Merlin

The hand that rocks the cradle
Mar 2nd 2006
From The Economist print edition

Why women are still earning less than men

WHATEVER the truth of the aphorism that a mother's place is in the wrong, it seems that working mothers, at least, are in the wrong place. Or so concludes the Women and Work Commission (WWC), whose long-awaited report on the causes of the “gender pay gap”, the difference between men's and women's hourly earnings, was published on February 27th. The commission found that the pay gap (British women in full-time work currently earn 17% less per hour than men) was due not so much to a pattern of paying women less than men for doing the same job as to something far harder to root out. Women are making the wrong choices early in their careers and sliding into dead-end part-time jobs after they have children, with serious consequences for their lifetime earnings.

A few days earlier, the European Commission brought out its own report on the pay gap across the whole European Union. Its findings were similar: per hour, European women earn 15% less than men. In America, the difference in median weekly pay is around 20%.

According to the WWC, the gender pay gap opens early. Boys and girls study different subjects in school, and boys' subjects lead to more lucrative careers. They then take different degrees and work in different sorts of jobs. As a result, average hourly pay for a woman at the start of her working life is only 91% of a man's, even though nowadays she is probably better qualified.

The gap widens to a chasm during women's working lives, for a fundamental biological reason: motherhood. According to the Institute for Fiscal Studies (IFS), a research outfit, the hourly pay of women with children relative to that of men with children falls to 67%. And the Institute for Public Policy Research, another think-tank, recently calculated that a woman with middling skills who has a baby at age 24 loses £564,000 ($981,000) in lifetime earnings compared with one who remains childless. (The figure is lower, although still substantial, if she waits a while.)

The Labour government sees affordable child care as crucial to narrowing the pay gap. The Conservatives are following suit, trying to re-position themselves as modern and woman-friendly. In a speech on February 27th, George Osborne, the shadow chancellor, hinted that his party would subsidise a wider range of childcare options than the government does currently. He went on to say that it should not be the business of the state whether women choose to work or stay at home with their children.

He is right. But most British women do not want to work full-time and park their babies in nursery care all day, as mothers in some countries do. They would prefer to work part-time while their children are young, and perhaps have their partners do likewise. (Around two-thirds of British women with children under 11 work part-time.) Often, though, they cannot do this in their current jobs, but must move to a lower-paid, lower-skilled job, or leave the workforce altogether.

Too often this move to the “mummy track” is irreversible. According to the IFS, women's hourly pay recovers only slightly by the time their children leave home, when it is 72% of men's pay, and although their employment rate increases steadily as their children grow up, it never returns to the same level as men's.

One could argue that people should not be protected from the consequences of their own choices. But female workers are needed to pick up the demographic slack as society ages, and low pay will make work seem less appealing to them. Rising divorce rates mean that women—and their children—are having to rely more on women's earnings, or on the state. Low pay for women increases poverty among children and costs taxpayers money. Families where both partners work are less vulnerable to sudden shocks. Ceri Peach, a professor of social geography at Oxford University, has examined employment and other characteristics of British Muslims and come to the conclusion that their socio-economic marginalisation is largely down to low rates of female employment.

There is also good evidence that not all the errors women make are unforced. The Women and Work Commissioners declared themselves shocked by the careers advice and work experience on offer in British schools. Girls were often allowed to give up maths and science without any warning about the consequences for their future earnings. They were offered work experience in nurseries and hairdressers—even when they had expressed no interest in working in these fields. And careers advisers often didn't even mention pay levels in different jobs. So the proposals to improve subject choices, careers advice and work experience make a lot of sense.

Other suggestions are rather less to the point. Some are mere exhortations (“Employers should ensure that their managers, at all levels, are regularly and continually trained on diversity and flexibility issues”), and some are comical (“The Department for Culture, Media and Sport should set up two high-level groups, of advertisers and key players in television drama, to encourage non-stereotypical portrayals of women and men at work”). They do, however, make the crucial point that the pay gap will never close unless it becomes easier for women to go part-time while staying in the same job.

Since 2003, companies have had to give serious consideration to employees (female and male) with children under six who request flexible working hours. Many employees have taken up this “right to request”: nearly one in five working women and one in ten men. It is still too early to tell whether the new law is making a difference to working patterns, but there is clearly the potential for a change. Without it, Stendhal's lament will continue to have resonance: that geniuses born as women are lost to the public good.
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Seems to me that this one line might go a long way toward explaining why the rich/developed world is getting so much older. When the opportunity costs of having a child approaches a million bucks you can't be surprised that people are having fewer and fewer.

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Jeffbx

Jeez, I've been saying this for years.

I've always been skeptical of the reasons for the difference in men vs. women's salaries. It's because they do different jobs, they have different career expectations, and most importantly, they tend to interrupt their working life to have kids.

As long as women are the ones having kids, there will always be an imbalance in the *average* salaries of men & women. If you compare men & women doing the same job with the same experience level for the same number of years, I bet the numbers are almost identical.

Throw an interruption into the career - from several months to several years - and the average rate of pay will decline. Not because of the sex of the worker, but because US companies focus on productivity & output, and are VERY reluctant to accommodate part time schedules or long leaves of absence. This often forces the new mother into a lower paying, part time job that's more flexible for her. In a traditional family, the husband will continue to work, thus boosting his career ahead of her interrupted one.

Even if they swap roles & the husband ends up staying home with the kids, the wife has still interrupted her career by several months, which can be a big impact in some jobs or offices, and she will sometimes be demoted or shifted into a new responsibility.

So I believe (maybe naively) that the difference in pay has more to do with biology & the interruption of their career than any type of sexual discrimination.