Friday, June 22, 2018
Business

The gender pay gap: 5 myths

The Paycheck Fairness Act failed — for the third time — to get anywhere in Congress this spring. But with a summit on working families and President Obama's lunch with an accountant mom in Minneapolis last month, the White House has tried to make the frustrations of working mothers and their families a hot topic. One of the biggest issues: the gender pay gap. Here are some lingering myths.

1 The pay gap is closing rapidly. A Pew report released in December seemed to bring good news: The pay gap is narrowing, and millennial women are nearly at parity with millennial men. Pew calculated that the median hourly wage for women was 84 percent of that for men in 2012, compared with 64 percent in 1980. And female workers aged 25 to 34 in 2012 were making 93 percent as much as their male peers.

Yet in the past decade, the pay gap has hardly narrowed at all; it actually widened between 2011 and 2012. The Institute for Women's Policy Research estimates that, based on the current trajectory, it could take until 2056 to reach parity. Even that estimate may be optimistic. The gap tends to fluctuate with the economy, narrowing in bad economic times and widening in good, when the bonuses and overtime pay that go disproportionately to men kick back in. So if the U.S. economy continues to grow, we may well see progress reversed.

2 Women earn less because they work in industries that pay less. In April, when Democrats pushed the Paycheck Fairness Act, the Republican National Committee countered that "there's a disparity not because female engineers are making less than male engineers at the same company with comparable experience. The disparity exists because a female social worker makes less than a male engineer."

There are, indeed, more women in low-paying occupations such as social work and education, and more men in high-paying fields such as engineering. Yet that doesn't go very far to explain the gender pay gap. Harvard labor economist Claudia Goldin has found that the pay gap is widest in some of the highest-paying fields. Female financial specialists make 66 percent of what their male counterparts make, female doctors earn 71 percent, and female lawyers and judges make 82 percent. That's all controlling for age, race, hours and education. Meanwhile, men, especially white men, tend to make more than women in female-dominated jobs and advance relatively easily into supervisory roles.

3 Women earn less because they don't negotiate well. Women are less likely than men to ask for a raise, and they don't negotiate as aggressively. But that doesn't mean they are less-capable negotiators. Rather, women don't ask because they fear real repercussions.

When women advocate for themselves, they're often perceived as pushy or unappreciative. Studies have shown that people are less likely to want to work with women who initiate salary discussions, whereas men don't see the same backlash. "Women are still expected to fulfill prescriptions of feminine niceness," Harvard researcher Hannah Riley Bowles and her co-authors theorize. Employers could help correct the gender pay gap with more transparent hiring, promotion and compensation decisions. "Ambiguity facilitates the potential for gender effects and for stereotyping people. It leads people to preconceived notions," Bowles says. "And transparency has the opposite effect."

4  Women earn less because mothers choose to work less. Men tend to earn more the more children they have, whereas women see their pay go down with each child. Some of that reflects mothers taking time off or reducing their hours, and sometimes that's by choice — but often it's because their jobs don't compensate them enough to cover the exorbitant cost of child care or don't allow flexibility in the hours they can work.

There's also a "motherhood penalty" that seems to stem from the perception that working moms are less dedicated, less competent and less efficient employees. Investor Paul Tudor Jones got himself in trouble articulating this perception last year. "As soon as that baby's lips touched that girl's bosom, forget it," he said of his experience with female traders. Studies show that his attitude is widely held. It results in mothers being paid 7 to 14 percent less than women without children for equivalent work.

In fact, moms may be more productive employees than women without children. For instance, one study of 10,000 academic economists found that, on average, mothers published more research than childless women and mothers of at least two children published more than did mothers of only one child. Researchers are also testing theories that motherhood makes women better at problem-solving, memory tasks and handling stress.

5 To close the pay gap, we should focus on deterring discrimination. Passing laws that make it harder for workplaces to discriminate based on sex is important. But gender discrimination accounts for only 25 to 40 percent of the pay gap, depending on which labor economists you consult. And since discrimination is already illegal, the ways in which it persists are subtle and may be challenging to address directly through legislation.

What could make a big difference would be if workplaces reconsidered how they compensate their employees — and were more transparent about it. Rather than disproportionately rewarding workers for putting in long hours and making themselves available around the clock, they should reward high-quality work and allow employees more of the flexibility they need to balance work and family demands. For example, when Google increased family leave from three months to five and made it fully paid, the company saw a 50 percent drop in the number of moms who quit. Family-friendly policies not only boost morale, productivity and loyalty, they also address the other factors that contribute to the pay gap.

Vivien Labaton is a co-founder of Make It Work, a campaign to advance economic security for working women, men and families.

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