Claudia Goldin: Why Do Women Still Make Less Than Men?

An overlooked reason why the gender earnings gap still exists—with Claudia Goldin, Henry Lee professor of economics

Claudia Goldin

Claudia Goldin | PHOTOGRAPH COURTESY OF BBVA FOUNDATION

 

 

Why do women still make less than men? Claudia Goldin, Henry Lee professor of economics, shares the reason why working mothers still earn less and advance less often in their careers than men: time. Even with antidiscrimination laws and unbiased managers, certain professions pay employees disproportionately more for long hours and weekends, passing over women who need that time for family care. Goldin also discusses how COVID-19’s flexible work policies may help close the gender earnings gap.

 

A transcript from the interview (the following was prepared by a machine algorithm, and may not perfectly reflect the audio file of the interview):

Nancy Kathryn Walecki: Why now when more women graduate college than men and about 30% of working women are mothers, is it still so hard for women to advance their careers and build their families? Why are women still making 81 cents to a man's dollar as the statistic goes? One reason for the persistent inequality might just be something we all have, but want more of: time. Welcome to the Harvard Magazine podcast, "Ask a Harvard Professor." I'm Nancy Kathryn Walecki. Joining us for office hours today is Dr. Claudia Goldin, Henry Lee professor of economics, and the first tenured woman in Harvard's economics department. She's known for her work on the female labor force and income inequality, and has served as the president of the American Economic Association, and as Director of the Development of the American Economy Program at the National Bureau of Economic Research. Her new book, Career and Family: Women's Century-Long Journey Toward Equity, looks at the lives of five generations of college-educated women to answer why true workplace equity for working mothers is still out of reach. Welcome, Dr. Goldin.

Claudia Goldin: I'm very glad to be here. And I am Claudia.

Nancy Kathryn Walecki: Welcome, Claudia. So first of all, what do we actually mean, when we talk about a gender earnings gap? Are women's paychecks literally 81% that of their male counterparts?

Claudia Goldin: Well, 81 cents, or whatever it is, number, is computed in a very, very particular way to make certain that the number isn't greatly influenced by very high incomes, and that it is standardized to some degree by hours. So it is the ratio of the income of the median woman to the median man who are full-time, full-year workers. And therefore, it's, if you took the average of everything in the nation, you'd never get anything that looked like that, it would actually be much, much larger. Because a mean is bigger than a median here. And in addition, you wouldn't be holding ours constant. That said, it's still the case that even for full-time workers, men work considerably more hours than women do.

Nancy Kathryn Walecki: Okay. So you found that one of the engines behind that wage gap is something called couple inequity. So can you tell me about what that is? And how does it relate to the career and wage gap?

Claudia Goldin: Certainly. So let's think about just two goals for a couple. And let us just say that this is a heterosexual couple. And I'll talk about same sex-couple differences. So let's say that they have just two goals. And we know that there are more, there is love and warm, fuzzy things. But the two, let's say are career on the one hand, or job or income, and family, and children, relatives. So couple inequity is when each member of the couple gets much more of one of these parts than the other. And in many ways each of them loses out. So if women take the jobs that are more flexible, and have less chance to let's say advance in their career, then they lose out. And they'll probably lose out more when they're older, when they need to build up wealth to retire, for example, or if they get divorced. But it's also the case that when a man takes a job, that is the greedier job and he spends less time with his family, then he also loses out. So if we're talking about a heterosexual couple, then it's generally the case that the woman would specialize more, take the flexible job, specialize more in family, and the reverse for the man, then couple inequity also means gender inequality. They are the two sides of the same issue. What about same sex couples? They too have couple inequity, but they don't give rise to gender inequality.

Nancy Kathryn Walecki: Okay, now, what does it mean when a job is greedy with an employee's time?

Claudia Goldin: So one way to think about greedy jobs and there are several ways of thinking about them, so, is that if you work more hours, then you get more per hour in terms of your pay. So let's say you work 60 hours a week, you get more per hour than if you work 30 hours a week. And there are lots of potential reasons. That could be because of some fundamental aspects of the job, so that there is greater productivity. Or it could be that there's some fixed costs that gets spread out. But the greediness of jobs may also be, and generally is not just in terms of the number of hours. It's the case that, you know, ask women who are in the world of finance, how many hours a week they work. They work a lot of hours, but they may not work particular hours, and therefore, they are not going to get the higher income. So it may not be just in terms of the number of hours, but which hours? Is it, you know, the evening when you want to have dinner with the family? Is it the vacation? Is it the weekend? Is it you know, early in the morning? And it's also the case that there are many jobs, such as at universities that are "up or out" jobs, where you put in more time when you're in your 20s and early 30s than you might later.

Nancy Kathryn Walecki: Okay, so on that idea of "up and out jobs" and career trajectories in general, do we see a mismatch between the biological clock of when women tend to start families and when things like promotions, tenure, making partners, when those events happen?

Claudia Goldin: Yes, of course, because so many things are front-loaded. And in fact, things have gotten worse. I could see it in my own lifetime. So there was a time when many careers were solidified, for men and for women, before the age of 30. And now, many of my undergraduates take off a few years before going to professional or graduate school. And that was just never done when I was an undergraduate or when my husband Larry was an undergraduate. And in addition, some of those degrees now take longer. And in addition, there are often postdocs, and fellowships, after, which are considered to be very, very useful to solidify your career. And that would be great if everyone was a man, because all of these things, 10 year partnerships, first promotions, are taking longer, and so, added up it's no longer 30. It's more like 35. And then we're really bumping into what has been called a biological clock.

Nancy Kathryn Walecki: Okay. So it sounds like there's a relationship between there has to be couple equity in order for there to be gender equity in the workplace. And one of those things that it hinges on is flexible time, maybe?

Claudia Goldin: Sure. So it will hinge on a couple of things. One has to do with what people are offered in the labor market, and the cost of that. So there is flexible time, and that, there's always flexible time, it just may be expensive. It may cost you a lot in terms of your career. There's also changes in relative prices of caring for children, and it's really children and other care responsibilities that are what is pulling one member of the couple to need more flexible time. So without that, both members of the couple could, you know, work whatever hours they want to work, they could take whatever greedy jobs they want to take. But once there is an infant involved, or a sick relative, or your own health issues, then you need some flexibility. So there are really three issues here. One has to do with the cost of flexibility, and why that's high and whether it has in fact declined in the new world of work. The other one is the price of care. You know, so do we have universal preschool that would be free? Are we in Sweden, where we have heavily subsidized child care? So there's that part. And then there's also the preferences of the members of the couple. You know, is it the case that each member of the couple is going to think, "Well, if we specialize a little bit, we would have that additional $30,000, but it's not worth it. We just don't think it's worth, you know, 30,000, maybe it wouldn't be worth 35,000." When I think of my own field of economics, this may come as a bit of a shock because economics does not have a lot of women. It has a lot more now than when I was a graduate student. But in fact, there are tons of examples, examples that many people know, people listening will know some of these people for sure, in which there are couples, heterosexual couples, that have children, in which both of them are absolutely on top of their game. And let me begin with Janet Yellen and George Akerlof. Okay, everyone knows them. Esther Duflo and Abhijit Banerjee, who won the Nobel Prize last year, both of them, Susan Athey, and Guido Imbens who just won the Nobel Prize, David Romer and Christy Romer, who is the head of the CEA, and the list goes on. So it is possible to do it, and each one of these couples I'm pretty confident, decided early on that they were going to do this as a team. Of course, these are pretty exceptional individuals.

Nancy Kathryn Walecki: Besides the exceptionality, do you see any characteristics among those couples that were able to, you know, stay at the top of their field?

Claudia Goldin: I think mutual respect. I see a growth, and it is borne out in some data by the Pew Research Group, a growth of companionate marriage. So I think of this, I'll use a term that, in many ways, is a nasty term, which is "trophy." This is the notion of a different type of trophy wife, that I certainly see in the group that I hang out with, that there's a sense, and of course, I hang out mainly with men who are economists, there's a sense of pride, that my spouse, my wife, my partner, is as important as I am. I mean, it, in many ways, would be a failure, if you said, my partner isn't as good as I am at what I do. And one might say, "Oh, but people specialize in things." But even within that, you know, let's put it in terms of something that we call a career, something that gives you identity apart from your family.

Nancy Kathryn Walecki: What do you mean by specialization in this context?

Claudia Goldin: Well, specialization, going back to the flexible and greedy jobs, would be that one person would be the on-call, at-home parent. That individual is still working full-time, but has a job that allows him or her, and it's generally her, to leave when the nurse calls and says, you know, your daughter just broke her arm. Or someone who has a job such that, you know, they can take their father to the cardiologist. So specialization here isn't the old fashioned specialization in which one person does all the cooking and the shopping, and this, that and the other thing, but there is a, you know, considerable specialization. If you're the on-call, at-home parent, it may also be that you are the person who has the mental weight of being the household manager, and making certain that the appointment with the cardiologist was made, and that the vaccination for your six year old was made. And that is a specialization. And the person with the greedy job, who's making considerably more because they have the greedy job, doesn't have the bandwidth to do that.

Nancy Kathryn Walecki: Right. Let's say both members of the couple in the companionate marriage decide to share childcare 50/50 and both have the flexible job instead of the greedy job so they can be on call at home. What do they potentially give up by doing that?

Claudia Goldin: So they potentially give up some amount of income. It may be that they also take a risk that they're going to get that first promotion a little bit later, that they have to burn the midnight oil, that they're going to sleep a little bit less. So there is something that both of them are going to give up.

Nancy Kathryn Walecki: Okay

Claudia Goldin: But on the other hand, I think this is a very, very important part, that they will both be able to get the joy of seeing their daughter score the goal. And they will be able to both listen when baby says their first full sentence, or you think it's a full sentence.

Nancy Kathryn Walecki: Yeah. Right. Both ways there's going to be a trade off.

Claudia Goldin: Yes. And your introduction was perfect, because the word "time" is of the essence, that if we could keep on expanding that time, we wouldn't have this set of issues. And it's one of the great equalizers in life that I may have more education than someone, someone maybe, you know, have a larger home than I do. But we all have 24 hours in the day.

Nancy Kathryn Walecki: It's true. And now, because of daylight savings, a lot of that is in the darkness. One theory that is often used to explain the wage gap is the idea of occupational segregation, that women and men tend to self-select for stereotypically gendered professions. So a woman becomes a nurse and a man becomes a doctor. And those jobs are paid unequally. Does the data support this idea? Does it relate to the idea of time and flexibility?

Claudia Goldin: Well, it is the case that there's a lot of self-selection. In fact the term, occupational segregation was often used in a somewhat different way, to explain why women were in certain jobs that they were, in some sense, forced, pushed, because there were barriers to being in other jobs, or because of certain societal norms that they should be nurses and not doctors. And the degree to which such, if it's their own choice, if it's a set of artificial barriers, or if it's a set of social norms, it doesn't really matter, the end result is the same. And the degree to which that can, in some sense, statistically, explain the differences in earnings has decreased over time, because occupational segregation has decreased over time. It's still the case that it can explain some reasonable amount. However, it's also the case that within each of the occupations, and there are about, you know, 500, 600 occupations that we use, there are fairly large differences. So in terms of the greedy versus flexible jobs, you can think that two members of a couple both get a law degree. And they both work for a big law firm. They both make, you know, a fair amount, but they decide that they need a little more flexibility. So one of them, the woman, goes to work for the smaller, boutique law firm. They're both lawyers, you know, in the census, they're both lawyers, but one makes considerably less than the other. And you can sort of go down the list of occupations. So one is a professor at a major league research place, and one is a professor at a state university, a large place, but one in which the type of grueling research that you might have to do in a place like Harvard isn't expected. So in fact, "within" occupational differences are actually, particularly for the college educated, very large.

Nancy Kathryn Walecki: Okay. How does the pay gap change throughout a woman's life? Are there moments when the the wage gap is generally wider or narrower?

Claudia Goldin: So if we start that law school couple out, they, they may have differences, and that's a topic that many people have explored, but the differences at the start are pale in comparison to what happens later. And so, as they continue with their lives and their careers, for many of the reasons that we've already discussed, their earnings differences widen. And we know from what we call "event studies," so an event might be marriage, or a birth, that after events like that, differences widen and they stay wide for quite some time. One of the projects that I'm working on now is to understand what happens when the kids grow up and leave home. So, so is there, and the way in which I think about this is that, you know, having a family and jobs, and working together as a couple with family, is like a big climb up a mountain. It takes a lot of energy and a lot of strength. And then you get to the top of the mountain, and hopefully your kids have done well and, and are leaving home to go to university, to start their own lives. And then gravity can pull you down the other side of the mountain. So is it the case that women are then able to sprint ahead? Or is it that being held back for so long means that the differences just continue to widen? And that's what we're exploring now using longitudinal data that allow us to track individuals to when they're around 55 years old.

Nancy Kathryn Walecki: Oh, wow. Have you found that certain occupations are more conducive to pay equity and couple equity? The, the journey up the mountain isn't quite so difficult?

Claudia Goldin: Right. So the journey up the mountain might still be difficult. But when you look at the person next to you, you'll think well, even though I'm a woman, and he's a man, we're doing about the same. Occupations in which, so if we go back and think about the flexible and the greedy jobs, so occupations in which the penalty for flexibility is less are going to be the jobs for which it will appear that, and it would be the case, that you as a woman, you as an individual who values flexibility, and took this job, are making similar amounts to a man in this job. So for example, I explored the field of pharmacy. And one of the hallmarks of such jobs is that individuals are very good substitutes for the other. It's also the case, and it comes as a big surprise, that many tech occupations are in that group as well. Because in tech, you are more substitutable. You write code, someone else writes code, you mesh it together. That's in sort of, in contrast to being a consultant, where you are the engineer and someone else is the accountant and someone else is the finance person, and you all have to go to Tokyo together to do a deal. So if you can even have one or two good substitutes for yourself, then you have sort of bought flexibility at pretty bargain prices.

Nancy Kathryn Walecki: Hmm. What aspects of our current job market make that kind of substitution and real equity difficult?

Claudia Goldin: Well, let's say travel. And I take this because it's something that I think is going to be changing a lot. But let us say that I'm not very good at predicting the future. And I don't really know, but this is, and a lot of business people don't really know either. But if there is a job, and they're often in finance, but they're also in consulting, in which long-distance travel is expected, every week, every other week, then an individual who's the on-call, at-home parent, or the on-call at-home daughter or child, is not going to be able to take that job. And she will tell the HR people, "Well, that's a very good job. But let's think about a job for me in the firm that doesn't involve travel." Well, fast forward to right now. We have seen that M&A, the mergers and acquisitions, was done, that M&A was done in Tokyo without being there, and it was just fine. The contract in Zurich was signed without being there. The handshake was done in Beijing without being there. So firms are pretty happy about that, because they're saving on the cost of travel, hotels. I'm sure that the hospitality industry isn't too happy about it. And they have their professionals around more of the time. Well, what this means is that the individual who said I can't take that job, can now turn around and say, "You know what? I'm pretty good on whatever platform you've got, where we stick our hand out, and we shake hands without being there. You know, I'm, I have that type of empathy and social skills so that I'm really quite believable. I have the language skills, I have the cultural skills." And so a different set of skills might take an individual into a job that they couldn't have taken before.

Nancy Kathryn Walecki: Right. Now, as the next generation of women start their careers during COVID, and hopefully soon post-COVID era, how do you think that might change the shape of work for this next generation of women?

Claudia Goldin: Well, it could change it in exactly the way I said, but we are so not there yet. So, you know, there, there are good paths we can go down, and there are not-so-good paths. So I just had a good path, a good path is where travel is limited. And therefore, an individual who's just getting her MBA, for example, can say, "I can take a host of jobs. And also think about being, you know, closer to my family, so that I can, I can do that M&A, and sleep in my own bed. I can do that contract and have dinner with my family." So to the extent that anyone values that these are going to be better jobs. However, there's a path that we might go down, that's not so good, which is that we have remote work that is offered and taken by some people and not by others, and those are the people who get together, face-to-face, or mask-to-mask, however we're going to be doing these things. And we will have created a female enclave. Or if I want to be nasty, I'll call it a female ghetto, which might be a bad thing. And, you know, it will have good aspects. But the question is whether the bad aspects then begin to outweigh. And the bad aspects are that face time might give an individual more. You know, if you show up, and you're the associate lawyer, and you pal around with the partners, and you go out for drinks with them, do you get the big ticket clients? So now more than ever, we really do not know.

Nancy Kathryn Walecki: Okay. What are some potential solutions to this trade-off between time at home and time at work that you've identified? You know, on the individual level what can be done?

Claudia Goldin: Yeah, so there were the three that I mentioned, one is lowering the price of flexibility. One is lowering the price of childcare, not just babysitting, but expanding the instructional time so that we have real pre-K care. And so those two have to do with relative prices. And the third one has to do with preferences. So changing preferences, I talked about that before, you know, how is it that there are all these amazing couples in my field, who've both gone on to greatness in their careers and have lots of, some of those couples have three kids. So it's that they've gone on to greatness and have great, wonderful families. And that may be that they each have given some amount and lifted the other person higher. So the first two are changes in relative prices, price of childcare and the price of flexible jobs. And the third one is changing what one might call social norms or individual preferences.

Nancy Kathryn Walecki: Okay. As we wrap things up, is there anything else I didn't ask you about? You know, anything else you'd like our listeners to know?

Claudia Goldin: Certainly. So what I feel very strongly about and the reason that I wrote the book the way I wrote it, and you introduced it in precisely the right way to say that much of the book is a history of five generations, groups of women, divided in a very natural way by their achievements and their aspirations so that the first group graduating college at the beginning of the 20th century, had either career or family. And the middle group, which are the mothers of the baby boom about which Betty Friedan wrote in "The Feminine Mystique", had family, and then they returned to the labor force in a very big way. And some of them had careers, but most of them had jobs. And fast forward to more recent in which women desire and are achieving, but not sufficiently, career and family. So what I want to emphasize is the enormous progress that has been made over time and also in individual's lifetimes. I think about a very interesting and poignant example, which is Ruth Bader Ginsburg and Marty Ginsburg. They were absolutely typical group three, that's mother's of the baby boom, smack in the middle of my century. They were absolutely typical of couples at that time. They met as undergraduates at Cornell, they married very soon after graduation, they went to professional school together. She then had a baby, he then needed to move to New York. She left, she, she upped herself from her law school, and went to Columbia. She also decided, took a back seat a while even before Marty took ill when he was a struggling tax lawyer, and then the tables turned. So it's also important to realize that not only has there been progress across these groups, but within each of them, we have to look for the fact that there are changes within individuals' lives. So I think it's important, even though we bemoan the fact that we are not yet there, to look back at this century-plus history and understand that there has been a lot of progress and to understand why and when there has been progress.

Nancy Kathryn Walecki: Absolutely. Thank you very much for joining us, Claudia.

Claudia Goldin: My great pleasure.

 This episode of Ask a Harvard Professor was hosted by Nancy Kathryn Walecki and the season is produced by Jacob Sweet and Niko Yaitanes. Our theme music was created by Louis Weeks. This fourth season is sponsored by the Harvard University Employees Credit Union and supported by voluntary donations from listeners like you. To support the podcast, visit harvardmagazine.com/supportpodcast. If you enjoyed this episode, please consider rating and reviewing us on Apple Podcasts. Contact us with questions at harvard_magazine@harvard.edu  

 

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