Why Are Women Paid Less?

By Jordan Weissmann

Discrimination, the careers women choose, and the burdens of motherhood could all play a role, says a Cornell economist.

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Women's rights activist Lilly Ledbetter speaks at the Democratic National Convention. (Reuters)

At last night's presidential debate, audience member Katherine Fenton got up and asked how the candidates planned to fix the fact that women make "only 72 percent of what their male counterparts earn." It's a familiar stat that, as some conservatives argued today, is also a bit misleading. When you compare men and women who work similar hours in similar jobs, the gap shrinks significantly.  

But it doesn't disappear. To get a sense of why women today are still paid less than men, and how much of the difference we can actually blame on discrimination, I spoke with Francine Blau, an award winning labor economist at Cornell who has published widely on gender and the workplace. Our conversation has been edited for length and clarity. 

Tell me the story of how the male-female pay gap has changed over the past few decades.

Way back in the 1950s, women earned around 60 percent on average of what men earned when working year-round full time. And it stayed right around at that level until about 1980. Then, particularly in the decade of the 80s, there was really considerable progress in narrowing the gender pay gap. Since then, there's been further progress, but it's been a little bit more fitful, a little less consistent. So in 1980, that figure was 60 percent. In 1990 it was 72 percent. In 10 years, that was quite a change. In 2000, it was 73 percent. And now it's about 77 percent. It bounces around year to year.

So overall, women who work full time make 77 cents for every dollar men make. But how much of that can we actually blame on discrimination, and how much is due to other factors, like the fact that women often work in lower paying industries?

I'm going to refer to a study with my colleague, Professor Lawrence Kahn at Cornell. In the data set we were using, women were making 20 percent less per hour than men overall. That would be what we call the unadjusted differential. As you're pointing out, this could reflect a variety of factors. It could reflect discrimination. But it also could reflect gender differences in work experience, or differences in industries and occupations. So first we statistically adjusted for human capital, which is a detailed measure of prior work experience and education. The adjusted gap was 19 percent, only slightly less than the unadjusted differential. So traditional human capital factors, taken together, do not explain that much of the gender gap. Then we have another specification, where we control for human capital but we additionally control for gender differences in industries and occupations. And that got us down to 9 percent less.

So there was a 9 percent difference in pay you couldn't explain even when you considered the jobs women do, the education they have, or the years they spent in the workforce.

Right.

Is it fair to say that's a sign of discrimination at play, or what else might it be?

On the one hand, that could be due to discrimination. On the other hand it could be due to some factors that employers know about that reflect productivity but are not possible for us to include in our analysis. So there might be gender differences -- I'm not saying there are -- but there might be gender differences in motivation or work commitment or negotiating skill, or a variety of unmeasured factors that we can't take into account in our analysis. On the other hand, women may be better endowed with some of the omitted factors. There's recent research suggesting interpersonal skills are becoming more important in the workplace and in general women are better endowed with those.

There's a variety of supplemental evidence that suggests there still is discrimination, even though our research suggests the amount of discrimination has decreased over the past 20 or 30 years to the extent that the unexplained gap has decreased. David Neumark looked at waiters and waitresses in the Philadelphia area, and he actually sent testers in for the job and found that women were discriminated against in high paying restaurants. They were much less likely to accept an application from them. They were much less likely to call them back. In another one, Claudia Goldin and Cecilia Rouse did symphony orchestras. They found that when women started auditioning behind a screen, their probability of advancing increased.

Let me raise another issue for you. Nine percent could be kind of an underestimate because, how are industries and occupations determined? Employers probably have a say in what occupation and what industry people are in because they have to be hired into those jobs. So by controlling for industry and occupation, you could be controlling for some amount of discrimination. I'm not saying we are. I consider the figure that we get, controlling for industry and occupation, a relatively conservative one. Although it doesn't take away from the unmeasured factors I was talking about.

What about the role of motherhood? How much does that really impact women's earning potential, and to what degree?

I don't think we completely have the answer to that. But one way it does is something we were able to control for, and that is it influences how much prior work experience a person has. Because in the old days, women used to drop out of the labor force for extended periods of time when they had children, and that has changed a great deal. But that disruption certainly lowered the earnings of women compared to men, that dropping out. Now I think think it's more subtle. Especially in very high level jobs, it's how much commitment can you give? Are you working 10 to 15 hours a day? It's not just a question of full time, but above and beyond, 60 hours a week. So it could be influential there. It could impact what occupations and industries women go into as well. It might make it more difficult in some that are actually higher paying.

So I think that there's no question that if we want to improve outcomes for women, we have to look at these work family issues and see how we can help accommodate balance without major detriment to either sphere. One concern I have is that some policies that are designed to help balance work and family have a tendency to push women on to a mommy track, off the main drag.

Can you give an example?

I think realistically what we have now in terms of parental leave is really pretty minimal. And we could probably expand it. What we have now legislatively is 12 weeks of unpaid leave. I think it would be reasonable to pay for leave maybe on a social insurance type of basis and have it be longer, but if we make it too long, then we're sort of inviting women to step out of the labor force for a major period of time. And that's almost going back to a more traditional pattern that's going to be disruptive to them in the labor market.

How much of the problem is just men's unwillingness to take over parenting responsibilities?

It's kind of interesting. There has been progress. I mean, still, the women do the majority. But there has been progress. Men are putting in more time in housework and childcare. An interesting proposal that they are exploiting in some Scandinavian countries is use it or lose it parental leave for men. So in other words, parental leave in many countries, including the U.S. is available to men and women, but it's disproportionately women who take it. In these Scandinavian countries, what they've instituted is a certain amount of leave that the family only gets if the father takes it. Just traveling in Europe recently, I've seen a lot more men pushing strollers during the day.

Mitt Romney talked a lot about workplace flexibility during the debate when asked how he would help women. What did you think of that?

It's an issue. I think it's important to keep it in balance. President Obama certainly advocated for workplace flexibility as well, whether or not he mentioned it specifically last night. But saying it's an issue sometimes gets close to saying the only issue, and I'd like to point out that it's only partially the problem. It's not the whole problem.

Some people point out that men and women who are unmarried and work the same number of hours earn roughly the same wages. Do you think that's a fair criticism of the idea that there really is a wage gap?

I don't think so, because unmarried men and women are disproportionately younger. The pay gap tends to be smaller for younger people than it is for older people. And the reasons for that, on the one hand, is discrimination. If women are having difficulty working their way up the hierarchy, that's going to show up more at older ages than it does in younger ages. On the other hand, if women have work-family issues, that can also show up more at older ages. So, just focusing on unmarried people is focusing on younger people. And so it's not, it doesn't answer the question.

What can economists tell us about the trouble women have advancing in the workplace? Do we really know whether they get the same training or opportunities in the office?

We certainly believe that's the case. And we do have some evidence. I've seen some studies where, even when controlling for measured factors, women will get less training than men. Mentorship has been a long-term issue, especially in male-dominated areas, or areas where the senior people are men. People still tend to identify of younger colleagues of the same sex. So they may be more supportive, encouraging and helpful to young men than they are to young women. And even how it affects women themselves. There have been some studies that suggest, for example -- the evidence is a bit mixed -- but one of the more interesting ones I saw, where women were randomly assigned to classes, just having a female professor in some of these scientific and technical areas increased the probability that women would go into these areas.

If you could see just one piece of legislation on these issues passed, what would it be?

That's a good question, but I'm not prepared to answer to it right now. We have some good anti-discrimination legislation on the books and we have to continue to enforce it. I think that some of the changes in addition to that are going to have to be voluntary changes. Employers, for example, as a larger supply of the skilled workforce that employers hire is female, they have the incentives to voluntarily address these work family issues. And they are. It's still not enough, but they increasingly are doing so. So we need a sort of combined approach of government and the private sector.

This article available online at:

http://www.theatlantic.com/business/archive/2012/10/why-are-women-paid-less/263776/