Gender pay gap? Culprit is ‘greedy work’

Excerpted from “Career and Family: Women’s Century-long Journey Toward Equity” (2021) by Claudia Goldin, Henry Lee Professor of Economics and winner of the 2023 Nobel Memorial Prize in Economic Sciences.

Now, more than ever, couples of all stripes are struggling to balance employment and family, their work lives and home lives. As a nation, we are collectively waking up to the importance of caregiving, to its value, for the present and for future generations. We are starting to fully realize its cost in terms of lost income, flattened careers, and trade-offs between couples (heterosexual and same sex), as well as the particularly strenuous demands on single mothers and fathers. These realizations predated the pandemic but have been brought into sharp focus by it.

In 1963, Betty Friedan wrote about college-educated women who were frustrated as stay-at-home moms, noting that their problem “has no name.” Almost 60 years later, female college graduates are largely on career tracks, but their earnings and promotions — relative to those of the men they graduated with — continue to make them look like they’ve been sideswiped. They, too, have a “problem with no name.”

But their problem goes by many names: sex discrimination, gender bias, glass ceiling, mommy track, leaning out — take your pick. And the problem seems to have immediate solutions. We should coach women to be more competitive and train them to negotiate better. We need to expose managers’ implicit bias. The government should impose gender-parity mandates on corporate boards and enforce the equal-pay-for-equal-work doctrine.

Women in the U.S. and elsewhere are clamoring ever more loudly for such an answer. Their concerns are splattered across national headlines (and book jackets). Do they need more drive? Do they need to lean in? Why aren’t women able to advance up the corporate ladder at the speed of their male counterparts? Why aren’t they compensated at the level their experience and seniority deserve?

Private doubts haunt many women, doubts that are shared in their intimate partnerships or relegated to private discussions with close friends. Should you date someone whose career is just as time consuming as your own? Should you put off having a family, even if you’re sure you want one? Should you freeze your eggs if you aren’t partnered by 35? Are you willing to walk away from an ambitious career (maybe one you’ve been building toward ever since you took your SAT) to raise kids? If you aren’t, who will pack the lunches, pick up your child from swim practice, and answer the panic-inducing call from the school nurse?

All these factors are real. But are they the root of the problem? Do they add up to the major difference between men and women in their salaries and careers? If they were all miraculously fixed, would the world of women and men, the world of couples and young parents, look completely different? Are they collectively the “new problem with no name”?

Some attribute the gender earnings gap to “occupational segregation” — the idea that women and men are self-selecting, or being railroaded into, certain professions that are stereotypically gendered (such as nurse versus doctor, teacher versus professor), and that those chosen professions pay differently.

Although lively public and private discourse has brought these important issues to light, we’re often guilty of disregarding the enormous scale and long history of gender disparities. A single company slapped on the wrist, one more woman who makes it to the boardroom, a few progressive tech leaders who go on paternity leave — such solutions are the economic equivalent of tossing a box of Band-Aids to someone with bubonic plague.

These responses haven’t worked to erase the differences in the gender pay gap. And they will never provide a complete solution to gender inequality, because they treat only the symptoms. They will never enable women to achieve both career and family to the same degree as men. If we want to eradicate or even narrow the pay gap, we must first plunge deeper toward the root of these setbacks and give the problem a more accurate name: greedy work.

For much of the 20th century, discrimination against women was a major bar to their ability to have a career. Historical documents from the 1930s to the 1950s reveal easily spotted smoking guns — actual evidence of prejudice and discrimination in employment and earnings. In the late 1930s, firm managers told survey agents, “Loan work is not suitable for girls,” “People with these jobs [automobile sales] are in contact with the public … women wouldn’t be acceptable.” That was at the end of the Great Depression. But even during the tight labor market of the late 1950s, company representatives categorically stated, “Mothers of young children are not hired,” “Married women with … infants are not encouraged to return to work,” and “Pregnancy is cause for a voluntary resignation [although] the company is glad to have the women return when the children are, perhaps, in junior high school.”

Today, we don’t see such explicit smoking guns. Data now show that true pay and employment discrimination, while they matter, are relatively small. This does not mean that many women don’t face discrimination and bias, or that sexual harassment and assault do not exist in the workplace. We have not seen a nationwide #MeToo movement for nothing.

So why do earnings differences persist when gender equality at work seems to finally be within our grasp, and at a time when more professions are open to women than ever before? Are women actually receiving lower pay for equal work? By and large, not so much anymore. Pay discrimination in terms of unequal earnings for the same work accounts for a small fraction of the total earnings gap. Today, the problem is different.

Some attribute the gender earnings gap to “occupational segregation” — the idea that women and men are self-selecting, or being railroaded into, certain professions that are stereotypically gendered (such as nurse versus doctor, teacher versus professor), and that those chosen professions pay differently. The data tell a somewhat different story. For the nearly 500 occupations listed in the U.S. census, two-thirds of the gender-based difference in earnings comes from factors within each occupation. Even if women’s occupations followed the male distribution — if women were the doctors and men were the nurses — it would wipe out only, at most, a third of the difference in earnings between men and women.

Thus, we empirically know that the lion’s share of the pay gap comes from something else.

Longitudinal data — information that follows the lives and earnings of individuals — allow us to see that right out of college (or out of graduate school), wages for men and women are strikingly similar. In the first few years of employment, the pay gap is modest for recent college graduates and newly minted M.B.A.s, for example, and is largely explained by differences in male and female fields of study and occupational choices. Men and women start out on an almost equal footing. They have very similar opportunities but make somewhat different choices, producing a slight initial wage gap.

It is only further along in their lives, about 10 years after college graduation, that large differences in pay for men and women become apparent. They work in different parts of the marketplace, for different firms. Unsurprisingly, these changes typically begin a year or two after a child is born and almost always negatively impact women’s careers. But the gap in their income also starts to widen right after marriage.

The advent of women’s careers fundamentally changed the relationship between the American family and the economy. We will never get to the bottom of the gender earnings gap until we understand the trajectory of the far larger problem of which it is a symptom. The gender earnings gap is a result of the career gap; the career gap is at the root of couple inequity. To truly grasp what that means, we need to take a voyage through women’s role in the American economy and consider how it has transformed across the course of the last century.

Our focus will be mainly on college-graduate women, as they have had the most opportunities to achieve a career, and their numbers have been expanding for some time. As of 2020, almost 45 percent of 25-year-old women have graduated, or will soon graduate, from a four-year college. The level for men is just 36 percent. Women, of course, didn’t always outnumber men as college graduates. For a long time, and for many reasons, women were at a great disadvantage in attending and graduating from college. In 1960, there were 1.6 males for every female graduating from a U.S. four-year college or university. But beginning in the late 1960s and early 1970s, things began to change. By 1980, men’s advantage had evaporated. Since then, more women than men have graduated from four-year institutions each year.

And they aren’t just graduating from colleges and universities in record numbers — they are setting their sights higher and higher. More than ever before, these graduates are aiming for premier post bachelor’s degrees and subsequent challenging careers. Just prior to the Great Recession, 23 percent of college-graduate women were earning one of the highest professional degrees, including a J.D., a Ph.D., an M.D., or an M.B.A. That reflects more than a fourfold increase across the previous four decades. For men, that fraction remained around 30 percent during the same 40-year period. Women have increasingly been planning to have long-term, highly remunerative, and fulfilling careers — sustained achievement that becomes embedded as part of an individual’s identity.

More of them are also having children — more than at any time since the end of the Baby Boom. Almost 80 percent of college-graduate women who are today in their mid- to late forties have given birth to a child (add 1.5 percentage points to include adoptions to those without a birth). Fifteen years ago, just 73 percent of all college-graduate women in their mid-forties had at least one birth. So college-graduate women born around the early 1970s have a considerably higher birth rate than college-graduate women born in the mid-1950s. There are now more women than ever like Keisha Lance Bottoms, Liz Cheney, Tammy Duckworth, Samantha Power, and Lori Trahan — all of whom have had successful careers plus children and are currently around 50 years old. College-graduate women no longer accept without question having a career but no family. Those who have children are no longer fully content to have a family but no career. By and large, college-graduate women want success in both arenas. But to do so requires negotiating a slew of time conflicts and making a host of difficult choices.

Not long ago, marriages among college graduates occurred at astoundingly early ages. Until around 1970, the median age at first marriage for a college-graduate woman was about 23 years old. The first child was born soon after. Early marriage often precluded further study for women, at least immediately. Newly married couples moved more often for the husbands’ career and education than for the wives’. Women didn’t always maximize their own future career prospects. Instead, they often sacrificed their careers to optimize the family’s well-being.

For women who graduated college from the 1940s to the late 1960s, early marriages occurred because marriage delay was a challenge. Getting pinned, lavaliered, and — the ultimate — engaged soon after starting a serious (and sexual) relationship was an important insurance policy against having a premarital pregnancy. In a world without female-controlled and highly effective contraception, choice was constrained.

By 1961, the Pill had been invented, FDA approved, and procured by large numbers of married women. But state laws and social convention did not allow the Pill to be disseminated among young, single women. Those restrictions began to break down around 1970 for various reasons, most unrelated to contraception. The Pill gave college-graduate women a newfound ability to plan their lives and to obviate the first of the constraints. They could enroll in time-consuming — actually all-consuming — post-bachelor’s education and training. Marriage and children could be delayed, just long enough for a woman to lay the foundations of a sustaining career.

That’s when things began to change, radically. After 1970, the age at first marriage started to increase, and it continued to climb year after year — so that the median age of first marriage for college-graduate women is now around 28 years old.

But even as the time-constraint problem was solved, others cropped up. Postgraduate education began to start later in the lives of college graduates and take longer to complete. The time to first promotion in a host of fields from academia to health, law, accounting, and consulting was increasingly delayed. The additional years mounted, resulting in yet another time conflict that had to be negotiated.

For families the fundamental time constraint is to negotiate who will be on call at home — that is, who will leave the office and be at home in a pinch. Both parents could be. That couple equity would yield the ultimate fifty-fifty sharing. But how much would that cost the family? A lot — a reality couples are more aware of now than ever before.

As aspirations for both career and family have increased, an important part of most careers has become apparent, visible, and central. Work, for many on the career track, is greedy. The individual who puts in overtime, weekend time, or evening time will earn a lot more — so much more that, even on an hourly basis, the person is earning more.

Thus, positions that have been more difficult for women to enter in the first place, such as those in finance, are precisely the ones that have seen the greatest increases in income in the last several decades.

The greediness of work means that couples with children or other care responsibilities would gain by doing a bit of specialization. This specialization doesn’t mean catapulting back to the world of “Leave It to Beaver.” Women will still pursue demanding careers. But one member of the couple will be on call at home, ready to leave the office or workplace at a moment’s notice. That person will have a position with considerable flexibility and will ordinarily not be expected to answer an e-mail or a call at 10 p.m. That parent will not have to cancel an appearance at soccer practice for an M&A. The other parent, however, will be on call at work and do just the opposite. The potential impact on promotion, advancement, and earnings is obvious.

The value of greedy jobs has greatly increased with rising income inequality, which has soared since the early 1980s. Earnings at the very upper end of the income distribution have ballooned. The worker who jumps the highest gets an ever-bigger reward. The jobs with the greatest demands for long hours and the least flexibility have paid disproportionately more, while earnings in other employments have stagnated. Thus, positions that have been more difficult for women to enter in the first place, such as those in finance, are precisely the ones that have seen the greatest increases in income in the last several decades. The private equity associate who sees the deal through from beginning to end, who did the difficult modeling, and who went to every meeting and late-night dinner, will have maximum chance for a big bonus and the sought-after promotion.

Rising inequality in earnings may be one important reason why the gender pay gap among college graduates has remained flat in the last several decades, despite improvements in women’s credentials and positions. It may be the reason why the gender earnings gap for college graduates became larger than that between men and women in the entire population in the late 1980s and early 1990s. Women have been swimming upstream, holding their own but going against a strong current of endemic income inequality.

Greedy work also means that couple equity has been, and will continue to be, jettisoned for increased family income. And when couple equity is thrown out the window, gender equality generally goes with it, except among same-sex unions. Gender norms that we have inherited get reinforced in a host of ways to allot more of the childcare responsibility to mothers, and more of the family care to grown daughters.

© 2023 by Claudia Goldin. Reprinted with permission by Princeton University Press.