The Gender Pay Gap Reverses
As you regular readers know one of the matters we like to talk about around here is the gender pay gap. If you average out the pay of all women and all men then you find that women earn some 71 cents for every dollar earned by men. The big question is, why? Some say that it’s because we’re in a patriarchal world where women are deliberately exploited, discriminated against. Others, who look more closely at the figures, say that it’s more to do with (there’s no one who says that women were not discriminated against in the past and few who deny that it exists in small amounts now, but is it still a major cause?) choices and biology: women do take career breaks to have and to raise children, is this the reason?
There’s an excellent piece in the New York Times which provides another little piece of the puzzle to make that latter explanation even more believable. Amongst those in their twenties, in New York City, the gender gap has reversed itself. Women in that age group now earn 117% of what men do. So instead of 71 cents on the dollar, they’re getting 117 cents. This is probably the first time, the first generation, that this has ever been seen.
The reasons appear to be all to do with college degrees. We’ve known for a decade or so that more women get college degrees than men. That does now seem to be translating through into women earning more than men: given the returns to education it would have been a surprise if we did not see it. It’s also true that over the past decade we’ve seen more women getting professional qualifications and certifications (lawyers, accountants, doctors and so on) than men and these are clearly linked to the possession of college degrees.
I think it’s fascinating and I hope you do too: we’re seeing something that some (myself, as an example) have predicted would happen, but here it actually is, going on right under our noses. What will be even more interesting is what happens in a decade or so, as these young women start to have their families (as we assume that most of them will). Will it be shown that the gender pay gap is indeed (now, at least) a function of having children: and if it is, what, if anything, are we going to do about it?
August 10th, 2007 at 12:01 am
Tim, Wow. That’s truly historical. It will be interesting to see what the future holds. According to some intelligence I’ve come across, , fewer and fewer people are projected to have children . And children have become less a part of how Americans define a happy marriage. If a significant percentage of women forego childbearing, we might actually see a real power shift, or at least an equalization with respect to representation, at the top levels. After all, aren’t women now thought to be better at management, for example, due to the fact that they generally have more empathy. What do you think?
August 12th, 2007 at 9:07 pm
Certainly, in certain types of management, I’ve seen intelligence that says that women are better managers: where teamwork is more important than individual performance, for example. It’s also true that birth rates are falling, as they have been all last century: there has, however, just been one paper showing a reversal. Amongst the very rich there are significantly more than normal fertility rates. No one’s quite sure what that’s going to mean in the future, it’s just an as yet undigested piece of intelligence.
However, we do need to still understand, that while this is indeed an historic event, the first time a female cohort has been earning more than a male, it still isn’t “full” gender pay equality. For once you control for education, the men are still making more than the women. Still a little way to go therefore.
August 13th, 2007 at 7:48 pm
Something not specifically mentioned in the NYT article is the dramatic drop in salaries for 21- to 30-year-olds. Adjusted for inflation, in 1970 NYC, the average man and woman of this age group made $71,833 together; in 2005, it was $66,213. In the U.S., the story was the same: $62,788 in 1970, $53,990 in 2005. Broken down between men and women, in the U.S., women’s salaries basically stayed the same between 1970 and 2005. And men (as the article stated) were making nearly 10k less. In NYC, women made a few thousand more in 2005 than 1970, and again, men were nearly 10k less.
So to me, it seems perhaps less of an indicator of a trend toward women making more (although this is happening), and more of a trend toward young-adults now making less than they did in 1970. Actually, I was surprised that women’s salaries didn’t rise MORE since 1970, as so many women are now receiving more degrees, entering ‘serious’ careers, etc.
My theory: 21-30-year-olds, men and women, are taking longer than their parents to jump into ‘serious’ careers. This is probably largely connected to the increasing need for advanced college degrees.
You’d really need to look at statistics of the next age group to compare.
August 23rd, 2007 at 7:27 pm
I was puzzled by that as well and actually wrote to the author of the paper for more intelligence on it. I didn’t, I’m afraid to say, get much useful from him, or not that I had the intelligence to understand. My assumption was as yours: that it’s something to do with needing more advanced degrees.
One way it could work is this: in order to get a decent career you now have to spend more time in school than 40 years ago. But his numbers only came from those who were in full time work. So those still in school are not included in his calculation. Thus, those who are in full time work in their 20s are skewed to those who are in lower paying jobs, the type you can get without those higher degrees. Make sense? That would explain why average wages are down for the young, when we know that average wages for all are up over the period.