The Truth Behind the Gender Wage Gap

By: Jacinta Sherris

Are Women really making 78 cents for every dollar a man earns? And if so, why?

This past year has brought to light the role women play in contributing to society, with the economy at the forefront of discussion. The issue of gender economic inequality has captivated American politics. “Equal pay for equal work” has been chanted with much anger and outrage towards the notion of the gender wage gap. But is it really true that women are being paid 78 cents for every dollar their male colleagues make? In order to properly address the issue we need to investigate the inner workings of the gender wage gap.

Much of the news surrounding the gender-wage gap revolves around the statistic that women make 78 cents for every dollar a man earns. People are left to conclude that women are paid less than men in the same jobs and that this is ultimately due to discrimination. Although there are definitely cases where a woman may be earning less than her male counterpart in the same field, the truth of the matter is that there is more to this statistic than meets the eye. The statistic represents the median annual earnings of all women and all men working full-time in the United States. It does not take into account education levels, hours worked, job positions, and therefore overlooks incredibly important determining factors specific to women. In fact, data from 25 countries collected by Korn Ferry, a consultancy,  firm, show us that women earn 98% as much as men who do the same job for the same employer.

The truth is that women and men are often segregated between occupations, industries, and ranks. Many times women occupy lower paying professions and positions.  Teacher, nurse, secretary and health aide are the top four professions occupied by women, at around 80%. That percentage decreases substantially when looking at managerial or higher ranking positions. The shortage of women in higher paying occupations and senior positions are definitely not the result of a lack of motivation, talent, or competence, but ultimately due to the cost of motherhood and familial divisions of labor. Indeed, women tend to occupy more lower-paying, less skill intensive jobs, despite many being overqualified because of the difficulty they face in balancing familial and career responsibilities.

When families members need care, such as a child or an elderly parent, it is often the woman that takes up the responsibility. Mothers with newborn children are often the ones to assume additional caretaking duties since they are already at home recovering post birth. Such seemingly simple or temporal decisions can have enormous consequences in the long run. Consequences include lower overall economic productivity from unused talent and potential, increased chances of poverty for women who divorce, and ultimately the gender wage gap.

A study from Harvard University suggests that the pay gap between mothers and non-mothers could in fact be larger than the overall pay gap between men and women. In the United States, women do not have a legal entitlement to paid maternity leave. Many women are often forced to altogether quit their jobs after having a baby. Because child care can often be very expensive or unavailable in terms of the quality and hours a mother is looking for, many women often have to sacrifice their careers or fall into lower-paying, under qualifying jobs that offer the flexibility in hours they need. Indeed, jobs where the gender wage gap is most severe are correlated with rigid hours that offer little leeway for people needing to accommodate familial responsibilities. Motherhood coupled with a lack of flexibility in the workplace, is where women tend to fall behind on the careers ladder as they struggle to balance professional success with familial responsibilities. It is often the case that the opportunity for the first critical career promotion coincides with the opportunity to start a family.

International surveys with data from both the EU and the United States, show us that out of all the women with children at home, 44-75% had scaled back after becoming mothers by working fewer hours or switching to a less demanding job with less travel or over time. Such career options almost always coincide with less pay. On the contrary only 13-37% of fathers said they had also scaled back after having children, of whom more that half had a partner that also scaled back. What is known to be the motherhood penalty- or the cost a woman endures to her career by becoming a mother- can be seen reflected in terms of monetary and social welfare. A recent American study put the motherhood penalty in causing a 4% decrease in a mother’s wages for each child, and as high as 10% for the highest earning, most skilled women. Women who are out of the workforce for a longer duration must commonly accept less demanding and rewarding positions in an attempt to restart their careers. Indeed the long term consequences of women missing out on professional development can be severe. Resulting in not only lower wages for women, but increased discrimination against mothers, waste of human talent, skill, creativity, and ultimately a decrease in productivity due to lack of diversification in many fields.

The issue of the gender pay gap is not so much the result of outright discrimination but rather the result of an institutional failure according to Harvard economists. An institutional problem that places value and incentives that do not align with the realities women face, therefore putting women on the back burner and ultimately causing a loss in economic productivity and well-being for society. Although programs for alleviating the gender wage gap have been criticized as costly or unfair “special treatment”, there are ways we can shift societal incentives to not only reduce the gender wage gap in an uncostly manner, but also improve economic productivity and familial happiness. One way to do this is to restructure current paid maternity and paternity absences. Research shows that an increase in paternity leave can have enormous benefits for children, mothers, families, and the rest of society. Fathers become engaged with their children, contributing to the children’s well-being and prospects of thriving later on. Women whose careers have not been derailed by motherhood also end up paying higher taxes as they continue to advance in their careers. More and more fathers want to have a larger part in their children’s lives, and giving them a legal right to request paid absences will have enormous benefits for everyone.

Women ultimately are faced with the difficulty of reconciling familial and career goals. The current gender wage gap is a byproduct of this conundrum, and not necessarily a result from direct workplace discrimination. Yet, the problem and more so the solution is complex nonetheless. What we do know is that women tend to be more successful in different areas of their lives when they have access to flexibility. This can mean flexibility in the hours they work, day care options, or simply the diversification of familial responsibilities that comes with increasing men’s engagement at home. Women face different realities than men, and the current incentives of the modern day workplace and economy neither recognize nor appreciate this fact. John Stuart Mill, the late British political philosopher and economist, recognized that women and men are indeed different, and it is the work environment and the incentives at force that contribute to the achievements of women in society.

Fortunately incentives can be changed, and they do tend to change as political and social climates shift. There may be some who believe it would be easier, or even beneficial, to simply continue the separation of work between the sexes and not bother to change incentives. But if we simply remember that economic growth ultimately results from capitalizing on the talents, skills, and potentials of all citizens, that women with goals and opportunities tend to be happier and turn into happier and more powerful mothers for their children, and that future generations reap the biggest benefits from increased engagement from both their fathers and mothers, we will recognize the need to change incentives in both society and the workplace. This will mean creating incentives for workplaces to accommodate families and ultimately improving upon the balance between work and family for both men and women.