What do we know about the Gender Wage Gap?

A data driven look

This year, Claudia Goldin won the Nobel Prize in Economics for her work as a pioneer in studying women in the labor market. Economists have uncovered a lot about gender differences in the labor market. While there has been some progress in the last 50 years, gender differences persist. These differences are often topics of discussion by politicians and in the media. In this article, I will discuss the driving forces behind the gender wage gap and how it is often wrongly portrayed by politicians and members of the media.

The graph below shows that in 2022, women were paid around 83% of what men were paid for full-time work. While the gender pay gap has improved since 1973, when women were paid around 63% of what men were paid, the pay gap has not changed much over the last 20 years. What’s more, the gender pay gap persists even when the data are adjusted for education, age, and race.

We see here that men earn more than women at all levels of education. Interestingly, the gender pay gap increases as the level of education increases.

Here we see that men earn more than women no matter what their age. And as people age, the gender pay gap increases.

The gap persists when we look at wages by race and gender. (This wage gap between Black and White workers evident from the graph above will be a topic of a future post).

It is clear that on average, men are paid more than women, whatever their level of education or race. This gender pay gap is a statistic that is often discussed by politicians and members of the media. However, the reasons for the gender wage gap are not as simple as these discussions make them seem. For instance, though some of the gender wage gap is due to direct discrimination by employers, there are more serious and insidious causes that could be rectified or mitigated by policy.

Choice of Occupation

One of the things driving the gender wage gap is occupation. The types of jobs that men and women choose are very different. Nearly 80% of occupations are gendered, that is, more than 60% of workers in a specific occupation are of one gender. Economists call this Occupational Segregation. Jobs such as administrative assistants, receptionists, nurses, office clerks, paralegals, and teaching assistants employ 85% or more women, while 83% or more of construction workers, truck drivers, police officers, clergy, and engineers are men.  Moreover, the jobs that most men choose typically pay a higher wage than the ones women choose. What compounds this problem is that not only are men paid more than women in male-dominated professions, but men are paid more even in occupations that predominantly employ women.  For example, we see that 96.5% of construction workers are men and that they earn about $4 more than women ($20.75 v $16.73). We also see that though there are about 91% of women are secretaries or administrative assistants, they get paid $4.78 less than the few men in that profession. Occupation segregation is an important factor in the gender wage gap.

This begs two questions: Why do men and women choose the professions they do, and, why are women almost universally paid less, even in the professions they dominate.

The jobs that we choose are often heavily influenced by societal norms that influence how people sort themselves into occupations. For example, these norms result in “gender roles” that can often influence how parents raise their kids. The toys and Halloween costumes that are given to boys and girls are often very different - boys are often police officers, construction workers, etc. whereas girls are ballerinas, nurses, etc. “Gender roles” often also dictate the way in which parents assign household chores to their children. Boys are more likely to help with yard work, cutting the grass, and taking out the trash whereas girls are more likely to help with cooking, cleaning, and laundry. These kinds of expectations/norms may set boys and girls on paths where they see themselves in certain roles in society. Although such gender bias is not true for every child and parent, these decisions can have a large influence on what kind of jobs kids aspire to have and what majors they choose, should they go to college.  The choice of major can also be heavily influenced by high school guidance counselors, who may push boys and girls into different courses and into different college majors based on how society’s gender roles have influenced their lives (again, they may do this unknowingly).

Women are more likely to choose majors such as education, psychology, fine arts, humanities, and communication and the annual income earned by these majors is lower than the income earned by majors that are more commonly chosen by men. 

Research by Ariane Hegewisch and Heidi Hartmann shows that occupational differences between men and women decline between 1970-2000, but occupational differences have remained relatively unchanged since 2000. Occupational segregation will likely continue until society’s definition of social norms and gender roles change. This will only occur if we educate people on the effect of social norms and gender roles in hopes that future parents and teachers will be aware of how their choices will influence their kids’ choices as adults. As long as occupational segregation remains as large as it is, the gender wage gap will likely persist.

I still have not answered the question posed earlier, why do men make more than women in most occupations, even those most commonly held by women. Part of the explanation for this is the disproportionate responsibility that women carry as mothers and primary caregivers.

Parenthood Tax?

Men and women both bear the cost of having children, however, women are more likely than men to bear the cost during their tenure in the workplace. Research by Michelle Budig and Elise Gould, Jessica Schieder, and Kathleen Geier shows that women with children are paid 4.6% less per hour than women who do not have children and that women with young children work fewer hours than women without children. Men do not bear this cost.  Men with children work more hours than men without children. I have included the most recent data on hours worked in 2022 from the US Census Bureau’s Current Population Survey below.

Research by Michelle Budig shows that women who have children are paid less even when the wage is differences in education, experience, and labor force participation are accounted for. Some of these trends may be attributed to social norms about taking care of children and how the workday is organized around a model of a single “breadwinner” in the household, which historically has been the man. Women are more likely to take jobs that afford them the flexibility to take kids to doctors’ appointments or drop off/pick from school. Such jobs often pay less. The choice of occupation on these grounds can contribute to women who have children, or who are considering having children, to working fewer hours and earning less.

Additionally, research by Mary Bronson and Peter Thoursie shows that women are less likely to be promoted earlier in their careers, and this is true for women with and without kids. Promotions usually come with pay increases. Since men are more likely to be promoted earlier in their careers and women are not, this exacerbates the gender pay gap within occupations over their lifetime. Bronson and Thoursie find that this accounts for about 70% of the gap in wage growth between men and women by age 45. One of the conclusions that can be drawn from their research is that employers are reluctant to promote women during their childbearing years for fear they may take pregnancy leave but do not show the same hesitation in promoting men even though these men may also be of an age to be parents.

Having children changes family dynamics but the main problem may be that the structure of the workday and the expectations of the workplace are still based on a model where women stay at home and take care of children while their partners “bring home the bacon.” For this reason, employment policies that support a two-income family with children are crucial to addressing the gender wage gap.

Other Factors and Policy Solutions

Society's expectations of gender roles are a large factor in the gender wage gap. In the United States, childcare is expensive and in some parts of the country, difficult to find. Public schools let kids out in the early afternoon and kids have multiple months off in the summer. If parents can’t afford childcare, summer camps, and after-school programs, then one parent must stay at home to care for their children. Most often, it is the woman who makes that sacrifice. There is a stigma associated with being a stay-at-home dad, even when the mother has a higher earning potential. In general, people don’t want to be the “weird family” that goes against societal norms, so people are more likely to act in accordance with what they think will make them most socially acceptable. Finding a way to make childcare affordable and accessible in the United States is the first step to addressing this problem. One policy option is universally paid parental leave policies. Parental leave is an important distinction between pregnancy leave. Women must take leave to give birth, but men don’t. Parental leave comes after childbirth. By having maternal and paternal leave, this could help with women being less likely to get promoted at younger ages and provides important childcare right after birth. Other options include universal pre-k, tax credits for parents, payment programs for parents for childcare, and changes to the K-12 system. If society can find a way for parents to have easier and more affordable access to childcare, this will go a long way to addressing occupational differences and motherhood wage penalties.

Occupational differences and motherhood penalties explain a substantial portion of the gender wage gap. But, research by Francine Blau and Lawrence Kahn shows that women earn around 8% less than their male colleagues even when all other factors have been properly accounted for. Economists call this the unexplained pay gap, but as Francine Blau says in an NPR interview, “you could just call it discrimination.” 

The gender pay gap has not improved over the last two decades. There is still a lot of work that can and needs to be done to address the gender pay gap, but it is important to understand what may be causing it. While it is clear that gender discrimination does play a role, if, as a society, we can eliminate the wage penalty for becoming a mother and decrease occupational segregation through policy, we will go a long way toward pay equity in the labor market.