The Freakonomics website has just published an interview with Claudia Goldin, Professor of Economics at Harvard University. She sets out a strategy to resolve the pay gap.
The key to the pay gap, in Claudia Goldin’s view, is the “amenity cost” of working to one’s own timetable, rather than being at the beck and call of one’s employer. She calls it the demand for “temporal flexibility”, a benefit that costs money. Pay gaps are higher in professions where the amenity cost is higher. So, for example, in corporate law or consultancy, there can be tremendous demands that impinge profoundly on sleep, weekends and holidays. There is a very big pay reward for those who are prepared to work like this. Meanwhile, in a profession like pharmacy, technology and low rates of self-employment have resulted in one pharmacist very easily being able to stand in for another (“each pharmacist is a perfect puzzle piece for another pharmacist”), so the amenity cost of working according to one’s own time is low. The pay gap is very low in pharmacy.
The gender pay gap arises because women are more likely to choose jobs that allow them to organise their work more flexibly and earn less, and men are more likely to choose jobs that earn more at the expense of flexibility.
She finds that this also explains most of the phenomenon of occupational segregation. If you take two professions, doctors and nurses, for example, she finds that 75% of the gap in pay is accounted for by differences in how women and men are paid within each of these professions. The men, on average, are working less flexibly than women.
Claudia Goldin has searched for evidence of direct discrimination against women in pay and has not found the “smoking gun”. Her statistical analysis keeps on finding other causes. She does not discount it entirely, but sees that this is not where most progress can be made in resolving the pay gap.
Claudia Goldin sees solutions in four “buckets”.
1. “Fix the women”
The statistics show that part of the pay gap is how women compete less and bargain less. She describes an example of this: women in orchestras in USA. When orchestras started blind auditions (the auditioners cannot see the person auditioning), the number of women in orchestras shot up. However, when researchers examined why this was, they found the main reason was that many more women started applying when they knew the auditions would be blind. Goldin also quoted an example of her own experience when she was asked to do a piece of consultancy and accepted an offer of $2000. Later she found that men had also done the consultancy but they had not accepted their offer of $2000 but asked for more and got it.
So she proposes that one solution for the pay gap is to encourage women to act more competitively, more confidently and to develop stronger bargaining skills.
2. “Fix the men”
The key here is for men to become more socialised into caring roles. “I could not agree with Anne-Marie Slaughter more that if men leaned out more the world would be a better place for women.” Goldin quotes examples of where such socialisation has worked, Quebec for example. However, she questions the extent to which all the men in USA can be “reprogrammed”! If more men chose to work flexibly, it would indeed drive down the gender pay gap. But it would not change the amenity cost of flexible working. The pay difference between the flexible workers and non-flexible workers would remain. And just as caring is unavoidable, for many families earning more by working inflexibly is unavoidable – someone has to do it.
3. “Fix the infants”
Childcare demands – early homecoming from school, school holidays – profoundly increase the need for greater work flexibility, forcing parents (mainly women) to make expensive choices in favour of flexibility. Goldin advocates organising care of children to fit better with working hours.
4. “Fix the organisations and jobs”
The is the area where Claudia Goldin sees the most potential – technological and organisational change to reduce the amenity cost of working flexibly. When the amenity cost goes down, then women and men are not pressured so much to choose between money and flexibility. In these circumstances their choices will become more similar.
Claudia Golding ends her interview with a charming comment on how she responds to the stock political assertions about the pay gap that, in her view, misinterpret the reality to such an extent; “It makes me feel that I have to get back in my office and do better work, and write it up better, and state it with more force. But, I recognise that there are facts, there are truths, and there’s political action. One simply has to recognise that there are good people out there who want to make the world a better place and they will push what they want even in the absence of hard evidence.”