The truth about the gender wage gap
Nearly 10,000 people graduated with MBAs from University of Chicago’s Booth School of Business between 1990 and 2006.
In 2009, three economists decided to study a quarter of those graduates. They asked a detailed set of questions about the jobs they’d held since graduation, how many hours they worked, where they worked, and what they had earned each year.
The researchers wanted to know how gender would affect the career trajectories of all these newly minted business school graduates.
"We decided to focus on MBAs, because if you think about women’s access to the top echelons, the corporate sector is one where they have had a particularly difficult time," says Marianne Bertrand, an economist at the University of Chicago who led the study.
The survey of thousands of business school graduates showed that men had slightly higher salaries right out of the gate.
Women earned an average salary of $115,000 right out of graduate school, while men earned $130,000. Men also averaged a few more weekly hours and a bit more prior experience as they entered the workforce.
But the most astounding thing happened nine years later: The distance between men and women’s salaries more than doubled
Nine years into their careers, women saw their salaries rise to an average of $250,000 — while men's salaries averaged out at $400,000. Men were earning 60 percent more than women.
When we talk about the gender wage gap, we often talk about it as one thing - equal work, unequal pay: women earn 79c for every dollar a man makes.
That’s an accurate statistic, but it doesn’t capture the complexity of the wage gap. It doesn’t, for example, reveal that the wage gap changes over the course of a female lawyer’s career. Or that some professions have really big wage gaps and others have small ones.
Understanding the nuances of the wage gap is important to understanding why women in the United States still earn less than men. It helps explain how to fix the problem, too. But it requires going much, much deeper than one statistic.
Want to know why the wage gap exists? Look at where it exists.
One of the economists who ran the study of MBAs was Claudia Goldin, an economist at Harvard University. She’s a former president of the American Economic Association and a leading researcher on the gender wage gap. And this speech she gave in Philadelphia two years ago explains the wage gap very clearly. I want to use this story (and a few cartoons) to tell you about it.
Goldin shows a few things that, at first glance, may seem contradictory. Wage discrimination does exist in the United States. Full stop. But it isn’t as obvious as companies putting up signs saying "we don’t hire women," or even deciding to pay women less. And it doesn’t mean that employers systematically value the work women do less than men.
As Goldin put it recently to Freakonomics, "It's hard to find smoking guns."
Instead, the workforce disadvantages women in subtler ways — ways that ultimately show up in their paycheck but don’t always begin there. The highest-paying jobs disproportionately reward those who can work the longest, least flexible hours.
These types of job penalize workers who have caregiving responsibilities outside the workplace. Those workers tend to be women.
As Goldin put it in her speech, "The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and worked particular hours."
Goldin explains why the wage gap exists by looking at where it exists. What does it tell us when we learn that pharmacists, for example, have a really small wage gap but lawyers have a large one? How can we learn from the fact that women in their 30s have a way bigger wage gap than their co-workers a decade younger?
Let’s find out.
Read full article and cartoon here: <http://www.vox.com/2016/8/1/12108126/gender-wage-gap-explained-real>
By Sarah Kliff, Vox. August 1 2016.