The True Story of the Gender Pay Gap

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Many women choose lower-paid jobs, like nursing. But that's not the main reason for the pay gap. (photo: COD Newsroom)

Women earn less than men for many reasons — especially job selection — but discrimination isn’t a huge factor. (photo: COD Newsroom)

Our latest Freakonomics Radio episode is called “The True Story of the Gender Pay Gap.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

The gist: discrimination can’t explain why women earn so much less than men. If only it were that easy.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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MEDIA CLIP:  Oh, hi. I’m Sarah Silverman, writer, comedian, and vagina owner. Women make up almost half the working population, yet we typically earn just 78 cents for every dollar a man makes in almost every profession.

[MUSIC: Beware Fashionable Women, “Get It” (from Barak Schpiez)]

I’m pretty sure you’ve heard this kind of statistic before — maybe in a political ad.

POLITICAL AD: The gender pay gap is real and women still earn about 77 cents for every dollar a man earns for working the same job.

Maybe even in a State of the Union address.

BARACK OBAMA: Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong. And in 2014, it’s an embarrassment. Women deserve equal pay for equal work.

The implication is that women are being discriminated against. True, they earn less. But does that mean …

CLAUDIA GOLDIN: Does that mean that women are receiving lower pay for equal work?  That is possibly the case in certain places, but by and large it’s not that, it’s something else.

“Something else” – like what? That’s our question of the day on Freakonomics Radio, as we try to figure out the true story of the gender pay gap. If you’re looking for someone to explain the gender pay gap, you couldn’t do much better than today’s guest.

[MUSIC: Chris Dupont, “The Vigil” (from Anxious Animal)]

GOLDIN: Claudia Goldin, I’m a professor of economics at Harvard University.

Goldin has been working on gender economics for years, and has personally done some of the most influential research.

GOLDIN: So, I define my role by thinking about the issues of today and putting them in historical perspective and understanding what the roots are.  Because until you see the more distant past you really don’t know whether you’re looking at something that’s a little ephemeral transitory blip or something that’s important.

DUBNER: And how important is it for you to get hold of good data in order to reach those conclusions?

GOLDIN: It’s sort of essential. I always say that I do not live in a data vacuum. I find it very hard to breathe in a data vacuum. 

In 1990, Claudia Goldin became the first woman to get tenure in the Harvard economics department. In 2014, she served as president of the American Economic Association, the AEA. Her lecture at the annual AEA meeting was called “A Grand Gender Convergence: Its Last Chapter.”

DUBNER: You have argued — and I’ll quote you to yourself — “The converging roles of men and women are among the grandest advances in the last century.” What do you mean by that, and why is it so grand?

GOLDIN: I’m very much interested in converging roles having to do with the productive capacities of men and women. So that would be their education, their professional degrees, their life-cycle labor-force participation — meaning how many years have they been productive members of the workforce. And so, there are converging roles in these arenas and they have meant that men and women are significantly more alike in terms of how firms and employers would look at them and how they look at themselves.

DUBNER: Now, we hear about the gender pay gap a lot.  We’re told repeatedly — including by the President of the United States in the State of the Union — that “women earn much less than men for doing the same work,” is one of the phrases that we hear — seventy-some cents on the dollar. So, first off, can you clarify what that really means?  How true is that, when we hear a statement like that, especially in a political arena?

GOLDIN: Well, it is true that if you took individuals in the labor force and took those who were working full-time, full-year, and took all women, took the median annual earnings of those women and took the same thing for men, and divided the two, it would be .77 or around that, OK?  And that’s a number that has increased. In early 1970’s it was .59 and there was a mantra, “59 cents on a dollar, that’s not enough, OK?  We are equal to men, we deserve more.”  So, is this for equal work?  Is it equal individuals?  What economists do is they use data to figure out whether the individuals are the same; they try to make them comparable as possible; they squeeze out these differences and productive attributes; they look for individuals who have the same education, the same labor-force participation rates over their life cycle, etc.  And they squeeze those out and we still get a number that’s less than one. So, does that mean that women are receiving lower pay for equal work?  That is possibly the case in certain places, but by and large, it’s not that. It’s something else.

DUBNER: If we are talking about a gender pay gap, of whatever size — somewhere between 23 cents and zero cents less per dollar than a man — let’s look at what factors might contribute to that.  So, number one, what about discrimination? What is the evidence that women earn less because they’re discriminated against on some dimension or another?

GOLDIN: It’s hard to find the smoking guns, OK?  The smoking guns existed in the past. I have found many a smoking gun where you find actual evidence of firms saying, for example, “I do not hire Negroes.” Or, “I do not hire women.” I mean, you actually find these in 1939.  We don’t find those smoking guns now, but what we do try to do is hold everything constant that we can hold, get the best data that we can get. And what remains we don’t call discrimination, we call wage discrimination. Discrimination is such a loaded word that we don’t want to use that, so we use quotes around “wage discrimination.” And so the first thing is, what type of data do you need to do that? It would be incredibly rich data. And a couple of people have put together data using administrative records that are phenomenally good data that can hold lots of things constant, that can track individuals over their lifetimes and get to the answer. And the answer is that it’s a pretty small number, this number for wage discrimination once you hold lots of things constant.  It’s probably there, but we’re not quite certain whether these differences are due to the fact that women, even those without kids, have more responsibilities or take more responsibilities in their own families — taking care of their parents, for example.  So the answer is that we don’t have tons of evidence that it’s true discrimination.

DUBNER: Talk for a moment about potential categorical differences between men and women that have shown up in some research.  The different appetite for competition, as some have labeled it. Or, in another instance, the willingness to bargain on salary or flexibility.  How much might those contribute to the pay gap?

GOLDIN: I think there’s no doubt that they contribute to some degree. But let me tell you why I don’t think that they go the real distance. Some of the best studies that we have of the gender pay gap, following individuals longitudinally, show that when they show up right out of college, or out of law school, or after they get their M.B.A. — all the studies that we have indicate that wages are pretty similar then. So if men were better bargainers, they would have been better right then. And it doesn’t look as if they’re better bargainers to a degree that shows up as a very large number.  But further down the pike in their lives, by 10-15 years out, we see very large differences in their pay. But we also see large differences in where they are, in their job titles, and a lot of that occurs a year or two after a kid is born, and it occurs for women and not for men. If anything, men tend to work somewhat harder. And I know that there are many who have done many experiments on the fact that women don’t necessarily like competition as much as men do — they value temporal flexibility, men value income growth — that there are various differences. But in terms of bargaining and competition it doesn’t look like it’s showing up that much at the very beginning.

DUBNER: Let me ask you about one more contributory factor. The parent penalty, what’s often called the mommy tax. How significant is that as a contributory factor?

GOLDIN: Well, it seems as if it’s a very large factor.  That anything that leads you to want to have more time is going to be a large factor.

[MUSIC: Laura Ault, “Roundabout Ways” (from The Greatest Thing)]

The noted public-policy scholar Anne-Marie Slaughter, in a book called Unfinished Business, singled out what she calls the “care penalty” as a main driver of gender inequity. Here’s how Slaughter sees it:

ANNE-MARIE SLAUGHTER: If you take women who don’t have caregiving obligations, they’re almost equal with men. It’s somewhere in the 95 percent range. But when women then have children, or again are caring for their own parents or other sick family members who need care, then they need to work differently. They need to work flexibly, and often go part-time. They often get less-good assignments because their bosses think that they’re not going to want work that allows them to travel, or they’re not going to be able to stay up all night, or whatever it is. And so then you start — if you’re working part-time, you don’t get the same raises. And if you’re working flexibly your boss very typically thinks that you’re not that committed to your career, so you don’t get promoted.

It is this pursuit, of what Claudia Goldin calls “temporal flexibility,” that Goldin sees as perhaps the most powerful explanation for the gender pay gap. As she told us, it doesn’t seem as though outright discrimination or differences in competitive drive or bargaining ability can account for much of the difference. But that need, or desire, for flexibility in the workplace leads to a split that’s very clear in the data — a split that has to do with job selection.

GOLDIN: Women often take jobs that have different characteristics, different amenities.

When Goldin refers to “amenities,” she isn’t just talking about free lunch at the office or free massages. She’s talking about the ability to work flexible hours, or maybe work at home some days, maybe complete a project outside the typical corporate schedule — all of which can be extremely valuable if you are helping care for your family members in addition to working.

GOLDIN: I like to think about an individual who gets a degree — let’s say a law degree — and it’s a woman, and now I have an individual a man who gets a law degree. And they graduate from law school and they’re both equally brilliant, and they both get jobs in approximately the same type of firm. By and large they’re going to earn approximately the same amount when they start. Things will continue in their lives — they’ll both perhaps find partners, get married, have kids. It’s often the case that women will leave the very large law firms that put a lot of time demands on them and go to smaller firms or become corporate counsel, become part-time corporate counsel, perhaps, for a while. They will go to small firms where the workload is somewhat different. They may work in fact the same number of hours, but they may work hours that are their hours rather than the hours imposed on them by the firm. The woman will then begin to make — if she’s the one who did this — she will make considerably less than the man.  And a lot of what we see — not all of it — but a lot of what we see is this choice to go into occupations that have less expensive temporal flexibility, that allow individuals to do their work on their own time.  

[MUSIC: Orbit Monkey, “Uh Oh” (from Easy to Love)]

DUBNER: So do you find that there are bigger differences between men and women between different occupations? In other words, what would be a more typical story? A man and a woman, let’s say, who are observationally equivalent in terms of aptitude and education, and so on.  What would be more typical, that the female would go into a profession where the average salary is lower than the man? Or that the female would go into the same profession as the man, but choose a particular type of occupation within that profession that might provide more latitude and therefore come with less salary?

GOLDIN: Right, so we have both things going on. So, we know that there is what many people call “occupational segregation.”  Nurses are female.  Doctors are — they were disproportionately male; in some specialties they still are.  We know that nurses earn less than doctors, in general.  So one might think that all of the difference in average earnings is going to be the difference because women select more into occupations that look like they’re paying less — big occupational groups that are paying less — and men select into occupations in which they pay more. But, really the lion’s share of the difference is due to the fact that in every occupation, just about, women receive less than men. And they’re receiving less than men for a host of reasons, one of which is that they’re not working the same amount of time. And in many occupations, working more hours or being there when the firm wants you to be there earns you a lot more. So, in fact, something like three-quarters of the difference, if you look at the 469 occupations in the Census, and you look at how much is due to the fact that women are disproportionately in certain occupations, and how much is due to the fact that within each occupation there are differences — 75% is due to the within each occupation.  Thus, another way of putting it is, you could hypothetically give women the male distribution of occupations and you would wipe out only about a quarter of the difference in earnings between men and women.

[MUSIC: Cin3ma, “On Your Side” (from Cin3ma)]

DUBNER: Can you talk for a moment about where you see the largest in-sector differences in gender pay?

GOLDIN: So, what I did was I took all of the occupations in the Census and then I looked at the top paying 105 occupations. So, the point that I’m drawing is about $60,000 a year. So, the occupations then divide into those in the corporate and finance sector, those in health, those in science and technology, which I can group together.  And then there is this other group that’s just very hard to put in one or the other — lawyers, for example, would be in that one.  And what I find — it’s very clear — is that the gender wage gaps, when you correct for the stuff you can correct for in the Census, you find that the biggest wage gaps are in the corporate, the financial sectors, also law, and the health occupations in which there is a high fraction of ownership, of self-employment — so the podiatrists, for example, the chiropractors.  So, the ones that have the smallest difference between male and female earnings with these corrections are the technology occupations and the science occupations and the health occupations where there is a small degree of self-employment — as is true today for, for example, pharmacists.

DUBNER: OK, so as best as you can figure the why out, where the gap within the profession is so large, why is it so large?

GOLDIN: By and large, it appears that there’s just a very high cost of temporal flexibility in certain occupations. And part of this is that people don’t have good substitutes for themselves in certain cases.  So, you are doing a merger in an acquisition, you’re a lawyer, you are a consultant — whatever it is — the client might say, “I want you there. I want you there all the time.  I want to call you at 2 in the morning. I want you to be there on Sunday, on holidays. I want you to go to Japan whenever I say that you should.”  Well, that’s a tremendous demand. So an individual who values their family time would say, “I’m not doing that.” So therefore if a woman wants to — law, for example, is a good example — if a woman wants to practice law, she has a law degree, she enjoys practicing law, being a corporate counsel would give her more flexibility. That doesn’t mean that she’s working fewer hours than she would’ve worked otherwise, but she can work her hours, and she gets paid somewhat less.  

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The big question of the gender pay gap has to be broken down into a set of smaller questions. And then you have to find the data to answer them. When someone like Claudia Goldin does that, it’s pretty obvious that the statistic cited by everyone from Sarah Silverman to President Obama isn’t quite right. Because women aren’t getting paid twenty-some percent less than men for doing the same work. They are, however, often doing different work, or work that affords more flexibility — which tends to pay less.

Now, it may be that if you put a dollar value on the flexibility, it could offset a lot of the actual, salary dollars. In any case, there would seem to be kinda-sorta good news here, which is that discrimination doesn’t seem to be the main culprit in the gender pay gap. Or at least it’s hard to find a smoking gun, as Claudia Goldin says. But not impossible.

A hack of Sony Pictures e-mails showed that the actresses Jennifer Lawrence and Amy Adams got fewer back-end points than their male counterparts in the film American Hustle. Interestingly, when Lawrence later wrote about this revelation, she largely blamed herself. “I failed as a negotiator because I gave up early,” she wrote. “I didn’t want to keep fighting over millions of dollars that, frankly, due to two franchises, I don’t need… But if I’m honest with myself, I would be lying if I didn’t say there was an element of wanting to be liked that influenced my decision to close the deal without a real fight. I didn’t want to seem ‘difficult’ or ‘spoiled.’”

So, that’s another component to consider when you’re talking about the gender pay gap — that even in the absence of outright discrimination, the playing fields are not necessarily equal. Some of the most compelling evidence for this fact comes from the late 1990s, a study that Claudia Goldin did with Ceci Rouse. The paper was called “Orchestrating Impartiality.”

[MUSIC: Pat Holmberg, “The Water Suite” (from The Water Suite)]

GOLDIN: We found out that the best orchestras in the United States, most of them use a blind when they do auditions. They didn’t in the past, and each one of them adopted this technique for having auditions. And the blind means that the individuals who are making the decision on the sound of the individual’s performance do not get to see the individual; that there is a screen in front of the individual. And so we decided that since the various orchestras adopted this screen, we could figure out whether the huge increase in women in the great orchestras in the United States was in, perhaps, due to the use of this screen. 

DUBNER: So I guess one theory might be if orchestras got a lot more female over time, it may have just been that the pool of female applicants had grown a lot or the pool of male applicants had shrunk a lot, right? But you wanted to isolate the effect of the blind auditions, correct? And what did you find?

GOLDIN: We found that blind auditions mattered a tremendous amount. Our best estimate was that it was about 25% of an increase, which is pretty large.  And one of the ways that we did it — and this I will say was Ceci’s brilliance — was that because we had the names of individuals, we actually could track individuals who auditioned not blind and then blind for different orchestras.

DUBNER: I’m trying to tell — I may be interpreting this wrong — but are you saying that the use of more blind auditions also had an effect of simply encouraging more females to audition for those top tier orchestras?

GOLDIN: That’s right. It appears to have led to an explosion of auditions.

DUBNER: So that suggests that — gender gap aside, which we’re talking about — that what you might more broadly and much more importantly call an opportunity gap in the gender sphere is something that’s not only omnipresent in certain industries but also really hard to get at, right?

GOLDIN: That’s right. I think that this is a very good example of where individuals might not come out to interview — it’s expensive to do that in some sense, you have to travel to do it, you have to put your pride on the line.  And so now there was just a much larger group of individuals doing these interviews. 

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[MUSIC: Trentalange, “Reconnected” (from Same Illusion)]

DUBNER: So you’re a Harvard economist. Your partner in life, Larry Katz, is also a Harvard economist.  How fair would you consider your pay in relation to his?

GOLDIN: They’re exactly the same, practically. I think I always make slightly more because I’m more senior than he in terms of years, and I think that the administration always thinks that if I get $5 more that that makes it better.  And it sort of sure does.

DUBNER: It gives you bragging rights, at least, right?

GOLDIN: Absolutely.

Goldin and Katz would both show up in the Census data as post-secondary teachers. And in this case, the female teacher earns a few dollars more than her male counterpart. But what if Goldin had decided some years back to find somewhere less-demanding to work than at Harvard? Maybe she needed to care for some family members; maybe she wanted to study opera singing on the side. Whatever. So perhaps she opted out of the Ivy League tenure track for a different teaching job that didn’t pay as much.

Well, if that were the case, she and Larry Katz would still both show up in the Census data as post-secondary teachers — but now the female worker is earning a lot less than the male counterpart. You multiply that story by a few million and you have a huge pay gap between men and women.

In some ways it’s a self-inflicted wound — women make choices that lead to smaller monetary returns. On the other hand, society is set up in such a way that those choices are often not really very optional. So, what’s to be done about it?

Some people have taken matters into their own hands. A record label from Portland, Oregon, called M’lady’s Records, decided to give female customers a 23 percent discount on mail orders to account for the pay gap. They weren’t the only ones to think of this strategy.

MEDIA CLIP: A bar in Brooklyn is charging women just 77% of their bar bills all night to highlight the wage gap between working men and women.

But getting a discount on drinks, or records, isn’t going to accomplish much. What would Claudia Goldin do?

DUBNER: So, let me ask you this. Can you point to examples of countries or cultures or maybe firms that in your view have successfully addressed the real root causes of the gender pay gap?

GOLDIN: In some ways, certain occupations that seem to have successfully addressed them may not have given it any thought.  My favorite example is pharmacy, in which there’s virtually no part-time penalty, in which there is very little ownership now in terms of independent pharmacies. We may lament that — I would certainly lament if I lost the wonderful independent pharmacy in Cambridge — but in fact, women tend to shy away from ownership in part because it involves a fair amount of responsibility that is unpredictable. So, there have been changes in pharmacy that have led pharmacists to be better substitutes for each other — the use of highly standardized drugs, for example, less compounding, less individual, less need for a particular pharmacist to deal with you. Information technologies have been absolutely essential. When you go to the pharmacist, it could be any of the pharmacists working there who are intelligent and professional and can read the information about you. So some of what has happened that has been good for women comes from changes that I call organic, and they simply happen because of various technological advances that make each pharmacist a perfect puzzle piece for another pharmacist. And also, I mean, go to Silicon Valley and they don’t talk about family time, they talk about play time, and it’s work-life balance rather than just work-family balance. So the more and more people in our society who value that, the more firms are going to be searching for methods to reduce the cost of this amenity.  If the cost is expensive, then it’s going to be the case that individuals who shy away from those jobs are going to be paid disproportionately less and the more people who want those jobs, the more firms are going to find it costly to provide them, and they’re going to come up with ways using information technology to create these puzzle pieces.

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[MUSIC: Debbie Miller, “It’s Been a Day” (from Measures and Waits)]

It may be a natural impulse, when you hear that women earn less than men, to find someone to blame. One obvious villain is: men, presumably for being discriminatory. But as Claudia Goldin told us, there isn’t much evidence to support the discrimination argument.

Another obvious villain is: our institutional setup. If we could change — maybe modernize — a lot of our institutions, and the incentives they offer, wouldn’t that lead to more equality? Let’s assume that’s true. The question would then become: which institutions should be changed, and how?

And should we assume that governments should take the lead? In 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act, which expands the right to sue in cases of unequal pay. But that’s a pretty narrow advance. President Obama and others want more legislation to try to close the gender pay gap. I asked Claudia Goldin if she thinks this is a good idea, and if so, what kind of legislation makes sense?

GOLDIN: The best legislation that we can have is to change certain aspects of our school system.  If family matters are important here — and I believe they are — it’s not just baby care.  Simply doing something for infants isn’t the big deal.  Most people I know who have kids will say that life was relatively easy until their kids went to the local public school, which sends them out at two o’clock, which sends them home in June, and the problems that they have are trying then to fill in the time to six o’clock, which used to be filled in in daycare, and fill in the summer, which used to be filled in in daycare.  So for the children, alone, it would be worth extending the day and extending the year.  This is not cheap, but it’s simply an extension of a public good that we are already producing and it will do a world of good for working families.

DUBNER: Interesting, but you’re not calling for, or advocating at least, as your first choice, legislation that would change the way firms work to create more equal opportunities or more temporal flexibility, let’s say, for women?

GOLDIN: If I could figure out a way of doing that, I would have told you.  But I don’t think it’s easy to mandate. How can you mandate that firms all figure out ways of reducing the cost of temporal flexibility and reducing the costs of having people be puzzle pieces?  We’re simply not going to do that. It’s going to happen organically.

DUBNER: There are some places where men are required, increasingly, to take family leave when they have a child.  So does that kind of legislation — that happens governmentally, but then at the firm level — does that suitably level the playing field by lowering the cost of temporal flexibility?

GOLDIN: Well that doesn’t lower the cost of temporal flexibility. That could change the amount of time that each parent spends with kids. So there are, sort of, two separate ways of dealing with this. One is changing the cost of the amenity, and the other one is changing the supply of the individuals who demand the amenity. And that might change the latter; it’s not necessarily going to change the former at all.

[MUSIC: Teddy Presberg, “82nd Ave Strut” (from Blueprint of Soul)]

DUBNER:  Anne-Marie Slaughter, whom we’ve also spoken with about this topic, argues that a lot of the solution for gender equality in the workplace lies with men — that men need essentially to be sort of re-socialized, to better understand their role and women’s role in family care and so on. I’m curious what your thoughts are on that.  That’s a strong social norm in our culture, that women are the, “primary caregiver” and so on. I’m curious whether you think that’s a necessary and/or likely change, and that might produce some benefit to everybody?

GOLDIN: Well, that is certainly related to the previous point that you made about paternity leave.  That if we mandate that men take paternity leave or give them paternity leave — parental leave that only they could take, that you can’t mandate they take it, you can simply say that if you don’t take it, it evaporates.  One of the reasons for doing that in the various countries that have done it is to, sort of, change the social norm and have fathers bond more with their kids, and take more responsibility when their kids are young and then they’re going to do more later.  And there are some studies — one in Quebec, for example — that indicates that it does have somewhat of an impact.  So, that’s going along the lines of what Anne-Marie Slaughter says, and I couldn’t agree with her more that if in fact men leaned out more the world would be a better place for women. How you accomplish that is more difficult.  I think that it would be easier to accomplish getting the price of the amenity down, than as you just said, reprogramming all the men in the United States. So, I think of these issues as these solutions in buckets as: fix the women —that is, make them more competitive, better bargaining skills, better at math.  Fix the infants — take care of the infants, that will do it, OK?  Fix the men — which is the point that we were just talking about.  Or, fix the organizations and the jobs and I’m thinking more about the latter.

DUBNER: What costs come with that convergence of the roles of men and women?  Especially hidden costs that we haven’t considered. In other words, we’ve set this up as a goal of equity, especially in the workplace. Can you point to any examples where there are costs, however, to the pursuit of that equity?

GOLDIN: Well, there are always going to be differences. There’s no question. No one’s saying that we want a world in which men and women are identical, in which you look out and you just see androgynous individuals walking around in Mao suits. So, I’m not certain what actual costs there are.  Making men kinder and gentler and more interested in their kids — how can there be any cost to that? Making women more respected in their jobs, how can there be any cost to that? Making women fiercer and better bargainers and more competitive? Meh. I can see a cost to that.

DUBNER: I’m just curious, what’s it like for you to hear the kind of stock political assertion about the size of the gender gap knowing that it misses all the nuances that you’ve just described?

GOLDIN: 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 recognize that there are facts, there are truths, and there’s political action. So one simply has to recognize 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.

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[MUSIC: Boat, “The Name Tossers” (from Setting the Paces)]

Claudia Goldin admits that her career has turned out pretty well. If you want to be an academic, landing in the economics department at Harvard isn’t bad. Goldin is considered a true expert in her field; she’s won awards, been celebrated. But she’s also been reminded, now and then, that simply being female can carry costs of its own.

GOLDIN: My own story is interesting because I was asked — and I do not do consulting — I was asked to evaluate a project that was done by a leading international agency that will remain unnamed. And the project was that in the organization, it was deemed that women were being treated less well than men. And they did an internal study, and the internal study concluded that women were doing just as well as men and that there were no problems at all — that whatever problems were in the organization were some other things. Maybe there was  groping, maybe there was harassment, but that didn’t look like it showed up in terms of their job position and their pay.  OK, so this person calls me up and says, we need external people to review it. And he asked me and two other people, who were men, who worked a lot as consultants.  And the person said to me, “how about $2,000 for this job?” And I thought, “that’s interesting,” because I thought I was doing it as a favor. “That’s fine, $2,000.” So the three of us evaluated the internal review, found that it looked pretty good, and I received my payment. A couple months go by and I receive a call that said, “By the way” — and remember that the project we were working on was wage- and promotion-discrimination against women — and I receive a call and was told that the other two men had a rate that they asked for and so their pay was about one and a half times or two times mine. So, someone at that organization actually approved three consultants, the woman receiving about half of what the men received.  So, there is evidence that the individual who didn’t ask for anything — because I didn’t have a rate — got less than the guys who did ask for it.

DUBNER: Alright, so my one piece of advice for you, Claudia, would be that you need to find out the previously agreed-upon male rate and quote that instead of letting them tell you what you’re going to get, alright?

GOLDIN: Thank you very much. Well, what I’m going to do is, I’m going to call you up and ask you to bargain for me.

DUBNER: It’s a deal. I’ll do it.  

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And next time on Freakonomics Radio, how to become a political superforecaster. It is not as straightforward as you think.

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Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Arwa GunjaJay CowitMerritt JacobChristopher WerthKasia MychajlowyczAlison Hockenberry and Caroline English. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas behind this episode:

PEOPLE

Claudia Goldin, professor of economics at Harvard

Cecilia Rouse, professor of economics at Princeton, Dean of Woodrow Wilson School

Anne-Marie Slaughter, president and CEO of New America

 

RESEARCH

 A Grand Gender Convergence: Its Last Chapter,” by Claudia Goldin, American Economic Review (2014)

How To Achieve Gender Equality,” by Claudia Goldin, Milkin Institute (2015)

Orchestrating Impartiality: The Impact of ‘Blind’ Auditions on Female Musicians,” by Claudia Goldin and Cecila Rouse, American Economic Review (2000)

Unfinished Business,” by Anne-Marie Slaughter (Random House, 2015)


ETC.

Meet the Woman Who Said Women Can’t Have It All,” Freakonomics Radio (2015)

Women Are Not Men,Freakonomics Radio (2015)

Sarah Silverman Closes The Gap,” YouTube (2014)

Why Do I Make Less Than My Male Co-Stars?” by Jennifer Lawrence, Lenny (2015)

Portland,” by Coasting, M’Lady’s Records (2011)

From the Archives: President Obama Signs the Lilly Ledbetter Fair Pay Act,” The White House (2012)

 


Johnnie Welker

It is something that all of us, analytic-minded knew: the 77 cents pay ratio is untrue. Are women making less than men for the same job, maybe. However, it is not near 23 cents. I wish politicians were trying to be honest, because laws matter.

Kressel

One of the perks of my job is that it's flexible while I'm here. I can listen to Freakonomics podcasts while I work. I don't know if I'd have such freedom in other offices, and it would be a hard thing to give up, even though, like anyone else, I could use more money. An interesting way of making me rethink the choices I've made in my life.

Babbo

Unless you well and truly live a world apart from the one I make a living in, yes, you are pretty fortunate, and you probably wouldn't enjoy the same freedom in another office. In the wake of the economic downturn I've worked for five different companies doing at least four different types of jobs ranging from accounting to warehouse to direct sales, and exactly one of those positions allowed me to listen to Freakonomics at work. Not a lot of freedom in the workplace in 2016.

James

I wonder what a comparison to men who choose work-life balance (perhaps not the best of terms) over career/money would show? I certainly could be making a lot more money if I'd stayed in the Silicon Valley rat race, but I wouldn't be able to take off afternoons to go cross-country skiing - or in season hiking, biking, riding the horses, enjoying the garden...

EB

A few years ago, I left a large firm where I made 80% of what similarly educated and experienced men made doing very similar work. While I had no evidence of outright discrimination, there was a significant difference between what the women were paid and what the men were paid.

At first, I thought it was a negotiating thing. However, I talked to my male friend who also worked there and we found out that he hadn't successfully negotiated a higher salary when he joined. But he had been offered $9,000 more than me up front. And over the years, the pay gap between me and male colleagues grew as they received higher percentage salary increases over the years.

Towards the end of my 7.5 years there, I ran statistics on the pay in my department. The women were consistently paid less, and had more jr job classifications. And it wasn't explained by hours worked, level of responsibility, children, married/single. I was single and childless and took on responsibility. I worked very similar hours to my male counterparts. And other women were very similar in that.

This is just my story. I finally left my job and went elsewhere to get better pay. Which I guess is one answer. But there still seems to be something pervasive in society. And mine isn't the only story of that. Discrimination? Can't say that... but there is still something going on with wages that needs to be acknowledged and worked on.

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vi0lit

I think there are occupational fields where this isn't the case. In software development, for example. I have had much better jobs and much more experience doing the same thing as my current coworkers and I know I am paid anywhere between 5k and 20k less than men who do not work as hard during the 9-5 (take long lunches with only men for example) while I sit at my desk and work my butt off throughout the day. IN the last 4 jobs over the last 12 years. I have been told by every company I work for that I am excellent in all aspects of my job, but it has always been the case that I am paid less and overlooked for promotions or mentoring. I would like to say that I have female friends who are in the same boat but I haven't had many female colleagues and I currently have none.

vi0lit

I should also say that the recruiter kept trying to negotiate my salary lower and I actually had to tell him that the company he was placing me at were getting a steal due to my experience and skills. UGH

Jean

I think there are some real holes in this research. comparing dr.s and nurses is one thing, but what about male laborers vs nurses. Traditionally female jobs overall pay less than traditional male jobs. This points to the cultural disrespect towards women; nurses, teachers, etc. make less than construction workers or auto workers. I also wonder if there is more discrimination in fields that don't pay as well.

Ethan

And your credentials for research would be?
Your line of questioning comes across as though you have a preconceived notion that it must be discrimination as a cause of the pay gap. And so, if someone (in this case, a highly regarded Harvard economics professor) provides you with evidence that the main reason for this pay gap is not discrimination, you seem to be just doubling down on your original viewpoint without providing any evidence.

Vern May

An interesting take on the gender gap. My students and I just started discussing this topic in our labor unit so I'm definitely going to assign this podcast. I would assume that teaching is one of those occupations in which individuals probably get paid pretty equally based on education and experience.

R. G. Price (@rationalrevo)

Yeah, I've been saying this for years. But not only this, actually women both help to drive the gap and benefit from it actually due to the expectations that they place on men.

In other words, much of the "pay gap" is not actually a disadvantage to women, it is actually a benefit to women because what is happening is that, especially in the case of women in relationships, they have an expectation that men will cover part of their expenses, and men do.

So part of the pay gap is men working more hours with less flexibility, because women put pressure on men to carry that burden so that they can have more flexibility and still benefit from the higher income that comes from the men. Women still have access to a lot of male income.

The men are working more, earning more, but then bringing that money home and handing it over to women, or at the very least paying bills with their money that women benefit from, like house payments or rent.

Obviously this is not always the case, but we are talking about aggregate numbers here, and in aggregate those transactions favor women far more than they favor men.

So the point is, much of the "pay gap" is actually an ADVANTAGE to women, not a disadvantage.,. because much of that money is money they aren't earning, but are getting access to and benefiting from, so much of that income end up being a subsidy to women anyway.

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Gabriel

While I agree with you, this only apply to heterosexual middle-class women. Also is worth noting that the discrimination is often the higher you go in the career and social ladder. Those women are the ones who take flexible jobs (and to go back to your explanation) tend to marry with men who earn at least the same as them. I'm sure minimum wage jobs pay everybody the same otherwise you will see only women working in fast food places, etc. As usual, the lower you go into the social classes the more egalitarian they are.

R. G. Price (@rationalrevo)

There is some truth to that, but mainly because the higher up the pay scale you go, the more subjective the pay is. Most low to moderate paying jobs have the pay defined by formulas, so there isn't even much opportunity to pay people differently for the "same work".

Most "low paying" jobs are simply hours wages, where the wage is defined by a set formula based on how long you have been on the job, etc.

It is also interesting that even in primary and elementary education men have higher average pay than women, despite the fact that the fields are about 80% female with pay scales set by formulas defined by unions that are run by women.

But even at higher levels, as Ms. Goldin, where we see much larger differences in pay within similar job definitions between men and women, much of that actually comes down to how men and women approach work. Men simply work longer hours and take more risks on average, and thus end up with higher pay. In other areas, like entertainment it's even more difficult to really untangle.

In sports for example, arguably the men and women are doing "equal work", but male basketball players get paid 10X what females ones do, but that's because of the consumer market favors men over women. Truly it is a form of discrimination, but it's not EMPLOYER based discrimination, it is consumer based discrimination that the employer is simply unable to do anything about.

The case is similar with actors. Male leads just have a bigger impact on the box office typically, and thus command higher pay.

Yeah, at this point, I think that really only about 2%-5% of the gender pay gap is due to things that "should be fixed". The rest of it is all due to the difference choices that men and women make and how they work, and honestly, much of the gap is actually a benefit to women as it represents the extra income men work to earn in order to be able to spend that income in the interests of women.

Now, when it comes to single parents, that's another issue. Single parents in general earn less than single non-parents or married parents. Like 80% of single parents are women. But the reason for this is that women get preferential custody and women have worked to get laws on the books that make it more likely they will get custody of children. The only real way to fix the statistical impact of single parenting on the gender pay gap is to award parental rights to men at a rate equal to women, but this is something that women fight against, so again it is a problem of their own making.

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WhoTheHell_Cares

I'd love to see an economist give us a breakdown of the control of total national spending.
If I am to believe many articles I've read, women somehow spend far more in total than they could ever possibly earn in total. As I see it, this can only occur if her money is her money, and his money is her money too.

Chris

This podcast really bothered me.

They spend 20 minutes talking about how these differences are largely related to the choices that women tend to make then spend the rest about how do we correct the problem.

Am I the only one who hears this and does not see a problem that needs to be solved.

It seems to me that the conclusion is that the system is pretty fair already.

Why not state that clearly.

I'm, for the first time, disappointed in the way this ran out.

It seems to me like they tried to be completely P.C.

Julien Couvreur

Is there a reason why no actual number was given for the "less than one" ratio after correcting for known differences?

Also, what is the meaning of "wage discrimination", if it's not the same as discrimination? Creating a new term without explaining it, while including the term that you deem sensitive makes very little apparent sense...

Johnny

(Agree with previous poster - Do not see the problem, why PC?)

As a man who cares much less about money and loves freedom, and also a devoted single parent, I am certain that all the tradeoffs of less pay are a fair benefit, if not superior. I feel sorry for people who value money more than life, especially most men.

I've always had a decent career but typically worked for just enough to pay the bills. All my freedom and time with child(ren) could not be made up by any dollar value. And it's definitely a choice, who in their right mind would complain? I had one job where I made double my typical/necessary income, which happened to require solid busting ass plus overtime, and I would never go back to that.

It's a choice for women, and a choice for men. Actually far less of a choice for men, because we can't choose to make babies, don't get default custody assumptions, and are judged very harshly for: not working [hard] enough, not making enough money, not busting ass to provide for dependents, and focusing on anything in life besides work.

Any change to what is already a fair and open system would be brutal.

Also agree that in aggregate women are getting a huge chunk of men's money one way or another. I'd guess that women outside that hetero cliche are either less affected by the "gap", or suffering just as much as a man in whatever non-ideal situation.

Didn't a major recent Freakonomics guest posit that Women Can't Have It All? Is that not obvious? Does anyone think that Men Can Have It All? (Obviously not, wanting different things is a scapegoat.) Time is a finite resource and men don't magically get more of it.

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