For years I heard that women are paid only a fraction of what men are paid. Something about that never sounded right to me. We have laws against gender discrimination, and there does not seem to be any sign of lax enforcement. I have never heard of men and women getting paid differently for the same job and I have never heard complaints about pay disparity based on gender. Just the same it seems that there are an awful lot of poor women, and many of the low paying jobs I see are held by women.
So what is going on? Do women get paid less than men? If so, why?
I recently decided to look into this question. Here is what I found out.
Women do indeed make less money than men, but it is not the result of discrimination as much as it is the choices that men and women make about education, careers and lifestyle.
Zafir (2009) distributed electronic questionnaires to 191 students at Northwestern Universities Weinberg College of Arts & Sciences that asked a variety of questions about demographics and future plans and choices. Although the results are complex and far reaching, relevant findings for our purposes are summarized here:
“Enjoying coursework, finding fulfillment in potential jobs, and gaining the approval of parents are the most important determinants in the choice of college major. Males and females have similar preferences while in college, but their preferences diverge in terms of the workplace:
Nonpecuniary (non-financial) outcomes at college are most important in the decisions of females, while pecuniary outcomes realized at the workplace explain a substantial part of the choice for males” (Abstract)
“Non-pecuniary determinants explain about half of the choice for males and more than three-fourths of the choice for females. Males and females have similar preferences regarding choices at college, but differ in their tastes regarding the workplace; females mostly care about non-pecuniary outcomes (gaining approval of parents and enjoying work at jobs), while males value pecuniary outcomes (social status of the jobs, likelihood of finding a job, and earnings profiles at jobs) more” (p. 28).
Gupta et al (2009) looked at survey responses from young people from India, Turkey and the United States who had had not made a career decision but were considering entrepreneurship. They found that respondents associated male characteristics with entrepreneurship regardless of their own gender or cultural background:
“Specifically, we found that both young men and women associate entrepreneurs with stereotypically masculine characteristics. More importantly, we found that it is not group membership based on biological sex, but identification with masculine characteristics that is positively associated with entrepreneurial intentions. Our findings indicate that men and women’s entry into entrepreneurship may be enhanced or limited by their perceived similarity to masculine characteristics.” p. 413.
In other words, entrepreneurship is mediated not so much by biological gender as much as how closely individuals perceive their attitudes to correlate with masculine traits. In view of Zafirs results (above) this means that women would do well to take a male perspective and consider future financial rewards of academic degrees rather than strictly job satisfaction or parental approval.
The Gupta paper identified social learning as the root of gender identification. This is an increasingly controversial position as more becomes known about the effect of genetics on personality. Although no definitive answers now exist, it is thought that the influence of genetics on gender role acquisition is at least as relevant as social learning. This means that women would do well to make a conscious effort to think in masculine terms when making academic or career decisions. What “comes naturally” for women when considering these issues is not generally conducive to high income or personal worth.
In a paper addressing the question of why female associate professors are more prolific producers of academic papers Rothausen-Vange et al (2005) found that marriage, partnering and the presence of children were a significant independent variable on the rate of publication. In other words, productivity was correlated to a marriage and child free lifestyle.
“…our data show that women associate professors in more research-oriented departments had forgone or delayed family formation (e.g., not partnered or married or not had children) more than had men. We found that male faculty in more research oriented departments were 33 times more likely to have partnered or been married during their assistant professor years and five times more likely to have had children during their assistant professor years than were female faculty in more research oriented departments” p.736.
Cole and Mehran (2009) examined a series of surveys conducted by the Federal Reserve, the 1987, 1993, 1998, and 2003 Surveys of Small Business Finance (SSBF), to examine the impact of gender on small business formation, and the ability to attract capital. They found that female headed firms displayed a number of predictable characteristics:
- Smaller in terms of sales, assets, and employment
- Younger and more likely to fail as determined by the firm’s age;
- More likely to be informal proprietorships than corporations or partnerships
- More likely to be in low wage service sectors, retail trade and business services than more profitable construction, manufacturing, or wholesale trade
- Have fewer and shorter banking relationships
- Female owners are significantly younger, less experienced, and not as well educated.
“Specifically, female-owned firms are significantly more likely to be credit-constrained because they are more likely to be discouraged from applying for credit, though not more likely to be denied credit when they do apply. However, these differences are rendered insignificant when we control for other firm and owner characteristics. This evidence suggests that observed gender differences in credit availability are attributable to other differences in male- and female-owned firms, such as the firm’s size and industry and the owner’s age, experience, and educational attainment” (p. 20).
In other words, female owned firms do not receive as much credit as male owned firms not because of the gender of ownership, but because of the gender specific decisions made by the owners. Firms that have a more professional business foundation — incorporation instead of sole proprietorship — and are in high value economic sectors like construction or wholesale, with early and long term banking relationships fare better than others.
These conclusions resonate with those of Zafer (2009) who found gender differences in the choice of academic majors. According to Zafer men look to the economic rewards of their academic choices to a far greater degree than women. When this trend is carried forward into business decisions things like choice of business entity, economic sectors, and start up funding suffer the same gender related outcome — women simply do not take these things as seriously as men.
Turning now to the personal outcome of gender related decisions, Yamokoski and Keister (2006) used the Bureau of Labor Statistics’ National Longitudinal Survey of Youth 1979 to examine the impact of marriage, divorce and children on net worth. They found that the combination of divorce and children resulted in significant decreases in net worth for both men and women, although it was particularly pronounced for women.
“Single mothers and fathers are economically disadvantaged in comparison to adults without children. Most notably, though, never-married and divorced mothers fare the worst in estimates of median net worth. Moreover, our regression analyses reveal that, compared to married adults with children, divorced mothers, in particular, are considerably disadvantaged in their wealth accumulation” p. 189.
This result is probably because academic and business decisions are magnified by the expensive presence of children. Children are high in cash outflow, but also in opportunity costs — the things that cannot be done because of a previous decision.
Ferrell (2005) makes a convincing case that gender disparity in overall wage income is largely the result of occupational choices. Women tend to make occupational choices that result in lower wages, even within professions. For example, in the medical profession women chose specialties that pay substantially less than specialties that men choose (p. 74).
Drawing on data in the National Longitudinal Survey of Youth (NLSY79) Gabriel and Schmitz (2007) found that gender differences in occupation were the result of free choice rather than discrimination or limitations imposed by geography or economics.
“Although gender differences in occupational attainment persist, they apparently result from voluntary choices of men and women and from long-term changes in labor markets, such as the simultaneous growth of white-collar occupations and women’s labor force participation rates” (p. 23).
Cole, R. A., & Mehran, H. (2009). Gender and the availability of credit to privately held firms: Evidence from the surveys of small business finances. [Electronic Version]. New York. Federal Reserve Bank of New York. Available at: http://www.newyorkfed.org/research/staff_reports/sr383.pdf
Farrell, W. (2005). Why men earn more : the startling truth behind the pay gap — and what women can do about it. New York: AMACOM.
Gabriel, P., & Schmitz, S. (2007). Gender differences in occupational distributions among workers.[Electronic Version] Monthly Labor Review Online, Bureau of Labor Statistics, 130(7 & 8), 5 Available at: http://www.bls.gov/opub/mlr/2007/06/art2full.pdf
Gupta, V. K., Turban, D. B., Wasti, S. A., & Sikdar, A. (2009). The Role of Gender Stereotypes in Perceptions of Entrepreneurs and Intentions to Become an Entrepreneur.[Electronic Version] Entrepreneurship: Theory & Practice, 33(2), 397–417 Available at: 10.1111/j.1540–6520.2009.00296.x http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=36839781&site=bsi-live
Rothausen-Vange, T. J., Marler, J. H., & Wright, P. M. (2005). Research Productivity, Gender, Family, and Tenure in Organization Science Careers.[Electronic Version] Sex Roles, 53(9/10), 727–738 Available at: 10.1007/s11199–005–7737–0 http://ezp.waldenulibrary.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=19300848&site=ehost-live&scope=site
Yamokoski, A., & Keister, L. A. (2006). The wealth of single women: Marital status and parenthood in the asset accumulation of young baby boomers in the United States.[Electronic Version] Feminist Economics, 12(1/2), 167–194 Available at: 10.1080/13545700500508478 http://0-search.ebscohost.com.library2.pima.edu/login.aspx?direct=true&db=aph&AN=20338588&loginpage=Login.asp&site=ehost-live
Zafar, B. (2009). College Major Choice and the Gender Gap [Electronic Version] Federal Reserve Bank of New York Staff Reports(364 ) Available at: http://www.newyorkfed.org/research/staff_reports/sr364.html