On average, women earn 79 cents on the dollar compared to men—a figure that has been repeated by economists and politicians for years. It has proven a simple way to underscore a persistent and complex problem in the United States. Although factually correct, the finding that women make less than 80% of what men do doesn’t tell the full story about gender in the workplace.
Mushfiq Mobarak, professor of economics, explains that not only does the 79 cents figure hide differences in education, experience, and occupational choices, it offers no context of how culture—including gender expectations in both the office and home—continues to shape attitudes that helped lead to the disparity and perpetuate it.
“Think about how the societal expectation that mothers will have to prioritize kids over careers affects a company’s decision on whom to hire or promote for executive positions that carry a lot of responsibility,” he said. “Or its impact on women’s choices long before they even become mothers. It might even affect who you date and who you marry.”
Drawing on numerous studies on the gender wage gap, Mubarak argues that the difference varies widely depending on industry and income level. In low-wage service jobs, the gap is minimal, only to balloon in professions such as law and finance, especially at the upper ranks.
It turns out that motherhood, even just its potential, is a major influence. Norms around who is expected to sacrifice career for family, care for the children, even perform housework, play into the gender wage gap, making it clear that closing the distance will require societal solutions, not just policy changes.
“We need to think deeply about how we raise our kids, what we look for in a partner, and how we share responsibilities,” Mobarak said. “And government and private sector policies can nudge society in the right direction to achieve more just and equitable outcomes.”
You've probably heard that women earn 79 cents on the dollar compared to men. But this widely-cited statistic does not necessarily demonstrate the presence of gender discrimination. In fact, the single number hides differences in education, experience, and occupational choices. Once you statistically control for those factors and look at men and women with similar backgrounds working in similar occupation, the gap is more like 9 cents.
Among higher earners the gap is much higher, but almost non-existent at the low end. To understand this remaining gap, we need to dig much deeper using large sample data on how societal norms are shaping the choices men and women make.
Among higher earners we see what's often called a leaky pipeline, that the percentage of women declines as you get to higher levels of authority and earnings. In finance, 54% of all workers are women, but only 12% of executives and almost no CEOs. In law 45% of entry-level associates are women, but only 15% of equity partners are.
A number of really impressive economists, most of whom happen to be women, have rigorously studied this issue using large data sets and can help us understand the forces at work here.
A study of Chicago Booth MBA graduates found that while the earnings gap between men and women was small at graduation, by 10 years out, it ballooned. The entirety of the gap is explained by women choosing jobs with limited hours and greater flexibility and men's choices not being constrained by those same factors.
Why is that? In the Booth study, women without children work 3% fewer hours per week than men, while women with children work 24% fewer hours per week. So yeah, kids.
You can see something similar in Denmark. Denmark has amazing data on all its citizens, and we can trace very closely their earnings over time. If you compare women who become mothers with those that don't, you see that their earnings tracked very closely before the birth of their first child, and then the mothers drop behind and never catch up. This is the motherhood penalty and it’s even larger in the U.S., UK, Germany, and Austria.
You don't see the same gap for fathers in any of these countries. Think about how the societal expectation that mothers will have to prioritize kids over careers affects the company’s decision on whom to hire or promote for executive positions that carry a lot of responsibility, or its impact on women’s choices long before they even become mothers. It might even affect who you date and who you marry.
This is exactly what we see in a clever experiment with MBA students at Harvard Business School, in which the career office asked those students about their job preferences to help match them to appropriate internship. When unmarried women thought their preferences would be shared with their male classmates, they signaled less career ambition than when they believed their answers would be kept private. These answers would get the women matched to employers who offered lower salaries, but more flexible hours than travel schedule.
In the same study, smart women who do well on exams speak up less often in class and get lower class participation grades as a result. The pressures of marriage and dating are such that women’s résumés end up looking different even before they hit employer's desks.
Another study of married couples in the U.S. shows that husbands are far more likely to earn a tiny bit more than their wives than slightly less. It’s as if there’s an invisible norm in effect or some sort of social penalty if wives’ earnings exceed their husbands. And according to surveys, marriages where women earn more are often unhappier and are more likely to end in separation.
The story that emerges is that gender wage disparities have very deep societal roots. It’s ultimately driven by norms around who is expected to sacrifice career for family, care for children, or do the housework. That will affect who a career-oriented man or woman will choose to date, who they’ll choose to marry. These choices in turn affect employer’s decisions about whom to hire, promote, and give the lucrative client account to, even if that employer has no intention to discriminate.
To address this imbalance, we need to go beyond employers and start to address social norms around childcare, merit, and housework that limit women's choices. But we also need to think about policy solutions. Leave policies in Scandinavian countries strongly encourage men to take more paternity leave. Normalizing men providing childcare changes employers’ perceptions.
And we need to look at the reward structures in high-paying fields like law and finance that place a huge premium on being available for work at all hours of the day. Not all high-skilled occupations are like that, so these norms can be changed too.
So where does this all leave us? To address gender disparities, we can’t only rely on employers and the legal system; we need to think deeply about how we raise our kids, what we look for in a partner, and how we share responsibilities. And government and private-sector policies can nudge society in the right direction to achieve more just and equitable outcomes.