How big is the gender pay gap? In Canada women make about 69 cents for every dollar men make, or maybe 73.5 cents. In the United States, it's about 77 cents. But never mind the details. The gap is big. Progressive politicians everywhere have pledged to fix it. Progressive companies, such as retailer Gap Inc., proudly proclaim they've already fixed it. Every year on International Women's Day, an army of consultants and progressive interest groups sorrowfully remind us how far we have to go.
Something must be done. In Britain, Prime Minister David Cameron is going to force big companies to start listing the number of men and women they have in each pay range. Everyone is applauding. That'll smarten them up! The trouble is, the gap isn't real.
What we think of as unequal pay for equal work – genuine wage discrimination – disappeared a while ago. The widely quoted "wage gap" is just a general average, and does not account for factors such as occupation, position, job tenure and hours worked a week. Once those differences are factored in, most of the wage gap disappears. But that would spoil the narrative, so no one says so. After all, they must seem female-friendly.
Here's the more subtle truth. In Britain, for example, the gap for full-time workers under 30 is almost non-existent. But in later life it opens up – and in almost every field, women who started out as equal earners wind up making less than men. Why?
Claudia Goldin has an explanation – one that has nothing to do with being passed over for promotion. She is a Harvard economics professor, past president of the American Economic Association, and she's been doing gender economics for years. So she's worth a listen.
Prof. Goldin has found that the biggest contribution to the pay gap, or what remains of it, is what she calls "temporal flexibility." Once women have children (or even if they don't), they tend to take jobs with different characteristics – the ability to work at home, perhaps, or more predictable hours. A litigator at a top firm that expects her to work 90 hours a week will get a job as an in-house counsel. A doctor will go into family practice, where she can work fewer hours. Women who value their family time do not want jobs that require their presence 24/7, even if they pay a lot more money.
In elite professions, the cost of "temporal flexibility" is very high. That's the main reason for the wage gap, and it's an issue. But it's not an issue that activists can solve with slogans or governments with laws.
Interestingly, people who wring their hands about the gender pay gap tend to be focused on the professional class, to which they belong. They seldom focus on the occupations in which most women actually work – teaching, nursing, hospitality and housekeeping, retail, clerical. Equal pay is not an issue for these women, because these fields remain almost entirely female. This is true even in enlightened Nordic countries such as Sweden, which are widely known for their gender equality.
In fact, there has been a far more significant and striking change in the lives of women. The top 15 or 20 per cent of women are becoming more like men than ever before in history. They have the same choices. They do essentially the same jobs, and earn high incomes. They tend to stay on a career track for a lifetime. At the same time, they have less and less in common with lower-earning women, who often work part-time. Professional women tend to marry later and have children later. Lower-earning women tend to marry earlier, have their families while young and divorce more often. Professional women can afford to farm out what used to be called "women's work" to servants and other services staffed by women who used to do this work at home, for free.
"The biggest differences now is not between men and women but between women and other women," says Alison Wolf, author of an important book called The XX Factor: How Working Women Are Creating a New Society. She points out that professional women's lifestyles "depend on the cheap labor of others." After all, somebody has to take care of the children and clean the house while elite women and men think up policies to close the gender gap. The class gap is another matter. And it might be much tougher to solve.