A Very Good Description of the Gender Pay Gap

Surprisingly, it\’s in the New Statesman.

It\’s quite fun seeing the writer (Richard Reeves) pottering along and saying all the right things…the gender pay gap is indeed caused by the career breaks and the subsequent preference for part time working amongst women caused by child bearing and rearing. Firms are not acting irrationally when they downgrade the importance or status of part time jobs and so on.

But given that this is simply the interaction of peoples\’ choices which creates the pay gap, how can anyone be against the existence of it?

Markets are usually good at offering choice, but at present the labour market is failing the family. Companies are not generally acting on the basis of a rigorous business case against senior part-timers. They are exhibiting what psychologists call "path dependency": doing what they do because that\’s what they\’ve always done. A decisive legislative strike on the Dutch model could jolt them on to a fairer path. Rather than aiming at creating economy-friendly families, it is time to shape a family-friendly economy.

I would even buy that path dependence argument, if it weren\’t for this:

It is important to be clear what the problem is. Is it bad news that women want to spend time with their children? Surely not, given the evidence for the importance of parental engagement in the early years of a child\’s life. Are these women "forced" into part-time work, and now just grinning and bearing it? No – the overwhelming majority say they positively chose part-time work, and their job satisfaction is higher than that of mothers working full-time. Most men and women, according to the British Social Attitudes Survey, think that a conventional division of labour is the right one, with mothers taking on the bulk of responsibility for childcare.

And this:

Employers are reluctant to retain or hire senior part-timers. While 60 per cent of employers say they would allow a woman returning from maternity leave to switch to part-time status, of these only two-thirds would allow her to remain at the same level of seniority. So, less than half would permit a reduction in hours without loss of status. This may not just be the result of Jurassic attitudes, as Gregory admits: "We can\’t assume that employers are simply stupid." Assuming it costs as much to hire and train part-timers as full-timers, they will offer a lower return on investment. There may also be co-ordination costs, especially associated with part-time or job-sharing managers. But it is hard to know the true height of these barriers.

If it costs more to employ part timers then part timers will get less pay.

It might be that there is in fact no "solution" to this problem. Even if contracts were adjusted so that men can take similar child rearing leave, this would simply mean a pay gap between parents and the childless. And given that social attitude about childcare, there would still be many more women takinig the extended leaves than men and thus still that gender pay gap that everyone is complaining about.

I can\’t see any problem wih encouraging companies to offer more fleixible work packages: I can see large ones with legislating to force them to do so. This will benefit larger companies at the expense of smaller as the larger you are the more flexible you can be. Screwing SMEs really isn\’t in the long term interest of the economy.

What I rather like about the way the debate is turning out now though is that at least the problem itself is being correctly identified and the causes properly noted.

Yes, there is a pay gap and it\’s a motherhood, or a child bearing and rearing pay gap.

Now we have to answer two further questions. Do we want to do anything about it, given that it is coming from the voluntary choices of the people involved?

Secondly, is there actually anything we can do about it?

Anything that isn\’t entirely counter-productive, that is?


3 thoughts on “A Very Good Description of the Gender Pay Gap”

  1. There are two simple things that ‘we’ can do:

    1. Scrap Child Tax Credits and increase Child Benefit to £35 per child per week (for the first three kids per family, let’s say), that’s simple and fiscally neutral, and pay this to Mum, so this narrows the gap between her net pay and a non-mother’s net pay.

    2. Couples with children could pool their net incomes and share expenses equally, so that each partner has the same amount of personal spending money … oh … most people do this anyway and it doesn’t require legislation.

    That’s that fixed.

  2. What about looking into what some of these extra proportional costs of hiring part time workers are and see if any of them have their source in government legislation? Things like compulsory national insurance contributions, statutory holiday pay, sickness liabilities etc.. Might it be these sort of things that impact disproportionately on those employing more people part time rather than fewer people full time?

    Tim adds: Those are pretty much proportionate: except at the very low hours end, less than about 15 per week (maybe a lower number than that??) I think, where they in fact make part timers slightly cheaper.

  3. If you’re not aware, Reeves wrote the recently published bio of JS Mill and is more than a little bit of a fan—met him at an event in Brighton (‘greatest ever liberal’), he won the debate hands down. That he’s actually got the right facts and understands the real issues doesn’t surprise me at all. Good book from what I’ve read so far, only read the first few chapters as yet.

    You’re right on this (and persuaded me awhileback), we need to move the debate on. Issues such as final salary pensions and similar need to be addressed taking the need to ensure children are raised effectively but not hurting competing SMEs. A rare instance where state intervention could be useful?

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