Recently, Cynthia Than wrote a piece for Quartz entitled “There is no gender gap in tech salaries,” which concluded just that. The truth, however, is quite a bit more complicated than that. What follows is the original text with my annotations; you can also read Than’s follow-up post here.
The Organization of Economic Cooperation and Development has a new report out for International Women’s Day showing how men and women in 26 different countries spend their time. It shows that women spent significantly more time during the day working without pay.
Here’s the percentage breakdown of unpaid work — childcare, household chores, etc. — for each country by gender, including the average (the bar on the far right):
Norway is the most egalitarian, with just 54% of unpaid work done by women. In Japan and Korea, it’s nearly 85%. Across 26 countries, women average more than an hour extra per day doing unpaid work. Interestingly, men and women spend about the same amount of time on eating, drinking, and personal care. However, men don’t use all of the extra time that women spend doing chores to do paid work: they also have more leisure time on average. Women also sleep slightly more.
To hammer the point home, check out this activity breakdown by country, with cute little gendered figures:
from Felix Salmon:
Catha Mullen of Personal Capital, an online wealth-management company, has an intriguing post about what she calls “gender bias in investing”. Looking at the Personal Capital user base, she found that “women are on average 7% more risk-averse than men”, and that “the effect of gender on risk tolerance is greater than that of any other variable” — bigger even than net worth.
Because Mullen’s multivariate analysis table is quite hard to read, I asked her to generate a couple of histograms for me. Here are the results:
In both cases, risk tolerance is based on Personal Capital’s five-point scale, which runs from 1 (“Market volatility makes me very uncomfortable. Safety is a much higher priority than growth for me, and I do not expect growth meaningfully above inflation”) to 5 (“I am willing to take a high degree of risk in pursuit of higher returns, and am very comfortable with the volatility of a 100% stock portfolio”). I’ve also stripped out the data for people with net worth over $5 million, since the dataset there seemed to comprise one man and zero women.
Overall, calculates Mullen, women will end up with roughly 10% less money at retirement, thanks to their higher risk aversion. Maybe that explains why Warren Buffett, in his will, isn’t giving his wife cash, but instead is setting up a trust for her which is 90% invested in stocks. But I don’t think that Mullen’s findings counteract the generally-accepted fact that women are better investors than men.
The biggest story in these charts can be found at the far left, among the young and the relatively impecunious. If you’re a woman between the ages of 18 and 30, or if you’re a woman with a net worth of less than $100,000, then you’re a lot more risk-averse than a man in the same position.
This risk-aversion could well be entirely sensible. If you’re just saving for retirement, then it makes sense for younger and poorer people to maximize their risk appetite: you have relatively little to lose, while a nice gain early on can give you an unbeatable headstart later in life. But the fact is that most of these people are probably not saving for retirement: they have more urgent expenses to deal with first, like the costs involved in buying a house or raising a young family. In that case, it makes sense to be relatively risk-averse.
It’s also interesting that the richer men get, the closer they get to how a similarly-situated woman would invest. You’d think that risk tolerance would rise with net worth, but in fact it doesn’t: once you have a decent nest egg, it turns out, you start concentrating more on how to keep it and less on how to grow it. That’s one reason why Suze Orman puts nearly all of her money into wrapped and triple-A rated zero-coupon municipal bonds. She can live extremely well on what she already has, so the most important thing is to retain that wealth, rather than bear any risk that it’s going to disappear. (Interestingly, Nassim Taleb has a very similar investment portfolio, although he takes a lot more risk with the 10% of his money which he puts at risk.)
In general, people filling out investment questionnaires tend to overestimate their own risk appetites — which implies that men are taking too much risk, and that they’d be better off behaving more like women. A good investment advisor knows to invest her clients’ money more cautiously than they say they want; the lesson of Mullen’s data is probably that she should bring the risk down more for men than she should for women.
There are a lot of things that “explain” inequality. Technology, finance, societal, and cultural changes have all played their part. In a new series, Counterparties takes a look at the various things that correlate with rising income inequality in order to ascertain how we got to this economy and where we might go from here. For story tips/comments/complaints email us at Counterparties.Reuters@gmail.com.
Matt O’Brien wrote a good post last week on how the classic 1989 romcom When Harry Met Sally explains inequality. I’ll let him explain:
Working men and working women of similar education and income levels bond and marry over similarities—movies, art, paprikash—rather than the differences that defined traditional marriage (he works/she cleans). This new arrangement promises a better world, but it has increased inequality.
O’Brien mostly references a new working paper on assortative mating written by Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos for the National Bureau of Economic Research. It looks at marriages from 1960 through 2005, comparing the levels of education of each partner.
The researchers found an increase in college graduates marrying college graduates, and high school graduates marrying high school graduates. Fewer people are marrying across education levels. This corresponds with an increase in the Gini coefficient (a way to estimate inequality) to 0.43 in 2005, from 0.34 in 1960.
Put another way, this rise in income inequality among households in the US is explained by the end of “Cinderella marriages” — the ones where women (traditionally) “marry up” above their parents’ class, James Pethokoukis writes. “Doctors no longer marry nurses, they marry fellow doctors or others of comparable education level,” he says.
Peter Orszag says this is a good example of the complexities that make fighting inequality so hard. He writes, “If income inequality is being driven in part by changes in marriage patterns, what can anyone do about that?”
Further, do we want to do anything about it? The increase in assortative mating also correlates with the number of women going to college and graduate school, an option that really wasn’t available to to them in 1960. Marriages in the mid-twentieth century were about division of labor: the man worked outside the home, the women kept the house and took care of the children.
That’s changed. As O’Brien says, people now marry because they’ve found a compatible life partner, someone they enjoy sitting down and watching Netflix with after a long day at work (for both of them). The correlated inequality (causation is hard to prove here) doesn’t seem worth giving that up.
In 2011, the organizers of the World Economic Forum announced they wanted to do something about the lack of women at their annual January gathering in Davos, Switzerland. They informed their leading corporate sponsors that one of out every five people they were sending were sending to the annual conference in the Swiss Alps would need to be a woman. In prior years, that number had hovered around 15-17%.
Since then, the percentage of women attending WEF’s gathering of business and political elites hasn’t changed much at all: in 2013 it was 17%. This year it’s 15%.
Those corporations just didn’t want to play along, apparently. Instead of pushing the point, the organizers of Davos have decided to pander to the biases of the more than 2,600 movers and shakers whose employers pay approximately $40,000 per head to attend the get-together. WEF spokesman Adrian Monck told Quartz this week, “We’re on the front line of reflecting the world as it is, not how we want it to be.”
A person needs to be what is considered “significant” to receive the Davos nod, but traditional power structures are still too unbalanced to give the holders of the coveted Davos invites many women to choose from. The companies that make up the Fortune 500 have 23 female CEOs between them. Less than 20% of the United States Congress are women, and the United Kingdom is little better, at 23%. Even Barack Obama has come under fire for the relative paucity of the second sex in his inner circle of advisers. This year, 23% of the US government delegation at Davos are women, a group which includes newly appointed Commerce Secretary Penny Pritzker.
So much for this year’s conference theme, “The Reshaping of the World: Consequences for Society, Politics and Business.”
A few longtime activists are throwing up their hands. Lucy P. Marcus, the CEO of Marcus Venture Consulting, who has attended Davos in the past, wrote in a recent widely circulated Facebook post “If they haven’t sorted it out by now, it makes you wonder if they really have the will.” She added, “If the WEF doesn’t think that women are vital and relevant to sort it once and for all, then how vital or relevant is the WEF?”
Unfortunately, it is all too relevant. For women, just like men, Davos is a way of signifying status. As Felix Salmon wrote:
The secret to Davos’s success is no secret at all: you invite a very carefully hand-picked group of people to travel thousands of miles to a small and remote Swiss town, and then ask them to stay there, generally, for a good four or five days. You remove them from their normal gatekeepers and power structures, and force them to mingle in a space which is too small to fit them all comfortably. The result is a series of more or less serendipitous meetings, and an opportunity for the global elite to get to know each other in a largely agenda-free context.
In a recent interview in the London Evening Standard, Linda Scott, a professor at Oxford’s business school, reminded everyone that any group of (mostly) men asking how to improve the world is almost certainly going to miss something.
Scott calls the larger world of informal work by women the “Double X Economy”; she used the example of building schools in developing countries without making sure female students have access to sanitary pads (so they can leave the house without risking embarrassment) to drive home this point. But there are plenty of developed world examples. The world of work, while seemingly fair, effectively excludes many women.
When I emailed Scott this morning to ask about Davos specifically, she was quite blunt. “If the Davos leadership really wants women in the conversation, they can find them. I think it is purely a matter of sincerity and intentionality,” she wrote.
In other words, Davos is about power and who has it. And women, for the most part, do not.
The mancession continues. What seems like a step forward for women in the workplace is actually bad for both genders*.
Last week’s BLS data revealed that all of the job gains in the labor market in December went to women.
The term mancession seems to have been coined back in 2009. In a post dedicated to the topic at the time, Catherine Rampell wrote:
In the 2001 recession, men were also disproportionately affected by job losses and women gained a larger share of the labor force as a result. But in the post-recession boom years, men started to regain some of their lost ground. The same may happen in the coming months or years, if the job market starts to recover.
So far, men haven’t regained much of their lost ground. Here’s what the proportion of male (blue) and female (red-orange) workers has looked like over the last 45 years.
Here I zoomed in to only the last two recessions:
Women as a percentage of the workforce just barely declined post-recession. As a singular data point, that seems like something to celebrate. But what you see here is men getting hit really hard between 2006 and 2010 (that’s construction and manufacturing both shrinking). Women lost jobs, but fewer (that’s healthcare and education weathering the recession okay). Since 2010, neither group has really recovered. Worse, the little recovery there has been, especially for women, has been in low-wage industries.
Matt Yglesias takes a closer look at the mancession phenomenon, breaking the trend down by age group. Older workers of both genders, he finds, weathered the last few years fairly well. Younger workers are a different story, though. He writes, “the younger you look the more you see men’s disemployment as a theme. For younger workers we really are slouching toward gender equity—we’re just doing it more by men becoming worse off than by women becoming better off.”
*I’m sticking to the gender binary here because BLS data does.
Late last year, Goldman Sachs made headlines by announcing they would no longer permit their younger recruits to work round the clock. So they banned them from entering the offices for a 36-hour period between Friday night and Sunday morning. Several other banks have taken similar steps in recent weeks.
This is what passes for work-life balance on Wall Street.
I suspect Harvard University economist Claudia Goldin would say we need to do better than that if we want to improve women’s position in the world of high finance.
Goldin presented a paper recently at the American Economic Association, making the argument that the male-female salary gap is not going to be fixed by begging men to do more at home, or by teaching women better bargaining skills.
Instead, look to the flexibility gap.
When men and women begin their careers, their earnings, in Goldin’s words, “are fairly similar.” According to the Pew Research Center, women between the ages of 25 and 34 earned, on an hourly basis, 93% of men’s pay. And then … well, family life intrudes. Soon you have the infamous gender gap, where women overall earn 77 cents for every dollar earned by a man.
Yet as Goldin goes on to report, some fields of endeavor offer worse returns than others. An earlier study by Goldin (with Lawrence Katz) showed that for 1990 Harvard College graduates, those with an MD degree suffered a 15% loss in earnings if they took an 18-month work break, but those with an MBA or JD lost a far more significant 41% and 29%, respectively.
So what’s going on? Are medical industry professionals more avid readers of Sheryl Sandberg than lawyers and investment bankers?
Goldin points to workplace flexibility. When an industry is structured so that part-time and flexible working positions are all but verboten, then women, who most often bear primary responsibility for managing their families, are the ones most likely to suffer.
Says Goldin: “The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and who worked particular hours.”
How to do this? Goldin believes the answer does not rest in either government intervention or teaching women better negotiating skills. It rests in convincing companies, industries and their clients to change the structure of how they perceive and compensate workers, so that employees who seek flexibility are not financially penalized.
Is she right?
Well, yes … and no. I wish it were that easy.
Once upon a time, bankers’ hours meant nine a.m. to three p.m. The workday, even for those in relatively high corporate positions, often ended around 5 or 5:30 p.m. Yet that slowly changed, or at least it did for high earners. According to a working paper by Peter Kuhn and Fernando Lozano published several years ago by the National Bureau of Economic Research, work hours increased by 14.4% for the top fifth of wage earners between 1979 and 2002.
Employers like to claim this changed because that’s just the way the 24/7, forever connected economy works. They need those employees to be available. As a result, companies like Yahoo have all but ended flexible working arrangements, saying they don’t work for the company. As Goldin points out, many businesses believe their “employees meet with clients and accumulate knowledge about them. If an employee in unavailable and communicating the information to another employee is costly, the value of the individual to the firm will decline.”
This frankly, is so much horse manure. There is not much essential about the work young associates on Wall Street or Big Law do. One person is as good as another when it comes to putting together Excel sheets for financial deals, or performing grunt legal research. If that weren’t true, law firms wouldn’t be outsourcing the work formerly done by associates to places like India.
Moreover, even as our lifespans have lengthened and more women have entered the workforce, the world of employment has all too often remained wedded to a traditional model, where employees who want to make it to the top need to all but sacrifice their personal lives in their twenties and thirties to make it big in their forties. I’m sure you don’t need me to tell you that this puts women at something of a disadvantage, since that’s also the prime age for women to have children. If they don’t do it then, it’s quite possible they never will.
So why not adjust? Why not be more flexible? Why not let people take time out in their twenties or thirties, and put in the face time in their forties?
Maybe it is just habit. But perhaps we need to consider something else: that these ridiculous work hours are just another form of sexism, but one that is legal in 2014. As Joan Williams, the founding director for the Center for WorkLife Law at the University of California, Hastings College of Law puts it, “Workplace norms cement felt truths that link long hours with manliness, moral stature, and elite status.”
Women were disproportionately impacted by downsizing in the financial services industry in the wake of the 2008 crisis. Numerous banks, including Citigroup and Goldman Sachs, have been sued for discrimination in recent years, with female plaintiffs claiming unequal pay, bias, and sexual harassment. The treatment is often quite blatant and crude. Just last year, hedge fund superstar Paul Tudor Jones told a gathering at the University of Virginia, “You will never see as many great women investors or traders as men.” The reason? “As soon as that baby’s lips touched that girl’s bosom, forget it. Every single investment idea, every desire to understand what’s going to make this go up or go down is going to be overwhelmed.”
Just the guy to approach about workplace flexibility and the right to equal pay, I’m sure.
I’m all for giving Goldin’s suggestion a try. I work at home myself, and I suspect the flexibility it gives me can also improve the lives of quite a few men and women out there. But as for solving the gender pay gap, we’re going to need more than that.
New stats out on women with graduate degrees are, quite simply, depressing.
The percentage of graduate students in economics who are women is down to 11% from a high of 16% in the 1990s, according to a new study by Wendy Stock and John Siegfried. What’s more, those who do make it to the end of a PhD program still face pitfalls. From the study (pdf):
For males, getting married within the first five years after graduation was associated with a 25 percent salary growth premium relative to other males. For females, however, getting married was associated with a 23 percent salary growth penalty relative to other females, perhaps reflecting compromises incurred in a two-career job search.
Basically, the research suggests that married women tend to compromise their careers and married men don’t, and that is reflected in their salaries. Lydia DePillis writes that this could mean that women are moving or making compromises for the sake of their husbands’ careers, or it could mean that women tend to make sacrifices related to having children more than men do. The academic system isn’t designed to accommodate life-work balance before tenure.
Take, for example, Maya Sapiurka. She’s in a science PhD program, not econ, but she writes very clearly about the compromises she and her colleagues are forced to make. Scientists in academia, she writes, have their livelihood based on securing grants to pay for research, the most prestigious of which come from the National Institutes of Health. To encourage scientists to branch out, the NIH has a tacit rule that it won’t award grants to scientists who do research at the same university where they did their graduate work. Here’s Sapiurka:
This sounds well-intentioned, but packing up after over five years of study and moving to a new city for a few years isn’t always possible. The students I’ve spoken to who have been disproportionately affected by this unspoken rule are women with families. They are scientists who finished their doctoral degrees while having children and who cannot or will not pick up their families to move to a new city for what may be only a year or two of training before moving to the next lab. All of them are working on substantially different projects in new labs. But because they’ve remained at the same university, they are cut off from the grants that would be most helpful to their careers and their futures.
For women, the academic system rubs directly against biology. The average PhD student graduates at 33 — right about the time fertility starts to drop off for women. Men can wait until they get tenure at 40 to think about having children. For women it’s much more difficult.
This isn’t a new idea. Sarah Gibbard Cook wrote a pretty thorough rundown of the problem of the “leaky academic pipeline” for women back in 2004. But Stock and Siegfried suggest that this is not just about women leaking out of the tenure track. The study also takes into account PhDs who went into industry, which Sapiurka considers the more flexible option.
This all leads me to a somewhat unsubstantiated theory: the more education you get, the more of a marriage/childbearing penalty you are likely to see. The years in which you would otherwise be building up the seniority to mitigate the career setback that inevitably accompanies having children are instead spent in school.
JDs and MBAs also have huge gender pay gaps (see Claudia Goldin’s new paper, also presented last weekend at the AEA). Both are higher education degrees that people usually get after working for a couple of years, putting most graduates in their late twenties, and many around over 30. Like academics, young female JDs and MBAs are still green — and expected to be flexible and available in their careers — when they are confronted with the impending decline of their fertility. Therefore their sacrifices count more. It seems to me to be a much bigger risk to take maternity leave, or need to leave the office at 5pm, two years into your career as opposed to eight or ten years in.
As a result, I don’t think we should only be talking about the marriage penalty. We should be talking about the education penalty, and what that says about us as a society.
Image: REUTERS/Jim Bourg
But here’s my question: Why is it all about “the effect of daughters”? Why not “Does having sons make you support the Democrats?” It looks to me like having sons is considered the default … Lots of discussion of how having a girl might affect your attitudes on abortion, not so much discussion about how having a boy might affect your attitudes on issues such as gun control or war, which disproportionately affect young men. This is a real problem, when issues of girls and boys, men and women, are treated asymmetrically.
The same day, there was this in the Atlantic, “The Real Reason the Humanities Are ‘in Crisis’”:
Women’s choices have changed the face of higher education over the past 35 years. A relentless focus on gender won’t resolve funding cuts. But examining the historical reasons why women turned away from the humanities might turn the purported crisis into an opportunity.
This piece is all about how women turned their back on the humanities. It’s written by a woman, and pro-women going into STEM fields. I don’t think it’s deliberately sexist, or even that there is anything necessarily wrong with it as it is.
Still, I do think Gelman is right that it’s important to think about the framing of questions — and the answers to those questions — when talking about gender inequality. What does focusing on one gender, and ignoring the other, say about our underlying assumptions of the “natural” state of society?
To me, the question of why women have abandoned the humanities is less interesting than why men have not moved in to fill those spaces. I assume that it’s for the same reasons women are flocking to the social sciences, pre-professional majors and, to a lesser extent, STEM fields: practicality.
Inequality in traditionally female fields is related to inequality in traditionally male ones. Why have more men not stepped in to become public school teachers or nurses as women have moved to become professors and doctors? The healthcare sector is booming, and isn’t expected to slow down anytime soon. Will men step up to meet demand for nurses and home health aids?
from Data Dive:
Today, GM announced its new CEO will be Mary Barra, the company's current head of global product development. This is big news: Barra is the first woman to head a global auto company. This move, as the below Reuters chart shows, is just one small step in the march toward management equality. Women are still far from reaching parity in upper reaches of big American corporations.
Here's more about Barra from Reuters:
With 33 years of experience at GM, Barra has risen through a series of manufacturing, engineering and senior staff positions, and is currently in charge of reducing the number of platforms on which GM builds its vehicles. A source close to Akerson's thinking who asked not to be identified said the CEO valued Barra highly for "bringing order to chaos" in the product development process.
When she ended a recent meeting at 4 p.m. to pick up her daughter, others thanked her for it. “One of the guys said to me, ‘I’m so glad you said that because I’m meeting my wife.’ A lot of women’s issues are men’s issues as well.”
This is the sort of culture shift that Anne-Marie Slaughter argues has to happen if we want more women to reach upper management, and it suggests GM under Barra may end up being a leader on this front.
UPDATE: A reader points out that the chart above is misleading, due to the incredibly zoomed-in y-axis. This is a valid point, and I like his suggested tweak:
Here's that closer up:
The point I would make about the original chart is not necessarily that the glass ceiling persists, but that women are making small gains -- just way, way too slowly.