The flexibility trap: how emphasizing face time is hurting women’s pay

By Helaine Olen
January 16, 2014

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.

5 comments

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I’m getting sick of all the articles about how companies should bend over backwards for women who want to earn the same but work a schedule that only works for them. Sorry but there are far too many professionally focused men AND women who are not all that keen about having children and want to work longer hours. And there are too many bosses who really don’t have any desire to have to re-arrange their schedules, client appointments, coverage for calls and client meetings just to accomodate their assistant or colleagues. Oh, and did I mention that it is discriminatory in my eyes for any company to give preferential treatment to a mommy over a non mommy. Yep, go ahead and blast me. Mommies can make up their minds to do what’s best for themselves but don’t expect the boss and co-workers to just bow before them and offer to cover for them so they can have flexible schedules and/or a private room to pump their breast milk.

Posted by QuidProQuo | Report as abusive

I had to read the quote from Paul Tudor a couple of times to be certain that I read it correctly.

A spectacularly funny comment! Is Paul referring to some stock or his personal issues with the opposite sex. Exactly what “this” is he talking about?

Wow, this looks like a textbook Freudian slip if ever there was one.

Posted by Missinginaction | Report as abusive

Equal pay for equal work means equal pay for equal work. And work includes being there. We can’t tell some workers you must show up more than others and yet you will still get the same pay. Fair is fair.

Posted by actnow | Report as abusive

Apparently the paradigm “equal work for equal pay” has morphed into “equal pay as long as I can get the work done on my own schedule”

I am all for egalitarianism — I am a single, male parent of two, who will inevitably be the final caretaker of his own parents when the time comes — but your statement “And then … well, family life intrudes” is diametrically opposed to the title “The flexibility trap: how emphasizing face time is hurting women’s pay.”

Where the @%@# did you get a GENDER issue out of this?
OH, WAIT~

“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.”

THERE you go~~!
My generation was driven (often forcefully) to understand that it took a marriage/partnership to conceive and raise children (socially, it was driven primarily by the desire to eliminate deadbeat-dad’s). And so, it was often uncomfortable for me to see people squirm a little when I mentioned that WE were pregnant (my then-wife and I).

** She attended College for the last two years of my Active Duty in the military. After separation I enrolled in College also, and she left me with the kids. **

Frankly — if you cannot accept equal rights AND RESPONSIBILITIES, you are destined to take advantage of our ever increasing ‘social safety net’ that has evolved to a point that it is a “normal” part of life for far too many.

Posted by Psyllicon | Report as abusive

Companies value dedication. Putting anything else above your career is a personal choice that ultimately reflects on the value and availability of you as a worker.

I have nothing against anyone who has children, but childbearing is a conscious decision of one’s priorities. While plenty of people can balance both a career and a family, the key word is “balance.” Careerists will be compensated for their involvement, which is certainly fair.

This is being presented as a women’s issue but it really comes down to each individual’s personal decisions.

Posted by RUBIC0N | Report as abusive