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

Helaine Olen
Jan 16, 2014 18:17 UTC

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.


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.

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Is there an education penalty for women?

Jan 9, 2014 17:40 UTC

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


Life for women in the West is full of choices, yet resentment about our biology, or towards the perceived wonderful life enjoyed by the opposite sex, continues to dominate our literature.

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The default gender

Dec 20, 2013 18:19 UTC

Andrew Gelman wrote something really smart over at the Monkey Cage the other day regarding Ross Douthat’s column on how having daughters makes you more conservative (emphasis mine):

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:

UPDATED: GM’s new CEO is another small crack in the glass ceiling

Dec 10, 2013 19:21 UTC

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.

Lydia DePillis points to a tidbit in a Bloomberg Businessweek profile of Barra from earlier this year, which suggests she may take steps toward changing the working culture at GM:

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.


from Data Dive:

Startups’ problem with female board members

Ben Walsh
Dec 9, 2013 16:33 UTC

On Friday, Twitter announced that it was adding Marjorie Scardino to its board of directors. Scardino is the former CEO of Pearson, and The Economist Group, as well as a former Nokia director. She is Twitter's first female board member.

Reuters' Sarah McBride and Poornima Gupta take a broader look at the lack of gender diversity on startups' boards:

Male-heavy boards dominate in the start-up mecca of Silicon Valley, which prides itself on progressive thinking and putting talent first. A Reuters survey of the 10 top venture-backed start-ups, as measured by venture funds raised, shows that six do not have any women on the board, including Pinterest. And none has more than one...The gender imbalance has been the norm for years despite some recent signs of change. Google, Facebook and Twitter all went public without a woman on the board. They are more diverse now... Big, established companies, by contrast, frequently have two or more female directors, based on the 10 largest U.S. tech companies by market value. All of the top 20 have at least one.

Reuters charts the dearth of female directors at venture-funded startups compared top public tech companies. Even as startups lag public companies, women still make up just 21% of the largest public tech companies' boards:

Corporate governance: Bring on the quotas!

Nov 27, 2013 16:35 UTC

This week, Germany’s ruling coalition announced that it’s set to institute a quota for the number of women involved in corporate governance at German companies. Lawmakers are set “to introduce legislation requiring German companies to allot 30 percent of their non-executive board seats to women from 2016,” Reuters reports. The European Union as a whole is moving closer to instituting a similar 40% quota.

This way of getting women into the upper rungs of the corporate ladder is relatively new, and somewhat controversial.

Norway instituted a board quota back in 2005, which requires that at least 40% of boards of publicly listed companies be comprised of women (it’s actually slightly more complicated than that, depending on the number of people on the board, but for larger boards it is 40%). According to the European Commission, Norway’s female board membership reached 40% in 2009 — up from just 6% in 2002 — and has stayed roughly constant since then. Here’s the chart from the report:

According to a 2011 Deloitte study on corporate governance, Norway’s gender diversity in this respect is the best in the world by 10-15 percentage points.

Initial (rather limited) research suggests that forced board diversity in Norway wasn’t necessarily a good thing for firms’ profits. However, the study found that this had more to do with the corporate governance experience the new female board members had (not much), rather than their gender. This rule wasn’t instituted with short-term corporate profits in mind. It was instituted by the state, with equality in mind. And being as women are not innately incompetent at governance, there’s unlikely to be any long-term harm to corporate profits by requiring more women at the top.

A few months ago, Peggy Drexler argued that quotas don’t work because, in addition to not helping corporate profits, women are seen as token hires (“golden skirts” as they are called in Norway). However, this is about as short-sighted as the company profits argument. When Norway’s rule was instituted in 2006, there weren’t many women qualified to meet the quota, so the few women that were got put on a lot of different boards. But that’s changing, and will continue to change as companies develop new hires knowing that it is in their interest to invest in promising young women.

Drexler also argues that the quota system discounts the achievements of women who work hard and are successful — women get viewed as tokens, in other words. But the crux of the problem is there aren’t enough women achieving success, and it’s not because they don’t work hard. That’s exactly why the quota system was put in place. Making women a larger percentage of corporate boards means fewer men will be. Some men who are left out will of course grumble at this. There is no reason their grumbling should be allowed to produce results.

As IMF head Christine Lagarde mentioned last March, the hope is that the quota system is effective enough that it eventually gets phased out. “Once a threshold has been reached… we can do away with quotas and demonstrate on our own merits that we can be trusted, that we can contribute, that we deserve to be elected, hired or promoted”.

In the years since the study was done, Norway has added training programs that help women climb more quickly up the corporate ladder. And guess what? It’s working. From the NYT:

When Torhild Barlaup joined Female Future in 2008, she did not think she had the skills to be a director. Although she was a senior manager at a Norwegian car importer, Ms. Barlaup, 44, said she lacked the self-confidence to approach her superiors about such opportunities.

Soon after finishing the course, Ms. Barlaup told her managers that she was ready to take on board positions. While she said her bosses were initially surprised, they quickly found roles for her at subsidiaries that faced challenges similar to those that Ms. Barlaup had addressed in her own division.

Hello and welcome to Equals!

Nov 20, 2013 17:12 UTC

Today we’re launching Equals, a new Reuters blog devoted to gender equality and the role women play in the economy. We’ll be tackling subjects like education, workplace performance, competitiveness, pay, and leadership. The topics will encompass virtually any subject that relates to gender differences in economics, finance, and management. The blog will lean heavily on data and new research, as well as the smart voices around the web already contributing to the discussion.

Ideas, tips or complaints? Send them to

Who is responsible for closing the gender pay gap?

Nov 20, 2013 18:20 UTC

Women respond differently to incentives in the workplace. Does that mean that it’s fair that women make less?

A few weeks ago, economists John List and Uri Gneezy wrote in Freakonomics about a new study they’ve done on the gender pay gap. Currently women make about 80% of what men do, and the paper takes a stab at explaining why.

In their experiment, researchers advertised on Craigslist and interviewed about 7,000 candidates in 16 cities. To one group of people, they offered a flat hourly rate of $15 per hour, and to the other group they offered $12, with the opportunity to compete with another employee for a $6 per hour bonus (making the average $15/hour). Here is what they found:

Women were 70% less likely than men to go after the job if it had the competitive pay scale. This result accords with the broader insights from laboratory experiments that others—Muriel Niederle, Lise Vesterlund, Aldo Rustichini, etc.—have found.  Of course, this estimate doesn’t apply to every type of job and every type of person in the country, but it does underscore the fact that, when it comes to competition at a potential job, women aren’t always interested in leaning in.

This is a fair point, if a misuse of the term “lean in”. What the study shows is that women are more risk-averse in the workplace when it comes to pay. Specifically, the study finds, women prefer knowing they will get $15 per hour rather than taking the risk of earning a lower amount.

There are plenty of caveats, though. For one, men also hate competitive pay. From the study: “We observe that both men and women prefer not to be in competitive environments, but that women simply have stronger preferences against them.” The authors also say that while women are dissuaded by variable compensation that’s 50% of their base pay, they are much less so when they are only competing for 22% of their overall pay. The experiment also didn’t factor in the family situation of the applicants — could it be that the difference between those who will compete for variable income versus a higher base pay are those who don’t have dependents (more likely to be men)?

Further, less competitive pay preferences don’t necessarily mean women aren’t competitive in other parts of the workplace. It means they prefer the security of a higher base salary compared to incentive-based pay. Just because she wants to make sure she takes home $15 today doesn’t mean she isn’t working toward the promotion that pays her $20 tomorrow.

But let’s get back to the real question: Does being risk-averse when it comes to variable compensation mean women deserve to make less? More likely it means means companies should rethink their compensation structures.

Jon Dymond’s recent column in the Guardian suggested the same. He critiqued the type of thinking that “unconsciously blames women for failing to get ahead”:

The real barrier to greater gender diversity – and to coping with the common organisational challenges faced today – isn’t that women need to learn how to play the game the male way. It’s more fundamental. It’s about companies not adapting the way they operate, value and manage their people either to women or to the modern world.

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