Goldin’s insights can be seen through the UK data too. In 2022, the median working woman earned 14.9 per cent less per hour than the median man, narrowing to an 8.3 per cent gap for full-time workers. These figures have fallen dramatically since 1997, when they stood at 27.5 per cent and 17.4 per cent, respectively.
As work and education opportunities have equalised for women here and culture has become more career-orientated, the crude pay gap has already shrunk.
What’s behind the lingering disparity? Discrimination exists, but the negligible pay gap among younger adults suggests sexism is not a big factor overall. Women working full-time earn only 0.9 per cent less than men in the 18–21 age bracket, 2.1 per cent less in the 22–29 range and 3.2 per cent less for ages 30 to 39.
The gap surges to 10.9 per cent for those aged 40 to 49. Overt prejudice, therefore, seems a poor explanation. Something that affects women between their thirties and forties is key. Motherhood is the obvious culprit. But why? Well, Goldin’s research shows it’s not just about women opting for lower-paid professions (although occupation choice accounts for a quarter of the pay gap). No, the biggest factor is that women earn far less than men within professions where pay accelerates with the number of hours worked or continuous employment. That is, industries characterised by client relationships, work travel, in-person meetings or being on call.
Jobs that demand long hours or constant availability, like in elite legal and consultancy fields, or skilled trades on call for emergencies, pay more per hour. As women tend to seek more work-life balance after having children, they step back from these demanding roles or cut their hours, leading to a widening hourly pay-rate disparity. This explains why the pay gap is much bigger for top earners than lower earners.
As couples have children, in other words, women, on average, seek flexible work schedules or jobs with less intensive demands on their time. The quid pro quo is lower hourly pay. In fact, in response to reduced family income because of this, some men even opt to work more hours. This can drive the gender pay gap higher still if they also work in professions where the willingness to work more comes with a higher pay rate.
Key to eliminating the remaining pay gap, then, is for the cost of job flexibility to fall. Where employers can rotate staff easily, and customers accept it, pay gaps are already lower. Pharmacists, for example, have a gender pay gap of 0.9 per cent. This is because they’ve reorganised successfully into groups or as locums who can cover for one another. Pay per hour for pharmacists, as a result, is pretty uniform.
Such flexibility is much more costly for major law firms or sectors where individuals are unique or irreplaceable. If a client is working with a globally renowned mergers and acquisitions lawyer, they may want access to them 24/7 and not to be told “she is out of the office this afternoon”. Chief executives, certain investment bankers, surgeons and musicians aren’t interchangeable. So mothers who take time off, or are less accessible during the years after childbirth, therefore tend to get paid much less in these professions and enjoy fewer promotions.
Until industries can mitigate the financial impacts of job flexibility, removing the remaining pay gap will be a distant goal. And heavy-handed government mandates might backfire. Consider Labour’s proposition to enforce a right to flexible working. The intention might be to open more opportunities for women. Yet employers in industries where on-call, in-person staff are valuable might simply hire more men, who are more likely to waive this flexible work right. This could widen the pay gap.
Goldin concludes that realising the “last chapter” in gender convergence hinges on workplace innovation, not government policy. The surge in remote work during the pandemic, which meant the gender pay gap for managers and directors shrank from 16.3 per cent in 2019 to 10.6 per cent last year, exemplifies this.
By eliminating the necessity of office attendance and commuting, the Zoomification of jobs can make more top roles accessible to working mums. Yet this can’t just be centrally mandated: there are no one-size-fits-all answers across industries.
Done well, the O’Grady review could illuminate this complex portrait of the gender pay gap, moving beyond the lazy, misguided conflation of these gaps with unequal pay for identical work. But Reeves’s link to the Equal Pay Act bodes ill. If this ends up as a vehicle to push a bunch of mandates favoured by O’Grady’s trade union friends, it won’t do much to close the gap, but will constrain businesses.
