Closing The Gap

8 economists on what people don't understand about the gender pay gap—and if it can actually be closed

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Each year, workers in the U.S. mark Equal Pay Day, the symbolic date to which women have to work each year to earn as much as men earned the year before. 

Equal Pay Day highlights the uncontrolled gender pay gap, quantified as the gap between the median salaries of all working men and women in the U.S. and often estimated at around 79 or 80 cents earned by women for every dollar earned by a man. 

But Stephen Rose, a fellow at the Income and Benefits Policy Center at the Urban Institute, and Heidi Hartmann, President of the Institute for Women's Policy Research (IWPR) and economist in-residence at American University, say this doesn't reflect the full picture of women's earnings over the course of their careers. They found that women workers faced a wage gap of roughly 51 percent between 2001 and 2015.

Gender pay gaps of different sizes emerge when analysts control for factors like job type, location, industry and educational attainment, but gaps tend to persist across almost every metric. According to Payscale, women with MBAs earn 74 cents for every dollar men with MBAs earn. A report released in December 2018 by the World Economic Forum predicted that it could take more than 200 years for men and women around the world to achieve economic equality. 

And yet, many people aren't sure the gender pay gap exists. A Glassdoor survey of workers in seven countries conducted in 2015 found that seven out of 10 people believe men and women are paid equally for equal work. 

CNBC Make It spoke with eight economists about what people don't understand about the pay gap and if there's any realistic way to close it.

People misunderstand how the pay gap is measured and what it represents

"I think some people get it wrong that [the pay gap] is all about discrimination against women, and another group of people get it wrong, that it has nothing to do with discrimination."

Gary Burtless, Senior Fellow, Economic Studies, The Brookings Institution

"People will typically say, 'Women earn 80 percent of what men earn in the same job,' and that's not correct, because typically they work in different jobs. More women are school teachers and nurses and more men truck drivers, engineers, and so you might expect to pay in those jobs to be different. That's actually not the Equal Pay Day claim — that they work in the same jobs — it's more about the fact that you work and I work and you make a lot more money than me, and it's unfair."

- Heidi Hartmann, President, the Institute for Women's Policy Research (IWPR), economist in-residence, American University

People oversimplify it

"People often look at the pay gap in simplistic terms. They either lay it all on employers for discriminating unfairly against women, or assume that women simply have different priorities than men do — i.e. care more about families than about individual earnings. Neither of these explanations is wrong, but they are both incomplete."

Nancy Folbre,  Professor Emerita of Economics, University of Massachusetts Amherst

Gaps persist at every earning level

People typically don't realize that the largest pay gaps are actually among the highest-earning workers.

"When you look at the gap, it widens at the upper end. In fact, we see the largest differences at the very upper end, not at the lower end.

"At the lower end, we feel worse about it, because a woman who is making $10 an hour rather than $14 an hour — or $10 versus $12 — is really taking a big hit, but [the gap] is not as big as a person making $150,000 rather than $300,000. We don't cry for that person."

Claudia Goldin, Henry Lee Professor of Economics, Harvard University

Noel Hendrickson | Getty Images

People assume better childcare and flexibility will provide a quick fix

Some economists said the impact of child caring and pursuing flexibility are overstated. Hartman cites IWPR research suggesting that white married men actually report having some of the highest levels of professional flexibility while single mothers actually report having the least flexibility with their jobs.

"The standard apology for the wage gap has been that women have less tenure in their jobs due to child care responsibilities. However, close to 48 percent of women of childbearing age do not have children, and this does not seem to affect their earnings potential in a positive way."

Nicole Smith, Research Professor and Chief Economist, Georgetown University Center on Education and the Workforce

"The largest single factor is that women, relative to men in couples with kids, often take a bit of a backseat so that their jobs are more able to be on call at home and so that guys' jobs are more able to be on call in the office. That doesn't mean that they're working different number of hours, that doesn't mean that their skill level is different, it just means that two people who graduated from Harvard Law School, they both take jobs at big law firms in New York, they have kids, one of them has to slow down a bit. Or else why even have the kids?"

- Goldin

"Women are more likely to take jobs that have one or two very important amenities for people who are trying to rear families, and one of those amenities is flexibility in work time. And another is less than all-out hours of work."

- Burtless

People underestimate the impact of the pay gap

At its most basic level, the pay gap matters because it is a reflection of power, and impacts nearly every aspect of American life.

"In this and other rich economies, power in the household, power in the economy, comes from what you bring in and what your income is. There's discrimination in pay, be at the societal or individual level, whatever. Women are making less and that inherently, given what we think is important, gives women less power."

Daniel S. Hamermesh, distinguished scholar, Barnard College | network director, the Institute for the Study of Labor

"Of course it matters. To some extent it's a matter of social justice. But at a more practical level women are the primary heads of single-parent families. I mean, almost all single-parent families are women-headed families, and they're more likely to therefore be responsible for children than men are. And so if we care about children, we have to care about this."

Isabel V. Sawhill, Senior Fellow in Economic Studies, the Brookings Institution

"Pay differences amazingly affect all your life chances, your children's life chances, your own health, your ability to take care of older parents."

- Hartmann

Klaus Vedfelt | Getty Images

Possible solutions

Given all of these dynamics, closing the pay gap can seem insurmountable. But economists point to several public policy changes leaders could advocate for to minimize the gender pay gap and steps individuals can take to counteract its affect on their earnings.

Choose the right field 

Many recommend pursuing a career in a field that can offer both high pay and flexibility. 

"In scientific and technical occupations it's more likely and it's possible to combine having a good job with having some flexibility in your work hours or lower work hours," says Burtless. 

Join a union

Hartmann suggests joining a union and being open about how much you are being compensated. "You can definitely share pay information, that is actually protected by law."

Social insurance

Folbre argues that there are several public policy changes that could be enacted to minimize the reality of the pay gap, including: "Paid family leaves from work; more public subsidies for care of children, people who are sick and disabled and the elderly; legislation to reduce penalties for part-time work; changes in the length of the school day and school vacations; reduced tuition and fees at public universities and Medicare for All."

"Sure, these policies would cost taxpayers money, but they would also reduce the out-of-pocket costs that most families must pay," says Folbre. "Everyone benefits from social insurance, because everyone is at risk of needing assistance for themselves or a loved one at some point in their lives."

In other countries, says Burtless, it's possible "to take two years off with partial compensation and still be protected in your old job. The United States doesn't have these kinds of protections to any great extent unless they're negotiated on by a sort of employer-by-employer basis. Whereas in other countries, these things are just the law of the land."

A higher minimum wage

Sawhill says that raising the minimum wage would help increase women's earnings specifically. "The unwillingness to raise the minimum wage is really hurting women," she says, "because they are disproportionately represented at that level."

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