Summer is winding down. For me, that means it’s time to start updating the many charts and graphs associated with my “Economics of Inequality” class at Boston College. When my students come marching in happily after a nice summer off, I like to hit ’em with some up-to-date numbers that really depress them. Don’t be too happy and relaxed, things are still unequal! Except, as I was updating some numbers this time, something caught my eye. Was the gender gap closing?
As I have written about before, after closing substantially from 1975 to 2000, the gender gap had been roughly stalled for two decades. In the year 2000, a full-time working woman made 78 percent what a man made. In 2019, that number was much the same at 80 percent. So, when I updated the gender gap figure for class this time, I expected a pretty flat line. Except…I got the figure below. Between 2019 and 2021, the gap closed from 80 to 85 percent, a 25 percent reduction in just two years!
Figure 1. Ratio of Median Full-time Full-year Women’s Annual Earnings to Men’s
This picture got me thinking two things. First, has this trend continued since 2021 (which was the last year the data I was using for this chart was available)? Second, if this trend has continued, why? (On this second point, I’d love to hear from you on your theories! Feel free to LinkedIn me an idea, or post a comment below.)
Has the Gender Gap Kept Closing?
The figures for my class and that I use in my awesome, awesome, book are usually based on annual earnings. Each March, people participating in the Current Population Survey (CPS) are asked to look back on the past year and report in detail on their sources of income. I like these annual questions, because they smooth out week to week noise that happens in people’s lives. But, the annual data are also slow to come out. For example, the March 2023 questions — about the calendar year 2022 — have not yet been released. So, I am stuck with the questions from March 2022, asking all about 2021. Hence, the data above are sort of old.
However, the CPS also asks some people about how much they made in a given week. I can use this data to follow earnings as recently as April 2023. Like the figure above, I restricted to individuals who claimed to be working full-time and who were ages 25-54. And, because the weekly earnings data are a bit noisy, I also added a trendline. The result, typical for a wishy-washy economist like myself, is somewhat inconclusive. Economists, right?
Figure 2. Ratio of Median Full-time Full-year Women’s Weekly Earnings to Men’s
To me, it looks like things are on an improving trend. But, at the same time, it also looks like a peak in 2021 and early 2022, with perhaps some backsliding since. Today, we sit at a pay gap significantly smaller than in 2018. But, whether this trend persists seems presently unclear. What do I do when the data are inconclusive? Give up? No! I turn to theory.
My Theory on the Gender Gap Closing
Like I said, I would love your theories on this closing gap. But for me, to think about what the future might hold for the pay gap, it’s worth thinking about the past. Why do economists think the pay gap still exists? It turns out, a big part of it is caregiving. And, not just because women take time off of paid work to do unpaid work. Remember, the women in our sample were working full-time for pay. Instead, more often than men, women take jobs that allow flexibility so that they can perform their caregiving duties. And, jobs that are flexible often come with a sizable reduction in pay. Being an attorney for high-profile clients who demand attention at a moment’s notice pays a lot more than being an attorney for a large company, and mostly working a 9-5 schedule, sometimes remotely. Indeed, Claudia Goldin — an awesome economist — found that the cost of flexibility in certain high-profile positions is a main cause of the gender pay gap.
The changing cost of working flexibly is why I maybe shouldn’t have been surprised by the closing of the gender gap. Today, somewhere in the vicinity of 40 percent of full-time workers work either completely remotely or a “hybrid” model. Census numbers suggest that this number might be three times higher than pre-pandemic. The technologies that have matured during the pandemic all make working flexibly easier for people and — as importantly — cheaper and more effective for employers. It seems possible that the increased flexibility made possible by remote work has reduced a cost that our society all too often has expected women to bear. Only time will tell if this trend towards equality continues.