Are employers to blame for the gender pay gap?

The Equality Act and the release of Made in Dagenham have brought the gender pay gap into the headlines again. The Coalition has been criticised for watering down the requirement for businesses to publish details of pay differences between male and female employees. This criticism, like much of the reporting on the subject in recent days, starts from the assumption that gender-based pay differentials are based on discrimination by employers. The evidence, though, indicates that outright sex discrimination is no longer the major cause of the gender pay gap. 

A report published yesterday by the Equality and Human Rights Commission (EHRC) finds that the gender pay gap between the median earnings of male and female workers is 22 percent, and 12.2 percent between male and female full-time workers. To a large extent, this reflects the difference in pay levels between full-time and part-time work. It is extremely difficult to get part-time work at a senior level. As the salary for a job increases, the chances of it being available as a part-time of job-share role decrease. The report also shows that the hourly rate for male part-time workers is lower than that for their female counterparts. Some of the gender pay gap can be explained by the concentration of women in part-time roles.

But even the full-time gender pay gap seems to be driven more by social factors than workplace discrimination. This report from the Office for National Statistics shows how the gender pay gap for full-time workers has changed over time. In 1975, there was a clear gap of around 10 percent between male and female salaries from the moment people started work. The gap widened with age and narrowed again in the mid-fifties. 

The pattern in 2006 had a similar shape but the differential was much smaller and, crucially, the pay gap had been eliminated for people in their late teens and twenties. The data indicate that, in their late twenties, women earn slightly more on average than men do. The gender pay gap starts to favour men at around age 32 then it widens considerably before narrowing slightly in the mid-fifties, just as it did in 1975. 

The report also uses figures from the Annual Survey of Hours and Earnings and the Labour Force Survey which tell a similar story. The gap between male and female pay starts when women leave the workforce to have children. 

Perhaps unsurprisingly, the figures also show that the gap between male and female earnings increases with the number of children people have. Having four children is likely to have a much higher impact on the female partner’s pay than that of her husband. 

Number of dependent children	Gender pay gap (%)
0	8.0
1	12.3
2	14.9
3	19.0
4	35.5

These figures show that there is still a gender pay gap among people without children but the EHRC report suggests that even this may be due, in part, to women preparing for their childcare roles before children are born.

Importantly, the influence of motherhood on the gender pay gap is apparent well before women become mothers. A study of graduates three years post graduation found that gender differences in career expectations explained 12% of the gender pay gap, with women much more likely to expect to take a break for family reasons than men (and men expecting their partners to do this). This highlights how childcare issues may impinge on pay even prior to motherhood, given the expected household division of caring responsibilities.

Intriguingly, though, there is no gender pay gap among single people; whatever their age, single women earn on average slightly more than men.

Married/cohabiting	Gender pay gap (%)
Married/cohabiting/civil partner	14.5
Single, widowed, divorced or separated	–1.1

Why should this be? Anecdotally, most of us could reel off any number of reasons. Great strides may have been made in gender equality but women, it seems, still do most of the childcare work. There is research evidence to back this up. Baroness Prosser’s 2006 report, Shaping a Fairer Future, identified a number of factors which contributed to the gender pay gap. Career interruptions and fewer years of work experience, the report noted, significantly reduce a person’s earning potential.

But the Prosser report also found that women had far shorter commuting distances than men; almost certainly a consequence of needing to be close to children’s schools. That would rule out a job in central London, and to an extent in the centre of many larger cities, for anyone except those who can afford the considerable cost of a family sized house there. Central London and other city centres are where most of the highly paid jobs are located. The report also noted that the financial services sector had one of the largest gender pay gaps. There is almost certainly a link between these two findings. A woman with children, unless she is particularly well supported by relatives or hired help, will find it almost impossible to combine long hours and a commute into the City with childcare responsibilities. 

The age-related gender pay gap is not just a British phenomenon. If anything, the trend is even more marked in the USA. A recent survey using U.S. Census Bureau statistics indicates that the gender pay gap works in women’s favour throughout their twenties. Young unmarried women in America’s cities earn around 8 percent more than their male counterparts. The figure rises to 17 percent in New York and 20 percent in Atlanta. But, as in the UK, this only applies to childless women under thirty. Thereafter, the gender pay gap works against women, just as it does in most other countries. 

The picture is the same even for high-flying MBA graduates. A study of those graduating between 1990 and 2006 from top-rated U.S. business schools found that, while childless women had careers that progressed in line with their male counterparts, the earnings of those with children began to decline within two years following the birth of the first child with the rate accelerating thereafter. In contrast, male earnings were unaffected by fatherhood. 

None of this is to say that pay discrimination doesn’t exist and there is some evidence to suggest that, in some industries, even single women in their twenties are still paid less than their male peers. But the factors that contribute to the gender pay gap are overwhelmingly social. Like just about every other society in the world, we expect women to take most of the responsibility for looking after children. Much of the gender pay gap is due to the conflict between the requirements of a corporate career and those of childcare. 

More needs to be done to address the gender pay gap but to blame employers for the pay disparity between men and women is a little unfair. The gender pay gap is due, largely, to the choices that men and women make about how they will balance the needs of their children with the need to earn enough money to support their lifestyles. Even in 2010, these choices are underpinned by deeply ingrained social attitudes. Forcing employers to publish data on gender pay gaps is unlikely to do much to solve the problem. Doing so implies that employers are to blame for pay inequalities. That might have been true thirty-five years ago but the causes of the gender pay gap are now largely due to factors outside their control.

Update: This report from Canada, entitled CAREER INTERRUPTED: The Economic Impact of Motherhood, has similar findings based on Canadian data:

Research shows that women that have never been married and/or are not mothers tend to have less conflicts in their career development, such that their wage gap with men is relatively small. The same holds for men and women at younger ages (18-24), when they are new entrants to the job market with similar skills, experience and education. The observed wage gap starts to widen noticeably as women enter the 25-34 age bracket, and then further in the 35-44 age bracket. This lends itself to the conclusion that the gender gap is actually more representative of a motherhood wage gap.

Interestingly, the authors also believe that female participation in the labour market has plateaued and they predict that the percentage of Canadian women in the workforce will decline by around ten percent between now and 2050. Irritatingly, they don’t really explain their reasons for that conclusion.