Policy: Budgets & Deficits

The week ahead in economics: The gender pay gap, Janet Yellen, unemployment benefits and jobs

By |
Jobs,PennAve,Joseph Lawler,Economy,Federal Reserve,Budgets and Deficits,Janet Yellen,Unemployment,Gender Issues

In a speech prepared for Saturday's awards ceremony for the American Economic Association, prominent Harvard labor economist Claudia Goldin made a claim that could inform President Obama's agenda for addressing inequality. She said "the solution" to narrowing the gap in earnings between men and women "does not [necessarily] have to involve government intervention."

Instead, Goldin argued, the "'last' chapter" in narrowing the pay gap will involve changes in the labor market, in particular boosting flexibility in work hours.

In 2010, median women's earnings were 77 percent those of men — a fairly well-known statistic. For college graduates, the proportion was 72 percent.

That gap has narrowed significantly as women increasingly entered the workforce and gained education over the past half-century. What remains, Goldin wrote, is largely differences in how employers reward workers who are willing to commit themselves to the job and sacrifice time flexibility.

Goldin noted that in certain high-education, high-stakes fields, the gender pay gap starts out small after school. For instance, she found that the gap in earnings between male and female graduates of the University of Michigan Law School from 1982 to 1991 was "nil" when they began work. But by the 15th year after graduation, the gap had ballooned.

In other professions, however, where maintaining a presence, being "on call," giving "face time" and participating in meetings is not as important to career development, the gap does not vary as much over time.

For example, there is less of a gender gap in pay among pharmacists, who in general are also high earners. Pharmacists are highly trained and do difficult work, but the occupation offers more workplace flexibility because pharmacists have "become better substitutes for each other with the increased standardization of procedures and drugs," Goldin wrote. Searching through industry statistics, Goldin found that female pharmacists with children are more likely to work part time than to take time off.

Raising children, of course, is the main reason women are more likely to take time away from work during the course of their careers than are men. In jobs where there's a high career penalty to failing to make a key connection or missing an important experience, any time off can significantly lower earnings.

Goldin's conclusion is that closing the remaining earnings gap between men and women is not a "zero-sum game in which women gain and men lose." Instead, it's fostering flexibility to accommodate women raising children without risking a career-defining absence at a key moment.

As part of his Dec. 4 speech on inequality,  Obama advocated passing the Paycheck Fairness Act "so that women will have more tools to fight pay discrimination" as part of the agenda for "empowering our workers." Goldin's analysis, which didn't address that or other legislative efforts, points to factors beyond the legal system for explaining and reducing the gap.

For the week ahead:

On Monday, the Senate is scheduled to vote on the nomination of Janet Yellen, the current Federal Reserve vice chairwoman, to replace Ben Bernanke as chairman. Following Senate Majority Leader Harry Reid's decision to change the Senate rules in November to eliminate the filibuster for executive appointments, Yellen needs only 51 votes to gain confirmation.

In 2010, with the recession still causing job losses, Bernanke won 70 votes for confirmation, which to that point was the lowest total in the Fed's history. With the Fed more politically polarizing than before, thanks partly to its aggressive monetary easing efforts over the past year, it remains to be seen whether Yellen will gain 60 votes, or squeak through with a bare majority.

Also on Monday, the Senate is scheduled to vote on a three-month extension of emergency unemployment benefits, which expired in December. It's not clear how the Senate will vote, and the extension faces an even tougher path to passage in the House. House Speaker John Boehner has demanded that the bill to extend benefits, estimated by the Congressional Budget Office to cost $6.4 billion, be offset with other budgetary savings.

On Wednesday afternoon the Federal Reserve is scheduled to release the minutes from its December meeting, providing a look into officials' decision to taper the quantitative easing program from $85 to $75 billion.

And on Friday morning the Bureau of Labor Statistics will release the December jobs report. With the unemployment rate currently at 7 percent, it's possible that Friday could see the first sub-7 percent unemployment rate since November 2008.

View article comments Leave a comment