Mind the Pay Gap : The Indicator from Planet Money Why do men still make 20 percent more than women in the U.S.?
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Mind the Pay Gap

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STACEY VANEK SMITH, HOST:

Hey, everybody. It is Stacey. And all this week, we are running our favorite INDICATOR episodes from the previous eight months. Today - an episode that I have not stopped thinking about since we originally aired it back in April - the gender pay gap.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

VANEK SMITH: So Cardiff, you know that I am a huge fan of "The Crown"...

CARDIFF GARCIA, HOST:

I do know this, yes.

VANEK SMITH: ...That show on Netflix about Queen Elizabeth.

(SOUNDBITE OF TV SHOW, "THE CROWN")

CLAIRE FOY: (As Queen Elizabeth II) To do nothing is often the best course of action.

VANEK SMITH: She's so wise. It is basically the best show ever. I especially love the actress, Claire Foy, who plays Queen Elizabeth.

(SOUNDBITE OF TV SHOW, "THE CROWN")

FOY: (As Queen Elizabeth II) History was not made by those who did nothing.

VANEK SMITH: Oh, she's so good.

GARCIA: Vicious, cutting.

VANEK SMITH: She's so good. So you can imagine how I felt when the news came out a few weeks ago that Claire Foy earned less on that show than the guy playing her husband. Now, the guy playing her husband was way more famous. And sure, there were some reasons. But I didn't care about these reasons. I found this infuriating. It just seems so unbelievable to me because she is so clearly the star.

FRANCINE BLAU: Oh, absolutely, absolutely the star, yes.

VANEK SMITH: Francine Blau is also a major fan of "The Crown."

GARCIA: Yeah. Also, though, Stacey, maybe more relevant for our conversation here today - Francine Blau is also an economist at Cornell...

VANEK SMITH: This is true.

GARCIA: ...Who has done a lot of research into the gender pay gap. She recently published a paper with her colleague, Lawrence Kahn, that looked at decades of research on the gender pay gap and added a little bit of original research of their own.

VANEK SMITH: And you have been studying the gender wage gap for years.

BLAU: Years - that's right, yeah.

(LAUGHTER)

BLAU: A long time.

GARCIA: This is THE INDICATOR. I'm Cardiff Garcia.

VANEK SMITH: And I'm Stacey Vanek Smith. Today on the show - the gender pay gap - why women get paid less.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

GARCIA: So the number we often hear about the gender pay gap is 20 percent. Women earn 20 percent less than men do in the United States. That is a huge gap.

VANEK SMITH: Francine took a deep dive into the gender wage divide. She looked at decades' worth of data to try and uncover some of the reasons behind it. There were a lot of interesting reasons. Today we are going to look at three of the big ones. So reason number one - this is the big one - job choice. Women do not pick really high-paying jobs as often as men do.

BLAU: Women are much more heavily represented than men in what we call administrative support or clerical occupations and also lower-paying service jobs.

VANEK SMITH: Of course this raises the question of why women end up in lower-paying jobs. And no doubt there is a lot at play here. But bottom line - this is something that can change. And Francine says it really has been changing. There are more women entering higher-paying fields. But when they do enter higher-paying fields, you see something really interesting.

GARCIA: But one of the intriguing findings in this paper by you and Lawrence Kahn was that the shrinking in the gender wage gap happened more slowly in the higher end of the wage distribution.

BLAU: Yes, a very interesting finding that we had was that the gender pay gap has fallen more slowly among the highly skilled. So these are the very top, the most lucrative jobs. And it seems like women are having more trouble than men reaching the very highest echelons.

VANEK SMITH: That's interesting. Why do you - what do you think's going on there? You think it's a glass ceiling issue?

BLAU: Well, I think it's really a complicated issue. And another word for glass ceiling is discrimination.

(LAUGHTER)

GARCIA: Yes.

VANEK SMITH: Glass ceiling sounds so much nicer. It sounds like a greenhouse.

GARCIA: And as people climb the ladder in a company and these jobs get more competitive, her point is that even a tiny edge can mean the difference between becoming the CEO of the company and one of its 50 senior vice presidents.

VANEK SMITH: So that is job choice, reason number one. A second reason Francine found for the gender pay gap - women taking time out of the workforce to have children and to stay home with them.

BLAU: Gender roles differ. And women have a greater tendency to move in and out of the labor force. And so they were less - on average, a less experienced group.

GARCIA: And Francine says that this also has been changing. So women are taking less time out of the workforce now. And today this accounts for a smaller part of the pay gap than it used to.

VANEK SMITH: So reason number two - child care. A third reason for the 20 percent gender pay gap?

BLAU: There are issues of negotiation.

VANEK SMITH: Yeah. I feel like I'm always a little skeptical of it because I feel like it's a way of victim blaming. But maybe it's true. I mean, how true is that?

BLAU: Well, I'm really very sympathetic with what you're saying. So there definitely is a difference in propensity to negotiate between men and women. But studies have shown that when women negotiate, they're more likely to get a negative reaction than when men negotiate. So it could backfire for the women unless they do it, you know, just right.

VANEK SMITH: So this is an interesting bind because on the one hand, if you don't negotiate, you will definitely miss out on a higher salary or more benefits or whatever might come with a job that you're offered. On the other hand, it could be logical for a woman not to negotiate because if she does and she doesn't do it in exactly the right way, as Francine said, she could be perceived as overly aggressive or at least in a negative light as compared to her male colleagues.

So a lot of the reasons that Francine found for the gender pay gap are not discrimination per se. It has to do with the choices women make - their profession, child care, whether or not to negotiate. Now, granted, the reason behind why women make certain choices aren't always so innocuous. There are a lot of problems sometimes woven into those very choices. But still these are choices, and those choices can change over time.

GARCIA: But even when Francine factored all of that in - all of these reasons and these choices about career, child care and negotiating - even when she took into account all of those things and removed them from the equation, women and men still were not getting paid equally.

BLAU: We found about 40 percent could not be explained by the variables that we were able to measure.

VANEK SMITH: OK, so 40 percent of the 20 percent can't be explained. So what is...

GARCIA: That's a lot. That's 8 percent.

VANEK SMITH: That's 8 percent.

GARCIA: That's a lot.

BLAU: So basically we found a woman with exactly the same characteristics or qualifications as a man would earn 8 percent less.

VANEK SMITH: And that is today's INDICATOR, 8 percent - the 40 percent of the 20 percent of the gender pay gap that cannot be explained away by outside factors. Francine's paper found that in the American workforce, Cardiff, you get an 8 percentage-point pay bump for being you.

GARCIA: I'm afraid to react, afraid to react.

VANEK SMITH: (Laughter) I'm really sorry. That's not fair. You're wonderful, Cardiff.

GARCIA: It's a bad thing. Let me be clear. That is a bad thing.

VANEK SMITH: Yes.

GARCIA: I'm not happy to hear about that or the way that was phrased.

VANEK SMITH: I'm sorry. I'm sorry. I'm sorry. I'm letting out my "Crown" anger on you, and that's just not fair. In spite of all of this - in spite of the troublesome 8 percent, Francine says there is reason to be optimistic.

BLAU: I have seen the world change so much. You know, we haven't completely eliminated these very important differences, but I've seen already so much progress.

VANEK SMITH: Yeah, it's true. I mean, 8 percent - like, that's not great obviously, but it's not terrible. Eight percent - I feel like we can work with that.

BLAU: (Laughter) Yeah, 8 percent.

GARCIA: Less terrible than it used to be.

VANEK SMITH: Yeah, it's less terrible. Give us another, you know...

BLAU: (Laughter) Hundred years or so.

VANEK SMITH: ...Hundred years. We're going to be right there (laughter).

(SOUNDBITE OF TV SHOW, "THE CROWN")

FOY: (As Queen Elizabeth II) There is no possibility of my forgiving you. The question is, how on Earth can you forgive yourself?

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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