Where (and When) Do Women Earn More?

According to a new Pew report, young women “out-earn” young men in several U.S. metropolitan areas.

On the map, in areas near New York City, Washington D.C., and Los Angeles, the shading is especially dark:

The good news is the progress the numbers represent. In 22 metropolitan areas, there is no gender pay gap. The bad news is the rest of the story.

The Gender Pay Gap

Looking back, you can see that women’s gender pay gap has narrowed since 1980. For younger workers, at 93 percent, the difference is even smaller:

However, it is likely that those same high earning women will fall behind as they age.

Economist Claudia Goldin says it is all about time. Using the legal profession as a prototype, she explains that “greedy work” rewards the people who work long hours. If you have a family, if you have caregiving obligations, then your work time is not as consistent as it is for people that have none. During their fifth year, male and female young lawyers put in close to 51 hours a week at the most demanding law firms.  After that though many of the women have the home responsibilities but the men do not.

At year 15, close to 25 percent of the women will have opted for part time and 16% will have left the labor force. Many became stay-at-home moms. By contrast, only 2 percent of the men are part time. At that 15 year mark, the wage gap expanded as 80 percent of the men put in more than 45 hours a week while 55% of the women did. At that point in their careers, the typical female attorney earned 56 percent of her male counterparts.

Goldin concludes that a vast proportion of the gender pay gap is caused by time and family.

Our Bottom Line: Division of Labor

Referring to factory work, the division of labor was first precisely described by Adam Smith through the manufacture of a pin. When the tasks were divided instead of done entirely by one person, efficiency soared.

Somewhat similarly, the gender pay gap is also about the division of labor. This time though, it takes place at home. The division of labor at home spills over into the workplace. For the gender pay gap to narrow further, the division of labor needs to change.

The division of labor takes us back to the “good news” and the “bad news” about the gender pay gap.

I wonder if the division of labor varies in these large and small pay gap areas:

My sources and more: Thanks to Bloomberg radio for alerting me to the new Pew study. However, the real story was in this Claudia Goldin podcast interview with Steve Levitt and in her new book, Career & Family.