The gender pay gap is an obstinate beast. Stubbornly sitting at 8.6 per cent in New Zealand, the factors underpinning it have always been somewhat elusive.

Historically, the gender pay gap was due to obvious factors – educational differences, the traditional roles men and women held in the workplace. But, according to the Ministry for Women website, these factors only account for around 20 per cent of the current gap – 80 per cent is driven by “unknown factors”.

In October, Claudia Goldin, Henry Lee professor of economics at Harvard University, won the Nobel Prize in Economics, only the third women to win a Nobel prize in this discipline. Her research explores the history of women in the workforce, and the “unknown factors” that lead to the gender pay gap. It may go some way to explaining why that obstinate beast refuses to shift.

Labour market

Goldin’s decades of research focused on a historical analysis of women and work. She delved deep into the socio-historical forces underpinning women’s place in the labour market, and questioned why, in a world with more female graduates than ever before, the gender pay gap still exists.

While her research was undertaken in the United States, her analysis of the gender pay gap, and the history of women in work, can be extrapolated to the New Zealand context.

Women in western society have faced the same forms of discrimination in a raft of deeply unfair work practices: unions set female wages at half those of males and restricted where they could work, for example.

Early in her career, Goldin focused on understanding these historical issues. She immersed herself in archives; exploring the statistics around the unacknowledged work that women undertook in industries like agriculture and manufacturing. In these historical records, women were often listed as “wives” – their true place in the workforce obfuscated by the biases of the day.

She was able to highlight the place these women actually held in the labour market, in farms and factories. And accordingly, redressed some of the misconceptions around women’s representation in the labour force at the turn of the 20th century.

Goldin went on to analyse the evolution of women’s workplace participation, and how this changed over time.

The “women’s liberation” movement of the 1960s and 70s saw huge changes in this space; shifting expectations saw workforce participation booming.

The social mores and forces at play historically – ideas around a “women’s place”, childcare and religion – are important when seeking to understanding of how we live today. It can help us understand how we “got here” and the biases and stereotypes that still exist in contemporary society.

In-depth analysis

Goldin’s most recent book, Career and Family: Women’s Century-Long Journey toward Equity (2021), provides an in-depth analysis of how men and women – with the same level of education – can end up with very different financial outcomes.

She uses the example of a young couple, recently graduated, with equivalent degrees. They both start in the same job on the same salary. Everything is going along nicely until they decide to have children – and the “motherhood penalty” kicks in.

“The motherhood penalty”, a phrase created by sociologists, investigates how women are penalised at work after they have children. According to data from Global Women (globalwomen.org.nz) the experience of having children negatively impacts a women’s potential earnings by up to 12.5 per cent over a lifetime.

In Goldin’s analysis, this “motherhood penalty” occurs when one of the couple is forced to take on what she refers to as “greedy work” to progress their career. Extremely high paying jobs (such as work in commercial law, medicine) suck up far more time than average work. This “greedy work” gobbles up weekends, evenings, holidays and is compensated by very high salaries.

Couples with children can’t both have “greedy work” – one of them needs to be available for their offspring. They need work that is flexible, less demanding, and pays less. And most of these parents are women.

“Women are generally the ones who are on-call at home, and that produces what I call couple inequity,” Goldin explained in a podcast with her publishers, Princeton University Press.

“Thus, the flipside to couple inequity in heterosexual couples is gender inequality [in the workforce].”

Penalty to pay

A genuine 50/50 partnership is possible, she acknowledges, but there will be a penalty.

“If they did this, they would probably be leaving some amount of money on the table.”

So “greedy work” – work that gobbles up time and is necessary for career advancement – is generally undertaken by men. And the flexible work (generally undertaken by women) comes at a price – a smaller salary. The space between these two salaries in the gender gap.

Progress of sorts

In Career and Family, Goldin explores the lives of five successive cohorts of women; from the early 20th century until today.

The first group (born in the opening decades of the 20th century) had to choose between work and family. Her research shows that 50 per cent of women who graduated from university and undertook work didn’t marry or have children. The second group graduated in the interwar period, with a small amount of progression in the workplace and the desire for more autonomy.

By the time the third group graduated (between 1940 and 1960) most would have a career and family, and the fourth group (graduating in the 1960s and 1970s and living through the heady days of revolutionary changes to women’s rights) saw vast increases in workplace participation and family. But the career came first, and often ended with family.

Those who graduated in the 1980s and 1990s, the fifth cohort, had careers early and then had children, continuing their careers after their children were born.

The combination of family and career was enabled by the move towards flexible working conditions, through technology, which was further consolidated during Covid-19 lockdowns. This flexibility allows women to work, but it can also lead to what she calls “a female ghetto” with women locked away at home and still doing the lion’s share of childcare.

But Covid-19 revealed that flexible work was possible for everyone, even those on the highest salaries. “It’s actually reducing the price of flexibility,” she explains in the Princeton University podcast.

“But certainly, the fact that in many jobs that handshake that you used to have to do in person in Korea […] is being done in a range of different means. And that is one aspect of reducing the price of flexibility; there are jobs that parents (particularly women) couldn’t take because they knew that they couldn’t fly overseas every other weekend. And now, they will be able to take those jobs.”

Goldin’s analysis is pertinent and timely. The Nobel prize will do much to extend its reach and advance our understanding of how we can move forward and close the gender pay gap.

*Data sourced from Ministry for Women website