The income inequality is an important and an attractive topic, much discussed in the media, including this magazine. But the discussion is concentrated on one aspect of income inequality, namely the rising inequality between the wealthy and the poor. This situation is not surprising, nor is it abominable, as this problem is certainly the most important aspect of the whole issue to all people and the society as a whole. But this also means, coincidentally, that all the other aspects are largely ignored, one of which (admittedly one of the most important, but also reasonably covered) is the problem of gender wage gap. The infographic below, created and generously shared by the talented people at LearnStuff.com, shows in an accessible manner how the problem looks and what it means to women and the economy as a whole, from many perspectives. But it is useful to consider something which is not apparent from looking at the infographic, namely why this problem arose in the first place and, consequently, how it may be remedied. To do that one has to analyse the roots of the issue carefully. Perhaps at first glance it looks as if the pay gap was an economic problem, so let us start with an economic analysis.
The theory of human capital proposes that a fair pay can be derived from one’s capital and the economic constant of potential economic growth (empirically estimated to be around 8%). Since capital is an abstract ability of doing labour, it can be calculated as sum of contributions to this potential, such as the costs of living prior to starting one’s working career and the cumulated costs of education (as both sustenance and education do affect the potential of doing labour), and cumulative experience after the start of one’s career. Looking at such model makes it clear to everyone that for a male and a female with the same life story (identical place of living and the same education) their capital will be the same as the costs of living and education are identical for men and women. Therefore the pay gap in such case doesn’t have economic grounds. But we know that in general men are not identical to women. The gender pay gap arises from these differences, which are social in their nature, mostly out of the fact that women are still by and large the persons responsible for pausing their careers to raise children. That affects at least the experience chunk of their capital, leaving them behind men. Some data suggests that this is indeed explaining the most part of the gender pay gap.
Therefore we can see that the pay gap is not an economic problem, but a social one. The society still leaves certain duties to be carried out by women. Joyce McNally and Sylvia Shimmin wrote back in 1984 that “weak, ineffectual organisation among women means that they do not possess the necessary bargaining power to impose their judgment on the various phases of a job evaluation exercise and to challenge strongly ingrained, detrimental assumptions about the value of their jobs” and that “while this remains largely unrealised, codes of practice on job evaluation, and changes in equal pay legislation, are unlikely to result in substantive changes in women’s job status and pay.” Many would argue, in line with historical materialism, that law is in place to guard economic efficiency. If we agree that this is the case then we also have to agree that gender pay gap, not being strictly an economic problem, should not be resolved with economic mechanisms or indeed legal constructs.
“Women should have got something really fixed before they did something else but they wanted to accrue more power,” said one of the most acute social observers and commentators among contemporary authors – Martin Amis – in the British press. “Men and women should have agreed to do 50:50 in the home and I believe a great deal would have followed from that, but they didn’t – the women went Napoleonic.” This is a controversial view, but the gender pay gap seems to provide some corroboration for his hypothesis. The fact that women do more to raise children than men is the main contributor to the economic differences between the sexes. So the solution to the problem is a simple, yet a revolutionary one, especially on the micro scale of families. If we want the gender pay gap to disappear we have to make the gender behaviour gap to disappear, that means, among other things, making men disturb their professional careers to raise children to the same extent women do (on average). Only then will the social constraints creating the gender pay gap cease to exist and equality will be possible. Alternatively the country could pay women who take a break to raise children from public funds to make up for the gender pay differences, but this solution is not a recommended one in our current economic order. So the key is once again in social activism, and not in political overabundance.
This essay first appeared in The Firebrand Magazine.