It's always great to showcase outstanding work undertaken by our students and what follows below is an essay by Rachel Gibbons. She is a current Year 13 Economist at GIS and entered this essay into the John Locke Institute Essay Competition, 2018...The John Locke Institute Essay Competition invites students to explore a wide range of challenging and interesting questions beyond the confines of the school curriculum and Rachel was delighted to hear her essay on the gender/wage gap was shortlisted and received the award of High Commendation. As with all students, Rachel is open-minded and loves feedback, so feel free to pass on any comments about her arguments in the essay...enjoy!
It has been said that a company may hire a woman for four-fifths of what a man would earn, to do the same job and do it just as well. If this were true, why would any profit-maximising employer choose to hire any men at all? Is there another explanation for the perceived gender wage gap? What are the policy implications, if any?
WHY WOULD ANY PROFIT-MAXIMISING EMPLOYER CHOOSE TO HIRE ANY MEN AT ALL? GENDER EQUALITY.
Why is equality so important? Think of it like a balanced diet, consuming the right amount in each food group helps you maintain a healthy lifestyle, whilst consuming too much of one food group could have adverse effects and harm you in the long term. The same principle can be applied to this question posed. By choosing to hire females over males, one is in essence prioritising one gender over another. This is perpetuating discrimination instead of trying to combat the very problem.
Employing only one gender restricts a firm to having a mono-dimensional approach to decision making, this can wield detrimental effects onto firms as monoculture thinking may not help a firm expand their consumer base and increase market share. By having a balance of both genders, companies are more likely to appeal to a wider demographic as both genders provide valid input on product design that appeals to a larger audience due to a variety of perspectives to aid product differentiation. Consequently, this strategy allows the increased capture of more market share, helping firms to not only have a steady stream of revenue but also benefit from economies of scale.
The gender diversity in the workplace also creates an atmosphere of friendly competition, healthy work culture and engagement which in turn fuels increased satisfaction, motivation and productivity. Furthermore, competition can be wielded as an incentive to spur innovation that would have not otherwise occurred. Moreover the combination of different skill sets and attributes being brought to the table are invaluable as without diversity, businesses would potentially be hindered as they struggle to innovate and progress as firms are unable to benefit from the multitude of viewpoints and insights perceived, resulting in less engagement with the market. An example reflecting the importance of gender diversity is a study contrasting and comparing the investments of women and men. Professor Sussman paraphrases the Vanguard study of 2.7 million IRA investors that was conducted and states that “When it comes to investing, neither gender is perfect. Perhaps both sexes can learn from each other. Men are likely to be too confident and optimistic about both their own performance and future market returns, while women are not confident or optimistic enough about either one. Ideally, there is an appropriate middle ground.” (Brecht, 2015)
This is study an example which clearly demonstrates the need for gender diversity in the workplace, whilst profit maximisation is important, other factors- such as gender diversity- also have to be taken into account in order for a firm to be successful.
EXPLANATIONS FOR THE PERCEIVED GENDER WAGE GAP
Aside from the stigma that men should be renowned as the more superior gender, another explanation for the perceived gender wage gap is the amount of hours and experience a women has due to their maternal role. It was found that women who take maternity leave and/or take additional time off work to raise their children upon returning to the workplace “lose an average of 10 percent in their wage per child” according to a study by Paula England, Professor of Sociology at New York University. (Phys.org, 2016). Furthermore, a survey showed that out of 500 managers, “40% admitted they are generally wary of hiring a woman of childbearing age” and “44% saying the financial costs to their business because of maternity leave are a significant concern”. (The Guardian, 2014) This can also be supported by the diagrams below which display the results from a study conducted in Denmark by the National Bureau of Economic Research. (Kliff, 2018) The constant change in technology, market conditions, economic conditions and workplace dynamic is rapid, and taking maternity leave may cause managers and employers to be wary of the gap in time which is perceived as a lack in experience and one being ‘out of touch’, thus resulting in lowr pay. The maternity leave that is a women’s right, discourages the hiring and promoting of women, in turn aiding the lowering of female wages, penalising them financially.
Other explanations for the perceived gender wage gaps is that women disproportionately select into lower paying jobs with lower status and little chance of promotion. Although this provides more flexibility due to fewer working hours demanded and less work responsibility shouldered, meaning they can carry out familial roles, this contributes to the gender wage gap as women are paid less. Moreover, selecting into low paying jobs also gives women less bargaining power due to the lack of skills required to undertake the tasks involved in a low paying job. This leads to less negotiations for salary increments to narrow the wage gap. This is proven in research that was conducted where “Of the 23.5 million Americans working low-wage jobs, 19 million are women, a new report from Oxfam America and the Institute for Women’s Policy Research found.” (Close, 2016) It is also the traditional norm for couples to decide that a women should give up her job and take on the role as a primary care giver, this further endorses the gender wage gap, essentially trapping women in this vicious cycle.
The conformation to socially constructed stereotypical gender ideology due to the notion that men are the more higher ranking gender and thus should be paid more has left women in an unfair position. Men have always been regarded as the ‘breadwinner’ of the family who ‘brings home the bacon’ and this is simply not always the case. As society, the workplace, technology evolves and progresses, our thinking should too.
POLICY IMPLICATIONS TO MINIMISE THE GENDER WAGE GAP
Equalisation of parental leave
The first policy implication is the equalisation of parental leave, this eliminates the point of difference in genders, sending a message that both genders are equal. This will encourage maternity leave and flexibility in the workplace to be necessity, pertinent to all and not just a ‘woman’s issue’. Furthermore, when an employer is considering who to hire they will not discriminate against females by being bias toward men as they will not take leave. Thus now the playing field is levelled and the employer will have to consider whether the male employee will take leave as well. Additionally equalisation of parental leave will help to ensure a more equal distribution of childcare duties, enabling women to retain their careers. This will eradicate the time gap that women face disconnected from the workforce which results in their lower wages as explained above.
Transparency of women representation and wages
Another policy implication is setting a target of women representation in a company. Companies which fail to meet the quota requirements will be ‘named and shamed’ in order to persuade a change in behaviour and to hold entities accountable for legal obligations. The same can be applied to a policy which requires companies to disclose the wages and gender proportions at each pay level. Those with unsatisfactory, discriminatory figures should be reprimanded and required to change their ways. These two requirements should be reported and measured frequently on an annual basis to measure progress.
Non discriminatory hiring
A third policy implication is to promote gender blind hiring, this way, companies cannot discriminate but instead exclusively base the hiring solely on skills, qualifications and experience. Furthermore, internal promotions should be encouraged so that women have increased opportunities in the workplace to advance to the next rung on the ladder; this will also stimulate motivation in the work environment. In addition, job descriptions should avoid utilising gender stereotypical words that imply masculinity or femininity that would sway the decision of candidates and instead using gender neutral words.
Equalising wages and trade unions
Another policy is implementing a minimum wage for women, this would narrow the gender pay gap. Additionally, encouraging the the trade union representation of females, which would allow the bargaining of higher wages would neutralise the disproportionate nature of wages between the two genders.
Educational system reform
The fourth policy is reforming the educational system to increase female enrolment and allow access to more opportunities for women to be better equipped and develop the skills, knowledge and attributes necessary in the workplace that recruiters are looking for in candidates. Moreover, the portrayal to boys and girls of educational course options should not be gender specific or biased. These should be paired with the increased support of women in non-traditional jobs to break taboos, encouraging women to participate in courses that are typically dominated by males such as STEM subject courses which are typically paid higher. This can be achieved through campaigns and interventions targeted at schools, colleges and universities as well as through mentoring sessions to help give women the right mindset that they can achieve anything. Furthermore, the increase in women that are in high power positions will act as role models to future generations of females, which will encourage females to strive for more senior positions in higher paying industries.
Provision of childcare services and facilities at firms
The mandatory provision of childcare facilities and services at a workplace would increase female participation in the workforce as there would be convenient access for children to be taken care of in a safe environment. This would result in women entering the workforce as they do not have to stay at home to look after their child/children.
Encouraging female entrepreneurship
The final policy is the expansion of funding allocated to female-owned businesses as well as providing entrepreneurship training on how to grow a business sustainably. This would promote female entrepreneurship and reduce gender barriers allowing women to receive more opportunities for development. Governments can also award more contracts to women-owned businesses, allowing them to benefit from experience and growth.
Submitted by: Rachel Ann Lim Gibbons
Bibliography
Brecht, K. (2015). Are Women Better Investors Than Men?. [online] US News & World Report. Available at: https://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/09/15/are-women-better-investors-than-men [Accessed 27 Apr. 2018].
Close, K. (2016). http://fortune.com. [online] Fortune. Available at: http://fortune.com/2016/12/28/gender-gap-low-wage-work/ [Accessed 11 Jul. 2018].
Kliff, S. (2018). Children and gender inequality: Evidence from Denmark. [image] Available at: https://www.vox.com/2018/2/19/17018380/gender-wage-gap-childcare-penalty [Accessed 11 Jul. 2018].
Phys.org. (2016). Taking time off work to raise children is damaging to the careers of highly skilled women. [online] Available at: https://phys.org/news/2016-12-children-careers-highly-skilled-women.html [Accessed 4 Jun. 2018].
The Guardian. (2014). 40% of managers avoid hiring younger women to get around maternity leave. [online] Available at: https://www.theguardian.com/money/2014/aug/12/managers-avoid-hiring-younger-women-maternity-leave [Accessed 4 Jun. 2018].
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