Workforce composition effects are imporant, d'ye see?
A certain confusion here:
The number of women working in the City has fallen by a third since the 1990s as administrative roles like secretaries disappear from the Square Mile.
Yes, OK, computers have meant that a certain type of job simply no longer exists.
Women’s average wages in the finance sector have more than tripled since 1997, rising from £16,000 to over £50,000 in 2022.
Over the same period, the average earnings of a man in the City have just over doubled from £33,500 to over £80,000.
While that’s true that’s very misleading. Because the reason women’s average wages have risen more than men’s is because the lower paid - and largely female - jobs no longer exist.
The point being that looking at average wages of all women against average wages of all men can indeed be misleading if we don’t also take into account those workforce composition effects. Those whines about a 15% (or whatever the whine is this week) gender pay gap across the nation make this very mistake. They fail to take account of the way in which men and women fo make up different portions of different parts of the workforce - do different jobs that is.
Yes, this is important. Italy, for example, has a very low, by European standards, gender pay gap when measured in this manner. Across all jobs done by all people. The reason being that the Italian married woman with children is very much less likely to work than her European contemporaries. Those who do continue to work tend to be in the professions, have careers rather than jobs. Effectively, lower paid Italian mothers simply aren’t in the workforce and so don’t pull average female wages down.
Yes, important. For that then leads on to a policy prescription. If we wish to lower the gender pay gap - by this measure of all women against all men - then we desire to have those lower paid women leave the workforce when they become mothers. For that’s how it does work in those places with a lower gender pay gap by this measure. That, in turn, means that we don’t want subsidised childcare in the slightest. Rather, we want families to face the full freight, the full costs, of childcare so that those on lower incomes do leave the workforce rather than drag the average pay down.
A lower gender pay gap means no subsidy to childcare, not more.
Of course, we can also look at this the other way around. No, we should subsidise childcare so that mothers can continue working. Fine - but we’ve then got to accept that we’ll have a substantial gender pay gap by this measure.
We could even conclude that measuring the gender pay gap by all women against all men in employment is a silly thing to do precisely because of this effect - that gap falls when more mothers leave the workforce entirely.
But workforce composition effects do matter. Average female pay in the City has risen because the low paid and largely female jobs have disappeared. The same will be true - as it is in Italy - of the population wide gender pay gap. If mothers aren’t in the workforce at all then it will shrink. This indicates no subsidy to childcare, not more, if our goal is the shrinking of that mismeasure of the gender pay gap.
We do, in fact, actually have to make a choice. What is it that we’re going to worry about by which measure? Our temptation is simply to observe that choices in life have both costs and benefits and let people work this all out for themselves. But even for those who disagree with this laissez faire position the central point still stands.
Lowering the population wide gender pay gap means reducing childcare subsidies, not increasing them - for that way the lower paid mothers leave the workforce and so don’t contribute to the gender pay gap. That’s simply true, whatever we might think about the way things ought to be.