President Barack Obama borrowed a policy from the British prime minister last week when he told US employers to disclose how much they pay their male and female staff. Britain is a decent place to turn for ideas: the gender pay gap may be sizeable but it has shrunk faster here than any other rich economy over the past 15 years. Now my home country has reached a hopeful juncture where there is almost no difference between the average pay of men and women under 30.
For women of my generation, things may not be completely resolved, but some factors, such as the quality of our education, no longer hold us back.
Children are one of the biggest remaining sticking points. Women still fall behind men in the workplace when they become mothers. Perhaps I am naive because I have not had children yet, but I think we now have a good chance to tackle this problem too.
Because the gender pay gap has narrowed so much among millennials, more couples will have similar salaries and career trajectories when they first start a family. For these couples, there is no longer a default financial rationale for the father to keep working full-time and the mother to dial down her hours or stop working altogether.
The UK has also recently introduced a shared parental leave policy so that parents can split a year’s worth of leave between them after their baby is born. Not every couple of my age wants to share the job of raising children evenly, but an increasing number do. Now there is no financial reason why they shouldn’t.
That is not to say it would be easy. A trawl through the official pay data suggests it would be financially painful for two parents to go part-time after their parental leave ends — and not just because they would be working fewer hours. The biggest and most stubborn hourly pay gap in Britain is not between women and men but between part-timers and full-timers. The gap in hourly pay between full-time and part-time women is about 30 per cent; between men it is more than 40 per cent.
Claudia Goldin, an economics professor at Harvard University, argues persuasively that some jobs — particularly well-rewarded corporate, financial and legal ones — impose heavy penalties on employees who want to work fewer or more flexible hours. Employees who need flexibility tend to shift to different (lower-paid) sectors, settle for less senior positions in the hierarchy or give up work altogether.
She studied about 2,500 MBA graduates from the University of Chicago Booth School of Business whose earnings were almost identical when they began their careers. After 10 to 16 years, the women were earning 55 per cent of what the men were earning. A quarter of the women were working part-time and 17 per cent were not working at all.
If we accept this as the status quo, the best long-term financial strategy for couples would probably be for them both to keep working full-time, even if the childcare costs a fortune in the short term. By the same token, governments would be smart to sink as much money as possible into subsidising childcare.
Yet I’m not sure we should accept this as the status quo. It seems to let employers off too lightly. At a time when technology has made it so much easier to work remotely and meet virtually, why should it still be so hard to combine flexible hours with a high-paying career?
Some employers are trying to make this possible. Professor Goldin’s research suggests entire sectors are already doing well, such as technology and parts of healthcare. Moves in the US, UK and other countries to make employers disclose their gender pay gaps may cajole more companies to consider how they could design jobs and career paths differently. It would require imagination and compromise. There are probably limits to what employers in some sectors can do. Still, it is hard to argue they are already doing as much as they can.
I remember asking the head of a law office once why all his partners were men. He shrugged resignedly and said the legal profession was a “ridiculous” one where the progression route to becoming a partner was simply “not compatible with having a family”.
Perhaps in a world where “having a family” becomes something that excludes both mothers and fathers from top jobs, professions like these will be forced to stop shrugging and start doing something differently.
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