The Flexibility Pay Gap

We hear a lot said about the gender pay gap; how, on average, men earn more than women. Even within the same occupations, men earn considerably more than women for each hour of work that they do. As shocking as this is, it might be masking another form of unintentional discrimination.

This has been demonstrated by Claudia Goldin, a professor of economics at Harvard University. Professor Goldin has shown that a large proportion of the difference in hourly earnings between men and women is accounted for by the need or preference of women to work flexible hours. Because women bear the majority of caregiving duties for children and the elderly, they often show a preference for jobs which allow them to work flexibly.

The difficulty with this is that the pursuit of temporal flexibility (e.g. the ability to manage one’s own time), often comes with a significant reduction in pay. Professor Goldin’s research has shown that in certain occupations, hourly pay actually increases with the total number of hours worked. For example, a lawyer working 30 hours a week might earn $100 an hour. However, the same lawyer working 60 hours a week could instead earn $350 an hour. Interestingly though, this pattern isn’t true for all occupations.

So, when are people disadvantaged for working less? The answer: when employees can’t easily be replaced. That is, when it is difficult to hand off clients, or when interdependent teams have to coordinate schedules. Think about how difficult it is when you have a 10am meeting with seven other people, each with their own busy schedule. Inevitably, people can’t come, meetings get rescheduled, and progress slows. Because of this, organisations are incentivised to make sure their employees are constantly available. In these organisations, the more inflexible you are, the less you are worth. Basically, if you want to have a life outside work in these occupations you are going to have to pay for it. All of this means that women are at a major disadvantage given that they have more responsibilities outside of paid work. Unsurprisingly, Professor Goldin’s research has shown that the occupations with the widest gender pay gap are those that do not lend themselves to flexible work arrangements.

On the other hand, some occupations such as pharmacy have evolved in such a way that employees don’t need to be constantly available. When you go into the chemist to get a script filled, you are unlikely to care which pharmacist serves you. In occupations like pharmacy, employees are perfect substitutes for one another, and therefore there are no penalties for working fewer hours. Amazingly, the research shows that in occupations like this which can easily substitute labour, the gender pay gap disappears almost entirely.

So, how can organisations reduce the flexibility pay gap? The better organisations become at structuring work so that employees can easily substitute for each other, the less costly it will be for any one employee to be away. To do this, organisations need to structure work around teams rather than individuals.

Structuring work around teams has benefits for the organisation as a whole, as well as the individual employees. Allowing for flexibility removes the incentive to work longer hours, encouraging employees to be productive, not just present. The ability to spend quality time outside of work will also positively impact employees’ overall health and wellbeing, reducing turnover and absenteeism. Ultimately, a shift to flexibility will also make a significant dent in the gender pay gap.

Stay tuned for the next blog in this series on flexible working.


by Jordan Gabriels, placement student, Diversity Inclusion

Jordan GabrielsComment