What causes the gender-wage gap, which as of 2013, had women making just $0.78 for every $1 a man earned?
Harvard Professor Claudia Goldin has examined the issue extensively, and her 2014 study, "A Grand Gender Convergence: Its Last Chapter," is regarded as the seminal work on the subject. Her main thesis: Women appear to prioritize jobs that either have a set number of hours, especially after they have children. When they can no longer work the same number of hours—even if they're at different hours—as their male counterparts, they are subsequently penalized.
In a new interview with Heather Boushey, executive director and chief economist at the Washington Center for Equitable Growth, Goldin cited changes in the pharmacology industry as an example of a way we could help close the gender-wage gap. Over the past four decades, Goldin says, the gender gap among pharmacists went from women making just 66% of their male counterparts to 92%.
For decades, Goldin says, pharmacists used to own their own businesses, and hired others to work for them, usually women. So if you listed yourself as a pharmacist, you were, until recently, also a business owner, and also likely a man.
Then, several things happened: First, pharmacists sold out to big chains. The neighborhood drug stores that sold candy and soda alongside quaaludes to your grandparents have almost all been replaced by the likes of Duane Reade and Walgreens. Today, a pharmacist will still handle drug prescriptions, they just no longer own the place where they work. So while the absolute return to being a pharmacist went down, pay became more equalized as the gender barrier that goes along with business ownership was eliminated. The rise of drugstore chains saw the fraction of pharmacists who are female rise from around 10% in 1970 to almost 60% today, and studies show that occupations with the same or greater shares of women have lower pay gaps.
Finally, advanced technology helped make all pharmacies equally knowledgable about drugs and patients' histories. "Every pharmacist now knows all the prescriptions that you have under your health plan, not just the ones that were filled in that pharmacy," Goldin says. At the same time, drugs themselves became highly standardized.
"So it isn’t that you are very attached to a particular pharmacist because they fill your prescriptions better or because they know you better," she says.
As a result, pharmacists remain well compensated ($121,500 a year is the median salary as of 2015, according to the Bureau of Labor Statistics), but are also very good substitutes for each other—no matter your age or gender. If you're a good pharmacist, you'll be paid accordingly, Goldin says.
Goldin calls this substitutability, and says it's a key driver for narrowing the gap. Other positions with high substitutability, according to Goldin's criteria, and low pay-gaps, according to Census data: paralegals, construction workers, and bank tellers. Yes, some jobs are going to inherently rely on an individual's personal qualities, relationships, and willingness and ability to work more hours, Goldin says. Think of a high-paid financier or lawyer—positions that have large pay gaps—having individual relationships with clients where they are on call or take them out to dinner.
But are there really so many jobs that are like this that there will always be a significant gender-pay gap in the economy? Goldin says she doubts it.
However, one might also ask what costs substitutability entails, something Goldin and Boushey do not discuss.
In any event, read the full exchange between Goldin and Boushey here.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.