Wednesday, 24 August 2016

The Mothers' Pay Gap

At last!

From the BBC:

Women in the UK returning to work after having a baby fall even further behind men in earning power, a report by the Institute for Fiscal Studies has said. The gap between hourly earnings of the two sexes becomes steadily wider after women become mothers, the IFS says. Over the subsequent 12 years, women's hourly pay rate falls 33% behind men's.

The IFS says this is partly because women who return to work often do so in a part-time capacity and miss out on opportunities for promotion.

Robert Joyce, one of the IFS report's authors, said women who chose to cut their hours on returning to work were not penalised with an immediate cut in their hourly wages. However, he said: "Rather, women who work half-time lose out on subsequent wage progression, meaning that the hourly wages of men (and of women in full-time work) pull further and further ahead."

Which is what I have been saying for years - there is no real gender pay gap, it is a mothers vs everybody else pay gap. You do not need to be an economist, social scientist or statistician to suss this out, most people will have noticed this themselves first hand (my wife and I certainly have).

Ben Southwood of the ASI takes the more cheerfully libertarian view in City AM explaining why this is no biggie and the real reasons for the apparent residual ten per cent pay gap which cannot be explained by motherhood alone, worth a read in full.

Nonetheless, to the extent that we "should" do something about the gender pay gap*, this is the place to start. IMHO, a Citizen's Income and more generous Child Benefit** instead of the Child Tax Credit crap would more or less eliminate the pay gap in net terms.

* My view is 'big deal'; the total wage pot is what it is, if mothers were paid more, then everybody else would be paid less, so for most couples it evens out. Her Indoors earns barely a third as much as I do (she is underpaid and I am overpaid, by definition) but - like most women - she somehow gets to spend considerably more of our total net/discretionary income than I do.

** The IFS say that the pay gap increases steadily after a woman has had her first child. Other sources correlate this with the number of children - the more children, the bigger the gap (probably a bit of both). So a more generous Child Benefit per child, paid to the mother would fix this nicely, and scrapping means-tested Child Tax Credits increases the incentive to work, so that looks like a win-win to me.


Dinero said...

Also worth considering that more women are in two earner households than is the case for men.

Mark Wadsworth said...

D, how do you work that out?

Dinero said...

correction -

more working women are in two earner households than is the case for men.

Mark Wadsworth said...

D aha, yes, good point.