When Doing Good Backfires

Sometimes when we try to do good, it does not entirely work out.

Gender Wage Gap

Wage Gap History

Below, you can see a snapshot of the women in the labor force. With each group more active than its predecessor, still all experience the wage gap:

After World War II, the gender wage gap plateaued at 40 percent. By the 1980s though, the gap narrowed but then it stalled again. From 1990 to 2010, the gap shrunk by just 2 percent:

Wage Gap Reasons

For the 1980s, we know that access to professional education and family planning, declines in unionization, and less gender discrimination, helped to propel the wage convergence. However, economists were not quite sure why progress stalled. Now, two economists believe they have an answer.

Our story starts with the 1993 Family and Medical Leave Act (FMLA). Guaranteeing 12 weeks of job protected leave, the act impacted women more than men. While leave pay was not mandated, still the cost at work was colleagues taking over the responsibilities of the absentee employee. In addition, women typically took 14 more days than men.

Ranging from the following states to Sweden, research indicated that paid leave increased the pay gap:

The authors of this paper conclude that family leave policies decreased the rate of gender pay convergence by 76 to 96 percent. Most unsettling, though, but for family leave policies, the researchers believe that gender wage parity would have been achieved in 2017.

Our Bottom Line: Unintended Consequences

Certainly, the intent of family leave is flexibility. But below you can see its impact. And, with 2,459,162 observations, the study’s causation rather than correlation claims are convincing:

At econlife, we can add our look at Denmark’s attempt to encourage Dads to take family leave, here and here. It did not quite work.

So where are we? As you might expect, it is so important to be sure we are doing good–not just feeling good. Otherwise, the unintended consequences negate what we had hoped to achieve.

My sources and more: Adding to Dr. Goldin’s research this new paper gives us a new gender wage gap conclusion. It ideally complements this Goldin Martin Feldstein 2020 lecture, “Journey Across a Century of Women.” (I should note also that the research on which we have focused is racially diverse although I just cite the results for their white cohort.)