Why focusing on “equal pay for equal work” is a mistake

Laetitia@Work #9

Hi everyone,

Today’s newsletter deals with female poverty, the gender gap and France’s pension reform. Yes, they’re all connected! As a feminist I’ve always held fast to the conviction that money is key to female independence and gender equality. A lot of women in my family made “choices” that have left them more dependent and much poorer. Somehow it has guided some of my own life choices: I don’t ever want to be financially dependent on someone else. 

Judith Leyster The Proposition.jpg

When I was a teacher in Paris, a majority of my colleagues were women. And many of the women who seemed to have comfortable lives all had husbands who made more money than they did. In a way their selfless activity was subsidised by their spouse. They could afford to say they didn’t care about money. It’s one reason why teachers’ unions have not fought enough about higher pay over the past four decades largely because of the feminisation of the teaching profession. The revenue of more and more (female) teachers was seen as an “additional” revenue. 

Many “choices” made by women are “rational” in a household because there’s a spouse who makes more money: going into a profession that doesn’t pay well, working part-time to look after a child or an elderly parent, staying at home for a couple of years, etc. It makes perfect sense for the household that the one who makes more money should pursue their career while the one with a “secondary” revenue should put their career on hold if necessary. There’s nothing sexist about such choices: it’s economically rational. The problem is that’s also how the gender gap is perpetuated decade after decade after decade.

“Equal pay for equal work” has been an important feminist fight for decades. Every couple of years there’s new legislation to push it further. In the UK, 40 years after the “Equal Pay Act” of 1970, the “Equality Act” of 2010 was meant to settle the matter once and for all. In France, they implemented an equal pay index that sets up an obligation to achieve results in closing the gender pay gap. There’s reason to hope that we’re making some progress on that front. But the main issue isn’t “equal pay”, it’s “equal work”. 

There’s no way we’ll close the gender gap if we keep focusing primarily on “equal pay for equal work” while ignoring the architecture of choice that pushes women to work part-time, stay at home, save less, and move into badly paid professions. Read along.

The architecture of choice is what matters

It seems that a lot of today’s policies are predicated on the assumption that people’s choices are free. If you believe choices are made freely, then all that matters is meritocracy. But I’m extremely wary of people who talk about meritocracy. Indeed I’ve found that those who speak the most about it usually come from organisations and systems where there is no meritocracy at all and where inequalities tend to be extremely high. It’s as if “meritocracy” was used as a weapon to fight diversity and equality. As Yale Professor Daniel Markovits explains in The Meritocracy Trap, “any society where socioeconomic reward is based on the principle of ‘merit’ itself is inherently unjust”. (That’s a subject I’d like to elaborate on in a future newsletter).

I believe more people should be taught sociology at school so they can understand how individual choices are determined by society, culture, class, gender. Sociology does not negate free will and the role of the individual but it focuses on the structural relationships between individuals and the groups that shape them. But sociology isn’t the only discipline that helps understand how choices are made. There’s also behavioural economics (I write this series of articles about cognitive biases) which gave us the “nudge” concept.

The “nudge” concept was made popular in 2008 by the eponymous book by Richard Thaler and Cass Sunstein. Since then it’s been very influential in marketing and politics. It’s based on the idea that our choices are not rational (and not entirely free) and can be softly “manipulated” by changing the design of the choice architecture. Depending on the choices they have, the way these choices are presented to them, and whether or not there is a “default”, consumers will be profoundly influenced in their decision-making.

Policy makers have used choice architecture to nudge people toward socially desirable behaviours (like saving more for retirement, or registering as an organ donor, for example). The UK created a Behavioural Insights Team (also called “Nudge Unit”) to “generate and apply behavioural insights to inform policy and improve public services”. And Obama’s White House also had a “Nudge Unit”. Behavioural economists know there is no neutral choice architecture. They know freedom of choice is a bit of a myth.

When it comes to women ‘“choosing” to work part-time, to accept a badly-paid job or to stay at home, choice architecture has a profound impact that’s linked to the role of public services, legislation (for example, concerning parental leaves), corporate policy, tax policy, as well as cultural expectations. If there’s no cheap childcare solution, the “choice” to stay at home to look after your child will largely depend on your revenues. Ditto with the “choice” to look after your old father-in-law. “Equal pay for equal work” will have little impact on the actual gender gap if women have to “choose” to stop their careers to look after children (see this essay I wrote about “the plight of Germany’s female workers”). 

In fact any policy that focuses on “equal pay” without addressing all the elements of choice architecture is naive at best, hypocritical at worst. Let’s take one component of choice architecture that’s too rarely addressed by feminists: tax policy. Its impact on “choices” is great. France and Germany, for example, allow (encourage) a joint filing in personal income tax systems with a progressive rate structure and effectively tax the low income earner (usually the woman, in heterosexual couples) at a much higher marginal tax rate. In other words, the low earner is strongly discouraged from earning more because whatever extra revenue is earned will cost the household a lot in additional income tax. Joint filings are the wrong nudge. The bigger the gender gap in the household (or the partner 1 / partner 2 gap in same-sex couples), the bigger the tax premium. Inequality gets rewarded!

One could argue that there’s solidarity in the household: after all the tax gain can be shared evenly and women may benefit. Unfortunately the member of the household that earns less generally has less of a say in how the financial gain is used (that’s just how it is: on average, the poorer you are, the less power you have). And the higher taxation of women’s “additional” income has a damaging influence on their labour market participation.

The fallacy of free choice can make things worse: the example of the French pension reform

Choice architecture hasn’t changed much for women. The “choice” of sacrificing one’s career to look after a child or a parent is still made overwhelmingly by women. Part-time jobs in most OECD countries are held mostly by women. In France, nearly 80% of all part-time jobs are held by women (it concerns 30.7% of active French women). In Germany almost one in two women are employed part-time. To say that women are more likely than men to work part-time is a gross understatement in every country.

It is no surprise that because of fragmented careers, more part-time work and different career “choices”, women’s pensions are significantly lower than men’s. In fact the gender pension gap is considerably higher than the gender pay gap. In France, the pension gap is 30%. The average EU pension gap is 26% (much higher than the average pay gap in the EU—17.5%). In Germany it is 46%! In Luxembourg, 42%. In the Netherlands, 41%.

The choice to sacrifice your career to look after a child or a parent used to be explicitly encouraged. In times when the concept of choice architecture was not known, in a way it was taken into account: that’s why widows would receive a survivor’s pension, and that’s why most divorces would result in the richer spouse (most often the man) paying spousal maintenance to the poorer one. In a way the old patriarchal system came with some compensations / protections. The gender gap was acknowledged.

Today by contrast, it is assumed that women choose freely, and therefore the consequences of their choices are their problem. The idea of spousal maintenance paid to divorcées is more and more questioned. So is the idea that a divorced woman should receive (part of) a survivor’s pension when her ex-husband dies. Indeed why should a divorcée receive money from a dead ex-husband? 

A lot of people, including French President Macron and his government, seem to think these patriarchal protections are anachronistic. France’s pension reform plans to put an end to survivor’s pensions paid to divorced spouses after 2025. After 2025, hundreds of thousands of divorced women who would have had an extra pension upon the death of their ex will now get nothing. The government says that these pensions should be replaced by divorce allowances, but the reality is that divorce allowances concern only a small minority of (usually rich) divorced women, not the many.

The paradox is this: a government that claims to embrace feminism and wants to fight for “equal pay for equal work” is completely ignoring the architecture of choice that is still pushing many women into part-time work and less ambitious careers, and ignoring the reality of the parental gap. Still today motherhood will slow a woman’s career down whereas fatherhood will come with a career boost. 

That divorcée mentioned earlier is likely to have made the same “choices” as her elder. She worked part-time for a couple of years to look after the kids. She “chose” a less lucrative career path to be more present at home. And there was this extra incentive for her to do so because it meant it would cost the household less in taxes. The husband is likely to have said, “it’s all right, one of us has to be more present at home”. Well that woman will have a very low pension. And she doesn’t have much in terms of savings. 

The risk that comes with assuming there’s free choice and people should suffer the consequences of their choices is there will be more female poverty and precariousness in the future. More women will be dependent. In concrete terms it could also mean that more women will be trapped in bad (sometimes violent) marriages for fear of poverty. We are forgetting that the rise of divorces in the second half of the 20th century was a product of women’s increased freedom and independence. When you’re independent you don’t have to stay with someone you hate for fear of going hungry. The reason there were fewer divorces in earlier times is not that couples were more stable and committed, it’s just that the only way out for a woman was to poison her husband ☠️ Funny how people (Catholics in particular) have nostalgia for those times!

Reducing the gender wealth gap and creating a world of equal opportunities cannot mean focusing on meritocracy and ignoring all the reasons why women do not have the same careers as men even though they are now free to. As long as the figures show a large discrepancy in the “choices” made by men and women, the old patriarchal protections still make sense, however “unequal” and “anachronistic” they may seem.

New “We’re all biased!” articles have been published on Welcome to the Jungle: “Ever heard of the ‘McNamara fallacy’? Be careful what you measure” (in English) ; “Effets Pygmalion et Golem : votre vision des autres influence leurs performances”, “Comment le biais du statu quo affecte vos recrutements” (in French).

The video of my debate with Jérôme Giusti at the Fondation Jean Jaurès is on YouTube “Que va devenir le travail ?” (in French).

I recorded a podcast (in French) with Christophe Bys (L’Usine Digitale): “La transformation du travail grâce au numérique offre-t-elle vraiment le don d’ubiquité ?

Content related to this week’s newsletter:

Miscellaneous

  • 🗞️ “The Passion Economy: A Conversation with Adam Davidson”, Jon Jachimowicz, Behavioral Scientist, February 2020: “You’re not born with passion—it’s not that on your twenty-first birthday, you either have it or you don’t, and then you’re done”.

  • 🗞️ “How Immigrants Drive Entrepreneurship and Innovation”, Stephanie Tam, Behavioral Scientist, January 2020: “It’s safe to say that immigrants are driving a significant chunk of expanding employment opportunities in the United States. In other words, these immigrants aren’t taking jobs. They’re making them.”

  • 🗞️ “How Much Does Our Language Determine Behavior?”, David Shariatmadari, Behavioral Scientist, January 2020: “If your mother tongue teaches you that keys are categorized as masculine, your idea of “key” is infused with what are judged masculine qualities in your culture—and this applies even when you’re using another (genderless) language.”

That’s all for this week. And please do not poison your spouse!! 🥺

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