This Is the Industry That Will Finally Close the Gender Wage Gap

Commentary about business and finance.
March 17 2014 6:10 PM

The Pay Gap Prescription

Your local pharmacy is closing the wage divide between men and women.

(Continued from Page 1)

It shrank in part because the large national chains made pharmacies into incredibly friendly places for part-time work. More than a quarter of female pharmacists work part-time, but hour for hour, they still earn about the same as men. Which is to say, the pay is “linear.” There’s no special premium for working a 60-hour week.

According to Goldin, one of the key reasons why linear pay works is that pharmacists, although highly educated, are essentially interchangeable. Customers aren’t particularly worried about who is filling their Xanax or Lipitor prescription, so long as they’re in the hands of a professional. “All the information is there in the computer. The training is standardized,” Goldin told me. For CVS or Rite Aid, it ultimately makes just as much sense to pay two pharmacists $50,000 to work half the number of hours per year as it does to pay one pharmacist $100,000. (I would only add that, presumably, the tradeoff isn’t exactly even once benefits start getting counted—either the company or, more likely, the workers would need to get shortchanged a bit). 

In fields like law and finance, workers can’t be swapped so easily without frustrating clients and costing the firm profits—and so they pay fewer workers more for long hours, which is a disadvantage to women. If those industries could change their business models in order to make their highly skilled employees more interchangeable, Goldin argues, the gender gap would shrink. Companies would be able to pay relatively more for part-time and flexible work—meaning that after having children, women would be more likely to continue in their careers, instead of cratering their future pay by leaving the working world altogether. Employers would also have less reason to pay a premium for the long hours women have trouble dedicating to their jobs. (Of course, if we could change the social expectation that women should shoulder the bulk of child care, all of this would be less of a problem to begin with.) Already, Goldin points out, industries like health care, real estate, retail banking, and brokerage have moved in this direction.  

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Goldin is doing no less than proposing a free-market solution to the pay gap that could evolve naturally over time. After all, what manager wouldn’t like to swap employees between projects at will without hurting his or her business? Goldin’s solution also suggests that as companies gain size and scale, they’ll become more equitable places to work by default—not just for women, but for any parent responsible for the majority of child care.

But Goldin’s idea also has its limits. For one, it only addresses one piece of the wage gap—essentially, what women earn per hour. To truly close the gender divide, Americans will have to stop treating child care as primarily a female obligation, so more women can keep working full-time.

It also won’t necessarily work for every profession. Pharmacists and anesthesiologists are tasked with finding a set right answer to a particular technical problem: Will this drug cause an interaction? How much sedative do I inject? Those parameters make their work relatively easy to standardize. Some routine legal and business work certainly lends itself to that treatment as well—in law, for instance, a partnerless firm called Axiom has made waves by offering low-cost corporate legal services in bulk. But some companies will always want to hire a superstar litigator to handle lawsuits. Some rich investors will always want to park their money with a hot hedge fund manager. And, for that matter, plenty of middle-class families like having a single personal finance adviser they can come back to. 

And that says nothing of creative industries. It’s tough to make jobs more coglike when employees are hired for their imaginations.

“I’m not saying you can do this in everything,” Goldin told me. “I’m simply saying that where it can be done, we can see the results.” Fair enough. For now, we’ll call it an imperfect prescription.

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