Why young women out earn young men.

What women really think about news, politics, and culture.
Sept. 7 2010 1:27 PM

Are Young Women Earning More Than Their Boyfriends?

Yes, but only because they're better educated.

Couple talking at a bar. Click image to expand.
Are young women really outearning young men?

The news last week was that if you're a young woman without children, you have a shot at making more money than your boyfriend. "Young, single, childless women out-earn male counterparts," says USA Today; "Workplace Salaries: At Last, Women on Top" says Time.

I always enjoy it when the media rediscover a trend: Equality is here! But digging a bit deeper into the data tells a more nuanced tale. Even if you can make more than the cute guy you saw at the bar last weekend, you may not out-earn the colleague sitting in the next cubicle. And, alas, it's the second comparison that really matters.

There are two ways to look at the gender pay gap. The first way is to ask whether equally skilled men and women in comparable jobs are paid the same. That's the way to gauge workplace fairness. Do women with similar credentials in similar jobs earn as much as the men they work with? It's in this context that the answer remains no.

How do we know that? To understand workplace fairness, economists analyze how much of the overall gender pay gap—women still earn 78 cents on the $1 of what men earn—can be explained by the characteristics of workers and the jobs they hold and how much cannot be explained by anything except the person's gender. In other words, they compare workers of the same educational attainment holding the same kinds of jobs—male college-educated electrical engineers and female college-educated electrical engineers. The American Association of University Women tackled the pay gap question this way and found that for college-educated women, the gap emerges as soon as they graduate. Their research shows that a woman earns 5 percent less the first year out of school than a man who goes to the same college, gets the same grades, has the same major, takes the same kind of job with similar workplace flexibility perks, and has the same personal characteristics, such as marital status, race, and number of children. Ten years later, even if she keeps working on par with the men around her—that is, continues to have the same level of on-the-job experience—the AAUW found that she'll earn 12 percent less.

The new headlines claiming that women outearn men come from Reach Advisors, a marketing research firm, which did not publicly release the numbers behind its claim. But from the media reports, it's clear that the analysis compared the median earnings of women and men aged 22 to 30 working full-time who do not have children and who live in the largest cities in the United States. Reach Advisors did not address whether the men and women in the sample had similar skills or experience, or held the same kinds of jobs. They asked: If you're a young, childless woman, do you earn as much as a young, childless man? With the question framed this way, the answer was yes. In fact, Time reports, Reach Advisors found that "in 147 out of 150 of the biggest cities in the U.S., the median full-time salaries of young women are 8% higher than those of the guys in their peer group."

But young women are earning more than young men because young women are acquiring more skills than the men are. Good for them. But this doesn't mean that they're being treated the same way in the workplace. When you do the apples-to-apples comparison that the AAUW did, young women still earn less than comparably skilled men. What has changed is that there are more women with higher levels of education. Among women aged 22 to 30, a third (34 percent) have some college education and a third (35 percent) have a college degree or more. Among men in that age group, less than a third (30 percent) spent some time in college, and just over a quarter (28 percent) have a college degree. If one group (women) has more workers with more education, then they should outearn the other group. That's what the Reach Advisors study shows—that because there are more young women with college degrees, women now outearn young men.

Education attainment chart.

Which brings us back to that cute guy at the bar. He is less likely than the woman sitting next to him to have been to or completed college. So yes, now we know that if he lives in a big city, he probably earns less than she does. Though Reach Advisors looked only at young workers without kids, down the line, the findings may have implications for how families use their time or for shifting the balance of power within the home. When mothers outearn fathers, it may make more sense for the dads to take off work to pick up a sick child. And higher-earning moms may have more say over household decisions than lower-earning ones.

At the same time, research has shown that discrimination against mothers remains widespread. And let's not forget that the fact that better-educated young women outearn less-educated young men doesn't mean that we've achieved workplace or gender equity. Until women with exactly the same skills and qualifications match their male peers in earnings, there's plenty of work left for all of us.

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