Friday, October 17, 2014

It is not a gender issue, it is a family structure issue

From Why Women Still Can’t Have It All by Anne-Marie Slaughter from a couple of years ago. An interesting complement to Claudia Goldin's A Grand Gender Convergence: Its Last Chapter from earlier this year.

Both are essentially arguing that the gender wage gap is a myth conjured for political expediency. Slaughter acknowledges an extremely supportive husband, a great boss, no discrimination and yet she can't compete with others owing to the fact that she has a family who she values and wishes to spend time with.
Women of my generation have clung to the feminist credo we were raised with, even as our ranks have been steadily thinned by unresolvable tensions between family and career, because we are determined not to drop the flag for the next generation. But when many members of the younger generation have stopped listening, on the grounds that glibly repeating “you can have it all” is simply airbrushing reality, it is time to talk.

I still strongly believe that women can “have it all” (and that men can too). I believe that we can “have it all at the same time.” But not today, not with the way America’s economy and society are currently structured. My experiences over the past three years have forced me to confront a number of uncomfortable facts that need to be widely acknowledged—and quickly changed.
Read through Slaughter's essay. It is well worth the read in the sense that it allows you to understand how and why bright people can strongly hold ideas that seem patently absurd on the face of it. We all carry assumptions that blind us to the full picture and all of us are inclined to wish the world to bend in our direction. That force is strong in this article.

She nods her head to the fact that she is one of the 1% and that her problems are not shared by everyone else.
I am well aware that the majority of American women face problems far greater than any discussed in this article. I am writing for my demographic—highly educated, well-off women who are privileged enough to have choices in the first place. We may not have choices about whether to do paid work, as dual incomes have become indispensable. But we have choices about the type and tempo of the work we do. We are the women who could be leading, and who should be equally represented in the leadership ranks.
Right there at the beginning you can detect a dense weave of embedded assumptions that help Slaughter shield herself from the reality she is fighting. "We may not have choices about whether to do paid work, as dual incomes have become indispensable." Off course you have choices. They may not be ones you like but they are choices none the less. Tens of millions live the reality of a single income family. Dual incomes are not indispensable, they are a choice.

By blithely passing it off as a necessity, Slaughter draws a veil over her own decisions. She chooses to be in a dual income family because it has very material benefits, such as, rather obviously, twice the income. But a dual income family has some downsides as well. Like any special pleader, she wants you to ignore the benefits she derives from a dual income family and focus instead on the downsides. Then she wants everyone else to mitigate the downsides arising from her decisions but is, presumably, unwilling to give up the benefits.

Then there is "We are the women . . . who should be equally represented in the leadership ranks." On what basis should she, and her 1% ilk, or anyone, be equally represented in the leadership ranks? What is the special entitlement? If, as I will argue, the pinnacle performers in all fields are predominantly characterized by voluminous effort in terms of hours worked, flexibility in terms of putting in peak efforts on short notice, and significant reliability then it rather precludes her predicate assumption that "we have choices about the type and tempo of the work we do."

She then proceeds to suggest changes to society and the economy which don't address the needs of the 99% but which will give her and her 1% a yet better deal than they already have.

Her solution? A simple assertion of ideological faith with nary a whisper of supporting evidence. And certainly no discussion of the failure of this program to achieve her desired outcomes where it has been tried in Europe and elsewhere.
The best hope for improving the lot of all women, and for closing what Wolfers and Stevenson call a “new gender gap”—measured by well-being rather than wages—is to close the leadership gap: to elect a woman president and 50 women senators; to ensure that women are equally represented in the ranks of corporate executives and judicial leaders. Only when women wield power in sufficient numbers will we create a society that genuinely works for all women. That will be a society that works for everyone.
So what's the problem? Women can and do compete successfully for these positions. Both Slaughter and Goldin are frustrated by the fact that in most arena's, women are stuck at 15-30% of the top positions. Senators, Representatives, Law firm partners, accounting firm partners, Governors, tenured professors, CEOs, CFOs, millionaires, engineers, scientists, etc.

So if women can and do compete successfully and if the institutions are relatively accommodating (for example universities and government), and if spouses are accommodating and supporting, and if in many instances bosses are sympathetic and accommodating, why is it that women are underrepresented at the pinnacle?

I think both Goldin and Slaughter have hit on the right root cause though perhaps have not explored it as fully as they could have. Who makes it to the top? Goldin and Slaughter are completely immersed in an ideological worldview that sees everything in terms of gender and it limits them from looking at things in an alternative way.

Formerly, feminists ascribed the low representation rates at the pinnacle of each field to overt, covert, or unconscious misogynism, individual discrimination, unsupportive husbands, institutional discrimination, etc. Both Goldin and Slaughter, while acknowledging that there remain instances, appear to have accepted that even when these issues have been overcome, there is still an under-representation. So what is the cause?

What both Goldin and Slaughter skirt is looking at things from a non-academic, non-government perspective. Taking Slaughter as an example, her entire career has been in government and academia. Both government and academia share the attribute that the past fifty years or more have been exceptionally congenial - revenues have grown at rates significantly above that of the economy. Think of it in terms of the classic S-curve. Her entire professional experience has been in two sectors that have had enjoyed a prolonged period of expansion with little competition (the middle part of the S-Curve)

For any product or service, including education, you can plot their growth from inception to saturation and it almost invariably follows an S-curve. Higher education has enjoyed fifty years of growing demand and capacity to pay. The population has been growing and Americans have become ever wealthier. The consequence is that Higher Education has not had to compete in any meaningful way for the past two generations nor have they had to manage their business with any great rigor. That is the environment that has shaped Slaughter's career experience. The same is broadly true for government services as well.

Most people not in academia live at the bottom of the curve (startups and others trying to grow) or at the top where all products and services end up - as commodities subject to brutal competition in terms of both efficiency and effectiveness. The sweet spot is in the middle where growth is rapid and margins are thick. But for most industries, the segment between the bottom of the curve and the top is usually pretty brief. Academia and Government have been the exceptions.

If you are among the few who have only experienced strong growth and thick margins, then it is natural to be either unaware or to significantly discount the realities experienced by everyone else at the top and bottom.

The other thing that academia and government share between them (and that is absent for everyone else) is that there is little measurability of, or even inclination to measure, outcomes. It is easy to measure both cost and quality of a widget. What is the cost and quality of a well rounded student or a well protected nation? What are the objective and empirical outcomes associated with two years of meetings and writing policy memos as Slaughter did for the State Department?

So what is missing from Slaughter's world view? An awareness of competition, outcomes, limits, trade-offs, risk, and uncertainty.

So what is the cause of the under representation if it is not institutional bias, unsupporting spouses, etc.?

Both Slaughter and Goldin identify the problem as maternity. Spouses who interrupt their careers in order to spend time with their children, either by leaving the workforce completely for a period or by working part-time, take a big hit in terms of their productivity. It is true whether the child-caring spouse is man or woman. While recognizing the issue, neither Goldin or Slaughter explore why productivity drops so dramatically when interrupting or working part time. They never take the perspective of the employer. It is always about the employee.

From the employer's perspective, any given employee with a defined skill set and defined level of productivity, has three attributes that contribute to making running a business easier and more profitable. The amount of time they work (Volume), their capacity to vary their hours based on need (Flexibility) and their Reliability. Your ideal employee works a lot of hours (it is cheaper and easier to manage 10 full time workers than 20 part time workers), adjusts their schedule to your business needs (working late or weekends when a project demands it) and is relentlessly reliable (always follows through).

Goldin and Slaughter don't put it in those terms but that is the problem in terms of achieving equal participation. If it is the mother (still the norm) who provides the primary care for children, then it is the mother's career which takes the hit. If it is the father who is the primary caregiver, the exact same thing happens. It is not a gender issue, it is a familial structure issue.

Single men and women earn the same income in all fields and industries. Men and women earn the same income when you take in to account the normal elements that you would expect to affect productivity: number of hours, continuity of work, flexibility (Goldin is good on this one), education attainment, etc. And what affects the number of hours you can spend on a job, the flexibility of those hours and your reliability? Family status and structure.

So what Slaughter is actually bumping into is the reality that you can't have it all - you have to make trade-off decisions which have consequences and this is equally true for men and women.

Which family structure (where there are children present) affords the greatest capacity for high volume of hours, great flexibility, and great reliability? One spouse working full-time and one working either part-time or not at all. That is the Golden Model. I can't call it the traditional model because it has usually been the aspiration, not the reality. People tend to fail to recognize that historically the majority of women have always worked. The 1950s-1960s were an aberration.

The Golden Model is distinct from the Modern Model where both spouses work and earn close to the same amount as one another. I'll ignore the Singles Model and Childless Model as I think they are straightforward.

The competition that irritates Slaughter is that between the Golden Model and the Modern Model (to which she subscribes). They both have advantages and disadvantages, some obvious and some not so apparent.

Two spouses working full time implies a household income greater than the working individual in the Golden Model. The data broadly supports that conclusion, especially in the early years of a career. The Modern Model also would seem to imply a steadier, less risky model than the Golden Model. If one working spouse loses a job, there is the other income to cover the costs.

So the Modern Model on the surface looks wealthier and less risky. What's not to like? It gets interesting when you look at the details over time.

The Golden Model pays few dividends at the beginning of a career but it appears from the data to lead to greater outcomes over the long term. Yes there is more job insecurity but there is also greater capacity to distinguish oneself. The Golden Model working spouse can put in the extra hours, can be there in a pinch, and rarely has to break commitments because they have to take a sick child to a doctor or such other domestic issues that arise. They work more voluminously, more flexibly and more reliably. After five years, they begin to pull ahead.

Interestingly, the data seems to indicate that Golden Model households, probably because of their greater sensitivity to perceived risk, seem to save more, presumably as a bridge over job interruptions. Those that seem to do best of all are those that establish the variant where the spouse who cares for the children also works part time before and after the youngest years. That seems to provide a greater financial safety net that shelters the household from great swings in asset accumulation and income.

The interesting issue is that the Modern Model actually appears to be somewhat riskier. What appears to be happening, particularly among the top 40%, is that there is a false sense of security from two incomes and that those households tend to consume close to all that they earn. Consequently, when there is a job loss, the financial consequences are more immediate and more dire. With the Golden Model, the part time spouse can up their hours in the interim to help bridge the gap and they can draw upon greater average savings. In the Modern Model there are fewer savings, greater financial obligations undertaken in a two income scenario and there is relatively little capacity for the remaining working spouse to increase their income in the short term.

Slaughter and Goldin are using the Modern Model as their established norm. Slaughter in particular is making the argument that it is inherently unfair that those who have subscribed to the Golden Model should have such greater capacity for hours, flexibility and reliability. She is basically making the case that the Golden Model has an unfair advantage over the Modern Model.

Slaughter is so intensely self-focused that she leaves out many of the compensating elements to the Modern Model. She is not just an individual, she is a member of a small business which is the Slaughter family household. She suffers from reduced opportunities compared to the spouse in the Golden Model but she benefits from two incomes versus one or a partial income.

What both Goldin and Slaughter are recommending is that the economy should be reorganized in a fashion that jobs should not require high volume or great flexibility or reliability. Goldin offers the example where this has occurred in the recent past by offering up the Pharmacy industry. Pharmacists used to usually be male and full-time. Today the industry is primarily female and either part-time or flexible time. Goldin holds this up as a model for the rest of the economy. What she ignores is that the structure of the pharmacy industry has changed, whether for good or bad depends on one's perspective.

Pharmacies used to be primarily small businesses locally owned. They were run by men who were the primary breadwinner in their family and they required huge amounts of time and flexibility as any small business does. In the past forty years, the independent pharmacy has all but disappeared, replaced by a handful of highly efficient, carefully managed national chains. Pharmacists are no longer small business people with all the prestige and challenges that come with that. They are now employees. And yes, they are employees who can work less than full time and variable hours and don't have to be as highly flexible as used to be the case. It is, from a macroeconomic perspective, a far more efficient model. But the flexibility has been purchased at the cost of ownership. A good deal for some, perhaps less so for others.

Slaughter holds out the hope that if we elect more women and more women make it to the C-suite, then they can change the structure of the economy. I view that as a nice utopian dream.

My assessment is that in a global interconnected economy where there is a seamless global supply chain, everyone is always connected, always on, and there is global competition, the premium set on volume, flexibility and reliability will become greater, not lesser. I suspect that this phenomena is partly what is behind increasing income inequality. It costs a lot to manage people who can only work short hours with limited flexibility and who aren't reliable. That cost is reflected in their reduced salaries.

I think what Goldin and Slaughter both miss is that the competition is not between genders but between familial models. As with any company that is less productive than the competition, they are seeking protection from the competition through regulation. That rarely ends well.

I think the real challenge is to provide greater clarity to all people about the costs and consequences of their decisions and equip them with the critical thinking skills to make better life decisions. In particular, we need to be clearer that income is a reflection of productivity. The core issue is, what are the values, behaviors, knowledge, skills and experiences that make an individual more or less productive in a given set of circumstances? Not to keep anyone guessing, but working fewer hours, working hours that are convenient to the employee rather than the employer, and not being reliable are not attributes that lead to higher productivity and greater leadership roles. When put in those terms, the magnitude of the issue Goldin and Slaughter are seeking to address becomes clearer.

Seeking to use the coercive power of government to favor one familial mode over another is futile, classist, and a repugnant exercise of self-interest over the common interest.

It's not that women can't have it all. It's that no one can have it all. People have to choose as individuals and as family units which model is likely to optimize all their goals and objectives: income, wealth accumulation, health, education attainment, time with family, time in the community, etc. Each model, Golden, Modern, Single, Childless has their unique set of risks and benefits. The fact that a spouse in a Modern family model cannot be as productive as a comparable person in the Golden model does not reflect on society. It reflects their own values and trade-offs and revealed preferences.

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