On average, women earn about 20 per cent less per hour worked than men. This persistent gap has, unsurprisingly, driven a lot of political concern, not to say outrage. It has also led to an increasing amount of research that is throwing a much clearer light on what is happening, if not on how to fix the problem.
We know that the wage gap is particularly associated with what happens in the labour market after women become mothers. They often spend some time out of work and, more importantly, often return to work part-time. In Britain, part-time work is heavily penalised. Women also tend to reduce their commuting times after they become mothers, giving them less choice of jobs and employers.
Men, on the whole, do not move to part-time work or reduce their commutes after they become fathers. Choices made within the family unit and choices made by employers over how they pay and promote those who work part-time or limited hours both matter enormously.
There is some good news. Over the past 20 years the gender wage gap has fallen. Slightly. Breaking that down, it actually has fallen very significantly for the least well-educated and least well-paid women. The wage gap between men and women with only GCSE-level qualifications or below is now well under 20 per cent, having been nearly 30 per cent in the mid-1990s. For women with degrees, the wage gap has shut not at all. It remains at just over 20 per cent. For the first time ever, it is the best-educated women who suffer most in the labour market relative to men with similar levels of education, and the least well-educated who suffer least. This makes sense in the light of what we know about the impact of part-time work and commuting patterns. It is the best-educated and most-skilled who stand to lose most if they don’t travel to jobs that will make most use of their skills, and if they lose out on the pay progression that usually comes with experience. This is a failure in our labour market that is costly in both social and economic terms. Finding ways to put it right must be a priority.
There is, though, something else going on in our labour market that is also very worrying and is getting much less attention: the plight of the low-educated and, in particular, the plight of men with low levels of formal qualifications. They have had a terrible time and are at risk of worse to come.
While the hourly earnings of the lowest-paid women have risen by an average of about 1.5 per cent a year for the past 20 years, the equivalent men have seen their hourly pay rise by just 0.5 per cent a year (hence the gender wage gap among this group has fallen). The differential is even starker when it comes to weekly pay. Low-paid women now work more hours than they used to, while low-paid men work fewer hours. The weekly pay of the lowest-paid fifth of men is lower in real terms today than it was 20 years ago. For the first time in history, a large fraction of lower-paid men are working part-time.
An even starker indicator of how the less well-educated are suffering in our increasingly competitive labour market comes from looking at who receives incapacity benefits. These are paid to people who are considered too unwell to work. In the 1990s these benefits went overwhelmingly to those in their 50s and older. No longer. Age is not the divide that it was. Education is the new divide. In the late 1990s highly educated men in their late 50s were twice as likely to be receiving these benefits as were low-educated men in their early 30s. The reverse is now true. A low-educated man at age 30 is twice as likely to be receiving incapacity benefits as is a high-educated man at age 60. And a lot of that is to do with mental health.
Because boys continue to do badly in our education system, we are storing up more trouble for the future. Boys do much worse than girls at GCSEs. They are 30 per cent less likely to go to university. Boys from working-class backgrounds do especially badly. Our education and training system ensure that they have few chances to continue in good-quality education and training post-16. That’s why too many end up in low-skilled, low-paying jobs or, worse, wholly disengaged from the labour market.
And guess what? Less well-educated men are precisely the group most likely to be negatively affected by any new barriers to trading with the EU. Remember that most trade is business-to-business. Industries such as chemicals and car manufacturing are highly dependent on supply chains integrated across national boundaries. These are the sectors most likely to suffer falls in employment or wages post-Brexit. They are also precisely the industries where you find men with specific skills, and decent wages, but often low levels of academic qualifications. As we have seen time and again since at least the early 1980s, this is the group least-equipped to cope with economic dislocation — they tend to move either into lower-paid jobs in the services sector or end up long term on incapacity benefits.
As the labour market has changed, trade unions have increasingly retreated from the private sector and especially those parts where work is least secure and least well-paid. Many workers have less of a voice than they would have had in the past. We must not make the mistake of ignoring them as, for too long, we have ignored the needs of working women.