Betsey Stevenson
Subject: Increasing Demand for Marrying Highly Educated Women
Bio: Professor of Economics at Michigan and the former Chief Economist at the Department of Labor
Transcript:
Larry Bernstein:
Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics and politics.
Today’s topic is the Increasing Demand for Marrying Highly Educated Women.
Our speaker is Betsey Stevenson who is a Professor of Economics at Michigan. Betsey is also the former Chief Economist at the Department of Labor.
I want to learn about ways to maximize the employment of women by increasing labor flexibility. And discouraging the idea that the work product is necessary right now.
I also want to get into the weeds about the monthly US employment statistics which are the most important economic data and greatly impact the financial markets. There are two major surveys to evaluate job growth and one survey indicates that there was no job growth in the last year and the other suggests that employment is growing above trend. I want to hear from Betsey what she survey she thinks is more accurate.
I recently held a conference in Washington DC with a bunch of my friends where we chatted with Betsey. This podcast will be different than normal because some of the questions will be asked by my friends.
Betsey, please begin with your opening six-minute remarks.
Betsey Stevenson:
If you go back to the last century, highly educated women were the least likely to get married, and today highly educated women are the most likely because we have had an evolution where the benefit of marriage came from comparative advantage. The idea of comparative advantage is we would make more together if the woman specialized in making stuff and the guy specialized in earnings.
Since then, the magnitude of comparative advantage within the home has been almost completely eradicated. You can trade with people all over the globe rather than finding a woman who can make you clothes, you can find a factory worker in Vietnam.
So why is it that highly educated women have become the most likely to marry? Because marriage evolved towards living a better life together, raising kids and having a partnership.
Women have been having their children at older ages. Today, the median age of first birth is around 30. For highly educated women with a professional degree, it is closer to 34.
We saw a big increase in women’s labor force participation up until about the 1990s. It peaked and then plateaued. In 2015, these older women were having their children and they were not interested in stepping out of the labor force. By 2019 for moms with young kids, we had the highest labor force participation ever.
Women have never been hit harder than men by cyclical unemployment. Never ever. Men lose jobs when the economy craters not women, because when the economy craters, you stop building stuff, but you don't stop going to the dentist or going for routine medical care. Those are female jobs.
Then the pandemic hits. Who loses their jobs? Not men, women lost their jobs. Why? Because women hold a lot of the jobs that involve face-to-face interactions with people. They hold 77% of the jobs in education and health services. There was no more routine healthcare, there were no elective surgeries. Lots of people lost their jobs and we sent all the kids home from school. We saw labor force participation of women look like it was the 1980s. It looked like we had erased decades of gains for women. And everyone was asking will they come back?
It took a while to get all the kids back in school. Now prime age labor force participation in the U.S. is as high as it has ever been, which is remarkable. Why are women fully rebounding into the labor force? It is because they were older mothers. I am a mom with a 5-year-old, but I also have 20 years of work experience, that is a different scenario than a mom with a five-year-old with five years of work experience.
The industries that were slowest to come back were education, health services, and leisure and hospitality which employ a lot of women. Women have shown themselves to be more flexible in the labor market. When a guy loses a job and what he does is hammers X into Y, and he's like, there's no more jobs hammering X into Y, I don't think I can work again.
Whereas for women, they think I better do something else. We see women being a lot more flexible about what jobs they can do with those skills and where they are willing to work. And that may come because they have had to be scrappy players in the labor market and at home.
One of the most startling statistics I saw on the data was labor force participation for women with a child under the age of one rose throughout the pandemic. Why? Because you could stay home and work with your little baby and that helped keep women attached to the labor force.
Many companies now would like to see people coming into work. Amazon just went to five days. The marginal cost of commuting is rising, the more you are commuting and the more you are away from home and the marginal benefit of being in the office is declining. I do not know why any company thinks they know that five days is the right number of days to get that marginal benefit and marginal cost right. Maybe it is for some companies, but everybody should be trying to have a fresh slate on that.
Larry Bernstein:
Claudia Goldin was my economics professor at Penn. She recently won the Nobel Prize for her work on flexibility in women's work. One of the reasons she thinks that there is a pay gap between men and women is that inflexible work earns more. Investment bankers that need to go to Seattle tomorrow on a moment's notice cannot be responsible for taking care of the kids. And men generally choose that type of work and women do not, and it pays more. That was the example that she gave in her talk. But recently, corporations have gotten better at minimizing the amount of inflexible work and therefore can reduce compensation to all parties allowing women to take on more responsibilities. Tell me about what you think of Claudia's work and the corporation's ability to generate more flexible work to use women more in the workplace.
Betsey Stevenson:
Claudia Goldin was my dissertation advisor. I think of myself as a child of her work and what she talks about is what she calls greedy jobs. I call them toddler jobs. Basically, as any parent of twins knows, when you have two people or two creatures, the job and the person that want what they want, when they want it, where they want it and how they want it. You are pulled in many different directions and it's very difficult. She talks about these toddler jobs that throw tantrums when you can't give them what they want, when they want it and how they want it as creating a split in the labor force that men go into those jobs and then that leaves their wives doing the work at home. And women can only go in those jobs if they have a husband that's willing to stay home.
It's worth noting that one in five stay-at-home parents are dads. The likelihood that a dad is a stay-at-home dad has doubled in the last 40 years. Claudia Goldin about these greedy jobs is that she's never been able to figure out some jobs how to reduce the constraints. Claudia Goldin taught me early on in my PhD was if you look at obstetrics, it was completely male dominated profession, and the obstetrician would show up at your birth when you went into labor, and they always had to be on call 24 hours a day. And now it's a very female dominated job and they don't operate that way. They have rearranged their work so that when I was in labor, I was there so long I saw the entire practice as they rotated through.
I do not think that it made it worse. When I was in my 72nd hour and trying to decide about what we were going to do. I was glad not to have a doctor that was on their 72nd hour. So sometimes these rearrangements of the work can get us to a place where the work is more efficient, and it is more equitable.
Then the question is why do we have to drop everything to go see the client in Seattle even though it is your kids' play that night? And it is on companies try to ask that question. I also have seen people in those jobs where there's virtue signaling to your clients like it's Thanksgiving Day, but of course I'll take this meeting to deal with your problem that doesn't have to be dealt with in two months, right? Because it is a set of norms. Everybody needs to collude to say no.
Larry Bernstein:
In a household where the man is the sole provider and he loses his job, the female would enter the workforce right away to support the family. It was insurance.
When both people work, you have two income streams, then the family can take more employment risk maybe start a new business venture. How should we think about risk taking in two-earner homes?
Betsey Stevenson:
When couples work in different industries that are not correlated from a cyclical risk perspective, they tend to buy smaller houses. Why? Because it is more likely that if one of them loses the job, the other one doesn’t, and they want to still be able to pay the mortgage. So, buy a smaller house.
If they work in the same industry or industries that are cyclically correlated, then they buy bigger houses. If one of us goes down, we are all going down so we are going to have to move anyhow. And that is a good way to think about how they tolerate risk. There's insurance when you are doing different things that one person will be able to hold down a job when the other person loses it.
I want to start my own business. What if you work while I do that? That requires some faith that you are going to stay married for the working spouse to reap the benefits. If said business ventures were to turn out successfully and I showed that no fault divorce reduced the likelihood that are going to do that for each other because our courts are not good at saying, “you went to medical school for six years while she worked and paid for it and now you are a surgeon earning half a million a year. You must pay her back for the investment she made in your medical school career.” Since they do not tend to do that, we moved to worlds without alimony and women just said, “no, I am not supporting you. If you are going to school, we will rack up the debt and I'll go to school too.” There is a different risk, which is the risk that you break up. So how do we incentivize people making these investments in each other and in the business? Theoretically you could do that, but then you also must think about what guarantee is the marriage able to offer?
Jay Greene:
Different women make different choices. I was wondering if you are worried that women's choices are being restricted. You described increases in labor force participation as progress, which it might be if that is what women were preferring, and it might not be if that is what they were not. You also mentioned increased age of first child, and you did not mention reduction in fertility and more women having no children at all, even though when surveyed as young people, women report at very high rates a desire to have children.
I was wondering if you're worried that the economy is structured incentives that employers offer is restricting the options available to women, including the option not to be participating in the labor force for certain stretches. I mean policies that encourage you to freeze your eggs, this is great for the company, is this good for women? Whether some of these things might be described as progress might not be progress.
Betsey Stevenson:
I totally hear you. We want to be careful about normative statements. Is it bad that fewer men are working? I don't know. Is it good that fewer women are working? I don't know. I did probably have some judgment in there that was pro-work. I acknowledge that we should be agnostic about whether it is good or bad.
The likelihood of never being a mom bottomed in 2006. People get confused by the fertility data and I know we're still seeing declining births per year, but that's because people are delaying births and having them at older ages.
When you are looking at the flow, you are getting a different set of stats, which is what is the chance that a woman who is 50 years old today has ever become a mother. And I can tell you that it's higher than the chance that a woman who is 60 years old today has ever become a mother. So that is turning around and recovering.
The fastest growing fertility is 35 to 45. 15 to 19-year-old moms is just straight down. And again, we shouldn't have judgment, my mom was 19. But we do think that in today's modern society it's good for girls to be investing more in education because they have a long life in front of them rather than say having kids at 18 or 19, we also see pretty big declines in women having children between 20 and 24.
You asked about the idea of choices, and I would agree with you that my idea, I don’t know whether I'd call it feminism or just my idea of what's a just society is one where we have choices over how to live our lives.
I wouldn't restrict those choices just to women. I have a son; I love the boys just as much. I'd like them to have full set of choices and that would be the choice to bond with their baby, the choice to be able to be an active dad, the choice to be in the workforce or the choice to be trying to do both. I think the same thing is true for women. I do not think women are being forced into the labor force.
You might think that some women feel that to provide a stable financial existence, they need to work because they do not have a stable relationship. I do not know whether some women would prefer some other arrangement, but we could do more to facilitate choices so we could have more flexibility, we could have more maternity leave.
Jay Greene:
It is great if people wish to have children and are having them by the age of 50, but also when you have them might matter to you and the option of getting to know your grandchildren might also be important. I was troubled by why education is going longer that could be a bad thing if that is excess credentialism where you must get more degrees to obtain licensed occupations may not be improving quality but are required for employment opportunities. And so, we're forcing people structurally to delay family formation.
Betsey Stevenson:
I hate licensing. I'd love us to get rid of most of it. I'd like my doctor to have a license, but I don't need my hairdresser or my interior designer to. The increased demand in education comes from being in a much more sophisticated society. The arguments people make against college today are literally the same arguments people made against high school in 1920 and the United States economic growth through the 1950s, 1960s and 1970s defied the entire world because we were the only nation with so many people who had a high school education and were able to use the new technologies to be more productive. I do think the demand with AI, with technological change on workers, people to have skills so that they can be increasingly productive does mean that childhood is delayed.
I agree with you. I hope I live a nice long life and I get to spend time with my grandkids. Some people would like to have kids younger, and they would like to be able to do that by perhaps combining their PhD with having children or perhaps being able to have children when they're early on in their career without facing so much of a plateau in the age-wage profile, which tends to happen to women. If we could release some of those constraints through more flexibility, then it would allow women to have children at younger ages. One thing to keep in mind is in every country in the world where they make it easier for women to work when they have young kids at home, they have higher fertility rates. So, it goes hand in hand. Sweden has more kids than Italy, which is not as keen.
If we put in place policies that allow you to have a kid and stay home and work from home for a year because you do not want to leave that kid. I nursed until my kid was two. You want to be able to be home with your kid if you are nursing. So, you put those policies in place and you are going to see more fertility and you're probably still going to see more labor force participation.
Dave Bunning:
You mentioned men not reaching their potential. I think we are somewhere 60/40 female in college right now. What do we do about that?
Betsey Stevenson:
I think it is a huge problem. We need to recognize that boys learn differently than girls and we have structured our schools in a way that works well for girls and less well for boys who mature at a slower rate biologically. My son is in sixth grade, the boys look different from the girls and the way they learn is hugely different. What do boys need so they can thrive? It is not just that colleges are 60/40 female.
If you look at the ones graduating on the top of the class, they are disproportionately women. If you look at the ones going on to grad school now, they are disproportionately women. We have an education system that prioritizes following the rules. Is that going to be on the test? No, I will not tell you exactly what is going to be on the test. Just dig in and think about this messy world and see what you can give me.
Girls do well when they are told exactly what is going to be on the test and when they are told exactly what the rules are going to be. My kids are at a school where they will not teach the AP classes. I do not think boys do well in that environment and what happens is they feel dejected and angry by the time they're old enough to develop the skills to thrive in the labor force.
Men need to go into caring fields because we are a service economy. We are no longer a manufacturing economy. We do not have enough make stuff jobs for the guys. They have got to do some of the take care of people jobs, but they've coming out of high school feeling so emasculated as it is that when someone says, why don't you become a nurse? There is not a pleasant response to that. We must figure out from the young ages; how do we recognize and endorse male masculinity in a way that the guys can come out of high school better set for success at a wide range of things even working as a preschool teacher.
Brande Stellings:
Can we talk about the labor force participation and the pay gap? And we have seen a lot of movement of women into traditionally male jobs but have not seen men moving into the traditionally women's jobs.
Betsey Stevenson:
About 10 years ago I commented to a female economics journalist, God, there is a lot of women doing economics journalism now. And she said, yeah, when the wages start to fall, the women move in. There are two questions. One is this broader question about gender wage gap, and another is what is happening with wages. This has just been a tumultuous time the last four years; we broke the whole economy and then we had to build it back up and I think our data systems have been stressed and we only know a little bit about what is going on with wages and income. We know that wages at the bottom have grown more than at the top. And I learned important lessons about when and how you adopt new technology without hurting a lot of workers. So, a lot of people were worried we'd send all the service workers home, we would just replace them with self-checkout kiosks and ordering apps and then they'd be stuck, unemployed and unable to work.
But what happened was we had to pay the people who were coming back into grocery stores and fast-food restaurants extremely high wages compared to what they'd earned before almost double in some cases. I remember standing in the mall in 2021 and being like Panda Express is paying $75,000 a year for a manager. So, this was a lot of wage gains at the bottom, but it's because the companies had also adopted a lot of technology that meant all those workers were productive and they could sustain that.
What you really want to know is are women doing the exact same thing as men able to earn the same amount of money? And we do not have great stats on that, and we know that when we look at women in their twenties, it looks like they earn similar to what men earn. The gender wage gap is narrow now. But then we talk about these greedy jobs and men's wages start to explode and women start having kids and they do not take the greedy jobs. And we get this gap.
And a lot of people talk about this like its choices, but the choices are made in a context. It is the choice that the dad feels. I cannot go to my kids' plays. My daughter told me the other day, she overheard a boy in her school say, well, my dad does not care about things like parent-teacher meetings and school plays, and I wanted to cry for the kid. Maybe that dad is a jerk or maybe he just has one of these greedy jobs. And it is not that he doesn't care.
What I care about is when there's little instances of discrimination that compound over time, and we do see that. Lilly Ledbetter who died a week or two ago was discriminated early on and it just magnified over time. And that is one reason there is a lot of places that are starting to ban salary histories. We should be trying to evaluate people. And when we do that, we see that it reduces gender wage gaps.
I did some work for companies on how to reduce the gender wage gap. And one thing you can do is just think about your language and your recruiting material because you would think that this is a sketch comedy, but not, there was a tech company looking for data ninjas. No women applied for the data ninja job. And so, language can shape who sees themself in that picture. And then the other thing you should all be aware about is if you list five things you want in a job, women will feel like they should only apply for that job if they can do all five. Guys will feel they can apply for that job if they can do two.
Hugh Nickola:
You mentioned the decline of male participation rates. Where are these men? Are they in jobs that aren't being counted? Is there some role reversal and they are taking care of the kids? Do we know?
Betsey Stevenson:
They're in their mother's basements or they might be with a girlfriend. They are not usually taking care of kids. More than half of prime manage men who do not work say that they have health problems, mental health problems, physical health problems, opioid use, problems, pain. The late Alan Krueger showed that work from a decade ago showed that more than half of them report that they are experiencing pain daily.
And then not surprisingly, we ended up with a pain medication crisis. But literally how do they put food in their mouths and how do they live? They are usually mooching off some woman like the mother or a girlfriend. And then when they must work, they go to work and then when they have enough to survive for a few months, they quit.
JD Vance mentioned this at the beginning of his book, he talked about being at a job and a guy comes in, he works, and he is like “screw this boss.” And he quits, and JD Vance's like, why did he do that? Well, he had enough money to get through the next few weeks and he figured he would pick up another job like that. So, you mentioned how women used to go in and out of the labor force.
I'll come in because my husband is having trouble with his earnings, so I better get a job now. Our family is flush. I need to exit. What we see is men who are going in and out, not because they are happily married and their wife is earning a lot, but the economy is good enough that their mother is tolerating them in the basement and they are getting through and then the economy gets bad and they are like, please go get a job and they go get a job. So, you are seeing a little bit more cyclicality in that male labor force participation.
Larry Bernstein:
You are the former Chief Economist at the Department of Labor. And I want to ask you about the two major surveys that estimate changes in US employment.
The US employment report is the most important economic statistic in the US and the world as it helps investors, the Fed, and other economic players evaluate the current state of the economy.
The first is the Household Survey, where someone from the Bureau of Labor Statistics calls a home and asks if anyone living there has got or lost a job in the past month. The Household Survey has an exceptionally large standard error each month, but in the long run it is more accurate than the second survey called the Establishment Survey that gets employment data directly from our largest firms. The problem with the Establishment Survey is that it does not get information from smaller firms or newly formed firms. And these small firms are where the action is because they hire a lot of people in good times and go bust in bad times.
14 years ago, when you spoke to my book club, I asked you how you evaluate the state of the labor market. At that time, you said that what you weigh the household survey 60% and the establishment survey 40%, but that you make an adjustment to the household survey by using a three-month average because the error in any given month is too big.
You also mentioned that there were budget cuts in the Bureau of Labor Statistics that would reduce the number of surveyed households and that would hurt the data quality.
Telephone surveys are much more difficult today because of the loss of landlines and a reluctance to answer phone calls from strangers.
What do you think of the current employment studies, data collection, and how do you evaluate the monthly jobs report now?
Betsey Stevenson:
Well, I just signed a letter saying, do not cut the CPS like last week. I am in the same place on that. I do think the Household Survey does give us an important window into what is happening in people's lives. There has been some problems with it that I've been worried about, but it captures things that the Establishment Survey can't capture. In those 14 years, I have done more research on looking at the two. This idea of averaging; I was smart back then. Averaging three months of the Household and putting a bigger weight on that also probably makes a bunch of sense.
Larry Bernstein:
In the past year, the Household Survey has shown almost no job growth while the Establishment Survey estimated that the US economy grew by 2.5 million workers. Why has there been such a divergence between the two surveys. What is causing this discrepancy? Do you think maybe the Household Survey fails to capture the surge in new immigrant labor?
Betsey Stevenson:
When the two are diverging, something is wrong, we put all of these pieces of data together to try to figure out what's right, what's going on with the Household Survey. Right now, if you go back to the 1990s, we saw a similar problem because we had an influx of immigration.
The pandemic really hurt the Household Survey. It has been harder to trace people. They have gotten a lower response rate. They have not been able to keep people in the sample for as long. They have had people dropping out. I have thought of the labor market as weakening over the last year because the Household Survey shows no growth in employment. Now we have got this gangbusters Establishment Survey shows 200,000 jobs added every month with literally no growth. And the household survey, well what did we just find out? The benchmark revision is going to take nearly a million jobs off that Establishment Survey.
The Establishment Survey does poorly when we are in a period where there is a lot of births and deaths of firms. It is relying on patterns of new businesses being formed and businesses dying. And if those patterns are disrupted, they do not know how to think about getting new businesses in and figuring out which businesses died.
That is one reason why the Establishment Survey is a little wackadoodle right now. That survey is the best thing we have. There is nothing better.
There has been a huge increase in young people having side hustles. When we look at the Household Survey data that asks people about a side hustle, everybody seems to have one. Particularly if you are young, and particularly if you are high earning.
The Household Survey does not pick up side hustles because when they ask you if you have a second job, people are just like, nah, not really. Why do you have these two 1099s in addition to your W2? Oh, because they did some work for this guy. Well, isn't that a second job? Well, not really. I just did it when I wanted to.
In the survey that we match the survey data up to W2s plus 1099s, and why are you all lying to us about your second job? And they are like, I do not really think of it as a second job. I think of it as a side hustle. I think if we ask people, do you have any kind of side hustle? There is a large share of young people, maybe to drive for Uber or Lyft. Maybe they are selling things on Etsy, making friendship bracelets for the Taylor Swift concert. Most people would not abandon their primary job for their side hustle.
Larry Bernstein:
Thanks to Betsey for joining us today.
If you missed our previous podcast the topic was Why the Presidential Polls Were Flawed? Our speaker was Patrick Ruffini who is a pollster with Echelon Insights and the author of the book Party of the People: Inside the Multiracial Populist Coalition Remaking the GOP. Patrick explained why the polls methodological construction was defective.
You can find our previous episodes and transcripts on our website whathappensnextin6minutes.com. Please follow us on Apple Podcasts or Spotify. Thank you for joining us today, goodbye.
Check out our previous episode, Are the Presidential Polls Flawed, here.
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