Women Slowly Shifting to Higher-Paying College Majors

What female students opt to study helps explain why gender pay gap persists—but their choices are changing

Over the past six decades, women have enrolled in college in greater and greater numbers. Those born in the mid-1980s are 22% more likely to hold a bachelor’s degree than men. Yet they still see lower wages.

That may have something to do with what women study and the jobs they take once they graduate, choices that are slowly shifting, according to new research by a trio of economists set to be published next week.

Female students tend to major in fields that lead to lower-paying jobs than their male counterparts, according to the paper by Carolyn Sloane of the University of California, Riverside, and Erik Hurst and Dan Black of the University of Chicago. And even when they do major in traditionally male-dominated fields, they often end up in jobs with lower potential salaries.

Why they make those choices will be the subject of future research, Ms. Sloane said.

The new research helps explain why the earnings gap between men and women in the labor force remains pronounced despite the rising number of women with college degrees.

Using data from the census, the researchers found that college-educated women earn about 23.3% less than college-educated men, after taking demographic factors such as age or race into account. About half of that gap comes from the choices that men and women make in college majors and, when they major in the same topics, from the occupations they pursue.

There’s an important thing that happens in schooling and that is the specialization,” Ms. Sloane said. “It’s not just whether you’re getting more B.A.s, but where did you put your efforts in terms of your training.”

The researchers grouped college graduates in 10-year birth cohorts and tracked how their choices of college majors changed over the years, as well as the professions in which they ended up.

They found that while women have started to move into traditionally higher-paying and male-dominated majors, they still are more likely to graduate with degrees in areas associated with lower-paying jobs.

Women born in the 1950s chose majors with potential wages that were 12.5% lower than potential wages for majors picked by men. Those born in the 1990s picked majors with potential wages that were 9.5% lower than men did, suggesting the gap has shrunk slightly.

But even when women majored in traditionally male-dominated topics such as engineering or business, they tended to end up in professions with lower potential wages. For instance, women born between 1955 and 1965 who majored in those fields worked in professions where the potential wage was 12% below those chosen by their male counterparts. For women born between 1975 and 1985, that gap had narrowed to 6%.

In part, the difference in potential earnings has to do with women working in jobs with lower hours requirements. Across all age cohorts and college majors, the researchers found that women work at jobs that require 3% fewer hours worked than men do.

The Dangers of Hiring for Cultural Fit

Employers often aim to hire people they think will be a good fit, but their efforts can easily veer into a ditch where new hires all look, think and act alike

What happens when a boss tries to foster a more inviting workplace, but not everyone feels invited?

Employers often aim to hire people they think will be a good “cultural fit,” with attributes that will mesh with a company’s goals and values. But their efforts can easily veer into a ditch where new hires all look, think and act alike. That’s bad for anyone who cares about an office with a mix of races, genders and points of view.

“What most people mean by culture fit is hiring people they’d like to have a beer with,” says Patty McCord, a human-resources consultant and former chief talent officer at Netflix. “You end up with this big, homogenous culture where everybody looks alike, everybody thinks alike, and everybody likes drinking beer at 3 o’clock in the afternoon with the bros,” she says.

Human-resources consultant Patty McCord says some employers err in trying to attract top talent by offering such frills as office ping pong or the latest craft beer. PHOTO: DEVI PRIDE

An alluring culture is a coveted prize in today’s tight labor market, surging to first from fifth place in the last five years as the most important factor in recruiting top talent, according to a 2018 Korn Ferry survey of 1,100 hiring managers. But there’s a difference between cultural frills like office ping pong and craft beer, and deeper ones that mean more. To employees, it means loving a job for more than just the paycheck. And to employers, it means employees will keep working hard even when no one is watching.

Making a good match can be difficult. In a pattern researchers call looking-glass merit, hirers tend to look for traits in candidates that make them feel good about themselves. These may be more nuanced than race or gender. A manager who got bad grades as a college freshman is likely to warm to an applicant who also got off to a rough start, research shows. Or a hirer who attended a low-prestige school may favor applicants who did the same.

“What most interviewers are looking for and acting on is more of an intuitive sense of, ‘Would I get along with this person?’ and that often isn’t very reliable,” says Kirsta Anderson, global head of culture transformation in London for Korn Ferry.

Employees err in taking a job because it offers office ping pong, free lunches or heated toilet seats. Ms. McCord recently met an HR executive who claimed to keep employees happy by serving up the latest craft beers. “Well, that sounds like a fun vacation. I’d probably go to that resort. But that’s not what you’re here to do,” says Ms. McCord, author of “Powerful,” a book on building workplace cultures.

Hiring managers need to go deeper and figure out whether applicants are in sync with more fundamental elements of their culture, Ms. Anderson says. Are they excited about how the company innovates, serves customers or makes a social impact? Will they mesh with the way individuals and teams at the company work, by collaborating or competing? And will they naturally make decisions the way the employer wants—individually or as a group, embracing or avoiding risk?

It isn’t easy to suss out those traits in an interview. Jeanne Leasure, a human-resources executive, recalls interviewing applicants for a job that gave employees a lot of autonomy. She was looking for recruits who were self-starters, but wound up hiring one who turned out to be a lovable slacker. “We hit it off, we had similar personalities,” and the applicant gave convincing answers when she asked him about past accomplishments, she says. But on the job, he didn’t have as much drive as she’d hoped, says Ms. Leasure, who was recently named senior vice president, people, at SpotX, an ad-tech company based in Broomfield, Colo. She has begun asking more probing questions, such as, “What was your work ethic like as a teenager?”

Ad-agency founder Ed Mitzen looks for recruits who are empathetic and at ease in his company’s flat, no-titles, team-based culture. PHOTO:FINGERPAINT

Fingerpaint Marketing is a flat organization with no lofty job titles, and its teams must work smoothly together on tight deadlines. When Ed Mitzen, founder of the Saratoga Springs, N.Y., agency, interviews candidates, he explores whether they’ll be kind to everyone regardless of status, and pleasant to work with. If teammates enjoy working with them, he reasons the team will get more done and do better work.

He screens out big egos partly by asking drivers for his company’s car service how candidates treated them en route to and from the interview. “If they’re a jerk to the car-service guy, that’s a warning sign,” Mr. Mitzen says. He once rejected an applicant partly because he put on airs with the driver and expected him to open the door for him.

“Really? You’re applying for a $150,000-a-year job,” Mr. Mitzen says. “You’re not applying to be ambassador to France. Take it easy.”

The best hires find the company’s business goals motivational, Ms. McCord says. “A big filter for hiring people at Netflix was, were they interested in our goal of making the customer happy?” Ms. McCord says. She invited applicants to see the customer as someone like their mom—not the engineer at the next desk, she says.

Many employers post their cultural values on the wall but fail to make them explicit to job applicants, says S. Chris Edmonds, author of “The Culture Engine.” This can easily lead to misfires. Some 7% of workers ages 24 to 36 say they dislike their employer’s culture so much that they intend to quit their jobs in the next two years, according to a 2019 survey by Deloitte of 13,416 millennial employees.

More young workers are holding employers accountable for their values, and insisting that their companies stand for something, Mr. Edmonds says. Some 32% of millennials say businesses should try to reduce inequality and support better education, but only 16% of the employees say companies are actually doing so, the Deloitte survey shows. And while 27% of millennials think businesses should protect the environment, only 12% believe they’re doing so.

The growing employee activism is marked by walkouts protesting employers’ stance on the environment, immigration policy or use of their technology for military drone strikes. Some 38% of developers have approached their leadership with such misgivings or concerns, according to a recent HackerRank survey of 71,000 software developers.

All that promises to put more CEOs on the hot seat. As employees become more vocal, “C-suite leaders will have to listen,” Mr. Edmonds says. And that, he says, is a good thing: “It helps employers get clearer about, ‘This is what we stand for.’ ”

Israel Wants Palestine’s Land, but Not Its People

Mr. Netanyahu only confirmed an unspoken truth. And yet something has changed.

RAMALLAH, West Bank — Last week, ahead of the parliamentary elections in Israel this Tuesday, Prime Minister Benjamin Netanyahu promised that if re-elected, he would annex up to one-third of the occupied West Bank.

His announcement prompted widespread international condemnation. But for most Palestinians such declarations mean nothing. We’ve heard many statements of support over the years, and nothing ever changes. Cynicism is widespread; by now, many of us would prefer straight talk. As Gideon Levy, a columnist for Haaretz, wrote recently, referring to Mr. Netanyahu’s plan: “Let him turn the reality in this territory into a political reality, without hiding it any longer. The time has come for truth.”

Israel already is reaping all the benefits of annexation in the West Bank, and without having to bear any responsibility for the welfare of the Palestinians living here.

Mr. Netanyahu made this promise, on the eve of an election, only to please his right-wing supporters. Formal annexation won’t bring about any real change or extra benefits for the Israelis who live in the occupied areas. For all intents and purposes, the Israeli government already treats them as though they were living in Israel proper (extending Israeli law to them), and gives them perks (cheap mortgages and tax relief).

That’s one reason that many Palestinians I know have come to believe in a one-state solution: After all, with so many Israeli settlements in the West Bank by now, a two-state solution would be impossible to implement. That’s not to say, however, that many Palestinians welcome Mr. Netanyahu’s formal annexation plan as a step forward toward that goal.

Israel has always wanted this land — without its people. And the territory Mr. Netanyahu is promising to annex is sparsely populated with Palestinians. Most Palestinians living in the areas slated for annexation have already lost their land and they would not get it back. They would simply be condemned to remaining laborers in the service of Israeli usurpers.

But Mr. Netanyahu’s move would, at least, have the virtue of being clarifying: If implemented, it would confirm the demise of the 1993 Oslo Accords — a development that many Palestinians would welcome because they have been disappointed by the agreement. Under the accords, the permanent status of the territories in the West Bank was to be negotiated between Israel and the Palestine Liberation Organization; outright annexation, as Mr. Netanyahu is now proposing, would be a clear violation.

For a time, the agreement was expected to bring about a negotiated peace between the two sides and freedom for the Palestinians. Instead, over the years it has enabled Israel to keep exploiting Palestinians economically, control much of their resources and exercise total dominion over their borders.

Mr. Netanyahu was an avowed opponent of the Oslo Accords when he was in the political opposition, before 1996, the year he first became prime minister. By now, after his various stints as Israel’s leader, he can claim credit among his supporters for having shrewdly managed the occupation of the West Bank until the time he could fully annex the territory. He furthered this goal with his unfettered encouragement of more and more Jewish settlements being built in the West Bank.

Palestinians have little interest in the elections in Israel this week. I’m not sure if that’s the result of their experience of living under an occupation that has morphed into ravenous colonial rule or of the economic hardships they suffer. Either way, I think few Palestinians believe that it will make much difference to them who is elected. None of the candidates is expressing a clear position on the future of Israeli-Palestinian relations; those simply are not on the campaign agenda. I wrote nearly the same thing half a year ago, before the previous election.

What does stand out is the ever-growing discrepancy in power between Israel and the Palestinians. When Mr. Netanyahu declares that he will annex about one-third of the West Bank, everyone knows he has the power to do so. When Mahmoud Abbas, the president of the Palestinian Authority, declares that he will cancel the divisions of the West Bank created by the Oslo Accords — into so-called Areas A, B and C — which gave Israel power over more than 60 percent of the area, everyone knows he is powerless to implement that announcement.

Israeli flags in front of an Israeli settlement on the southern outskirts of the West Bank city of Bethlehem.
CreditThomas Coex/Agence France-Presse — Getty Images

Worse, it is possible that Mr. Netanyahu is shrewd enough to carry out his promise of annexation and then manage to weather all the criticism and the consequences. He would probably justify the measure as being necessary for the defense of his country: He recently said to his voters in a Facebook post that Arabs “want to annihilate us all — women, children and men.” (Facebook then temporarily suspended some features of the account, as a penalty for violating the company’s hate-speech policy.) This hardly augurs well for the prospect of peace between our two nations if Mr. Netanyahu is re-elected.

Then again, it’s not like his main opponent, Benny Gantz, a former military chief, is better disposed toward us Palestinians. Short of being a Saudi billionaire, Mr. Gantz said last week, “the best place to be an Arab in the Middle East is in Israel” — as though Palestinians in Israel were treated like Israelis’ equals. “And the second-best place to be an Arab in the Middle East is the West Bank.” As though Palestinians — or anyone — could be happy living under foreign occupation for half a century. How deep can denial go?

Mr. Netanyahu is shameless. Mr. Gantz is blind. Palestinians see no prospect in this election. How could they?

Historic Asset Boom Passes by Half of Families

Scant wealth leaves families vulnerable if recession hits, economists say

The decadelong economic expansion has showered the U.S. with staggering new wealth driven by a booming stock market and rising house prices.

But that windfall has passed by many Americans. The bottom half of all U.S. households, as measured by wealth, have only recently regained the wealth lost in the 2007-2009 recession and still have 32% less wealth, adjusted for inflation, than in 2003, according to recent Federal Reserve figures. The top 1% of households have more than twice as much as they did in 2003.

This points to a potentially worrisome side of the expansion, now the longest on record. If another recession comes, it could be devastating for people who have only just recovered from the last one.

Wealth Rebound

Wealth, also called net worth, is the value of assets such as houses, savings and stocks minus debt such as mortgages and credit-card balances. Net worth is different from income, the cash a household receives each month such as wages, dividends and government benefits. It is common for countries to have a highly skewed wealth distribution. Nonetheless, in the U.S., wealth inequality has grown faster than income inequality in the past decade, making the current wealth gap the widest in the postwar period, according to a study by Moritz Kuhn, Moritz Schularick and Ulrike Steins, economists at the University of Bonn.

Behind this trend: More than 85% of the assets of the wealthiest 1% are in financial assets such as stocks, bonds or stakes in private companies. By contrast, slightly more than half of all assets owned by the bottom 50% of households comes from real estate, such as the family home. Economic and regulatory trends over the past decade have not only favored stock over housing wealth, but have also made it harder for the less affluent to even buy a home.

Since 2009, home prices have outpaced incomes, making it harder for families to purchase their first home.

Home prices have increased 41% since 2009

40

%

30

20

Percentage change in price of a starter home

10

Income has grown 8%

0

Percentage change in median income

-10

-20

2009

’10

’11

’12

’13

’14

’15

’16

’17

Note: Adjusted for inflation

Sources: CoreLogic (home prices); Commerce Department (incomes)

Until the mid-2000s, the net worth of households across the wealth distribution increased at roughly the same pace, keeping inequality stable. That started to change when housing prices took off in the early 2000s. For the bottom 50%, rising home values were more than offset by mortgage debt, which almost doubled between 2003 and 2007. For the top 1%, debt was flat between those years. When the housing bubble burst, many less-affluent households saw housing wealth wiped out; some lost their homes altogether.

Today, the bottom half of American households aren’t carrying so much debt compared with the prerecession peak, after adjusting for inflation. And starting in 2012, a recovery in home prices has allowed their net worth to inch up. But house prices, adjusted for inflation, have yet to reach their 2006 peak, according to the S&P CoreLogic Case-Shiller index. Meanwhile, a decade of rising equity prices has buoyed the 1% wealthiest households, pushing the value of their financial assets up 72% since the recession, after adjusting for inflation.

The bottom 50% of households saw a much bigger rise in mortgage debt during the housing boom than wealthier households

Aggregate mortgage debt, in trillions ($)

0

Top 1%

Next 9%

Bottom 50%

-1.5

-3.0

-4.5

-6.0

2005

’10

’15

2005

’10

’15

2005

’10

’15

Note: Figures shown in 2019 dollars

Source: Federal Reserve

Structural economic forces have affected the wealth of the rich and the lower-middle class differently. The Fed kept interest rates near zero and bought bonds in the years after the crisis to revive the economy, in the process amplifying the run-up in asset prices. “Who owns that stuff? Rich people,” said Karen Petrou, managing partner at Federal Financial Analytics.

Meanwhile, the share of families in the bottom half who own a home has fallen to about 37% in 2016, the latest year for which data are available, from 43% in 2007, according to the Fed. Homeownership among the entire population has crept up since 2016.

Homes in Las Vegas. More than half of all assets owned by the bottom 50% of households comes from real estate, such as the family home.PHOTO: ROGER KISBY FOR THE WALL STREET JOURNAL

For those who lost a house during the recession or never had one, getting a toehold in homeownership has become more difficult. Partly because of regulations designed to prevent another crisis, banks have toughened credit standards and down-payment requirements, said Susan Wachter, a University of Pennsylvania economist. Had the looser, prerecession credit standards stayed, the proportion of Americans who own their home would have been 5.2 percentage points higher in 2010-2013, a study by Ms. Wachter and three co-authors estimates.

Why the Economic Expansion Missed Many Americans

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How the Other Half Lives
The net worth of the bottom half of American households has been slow to come back from the recession.
Wealth for the bottom 50% of Americans

Assets

Liabilities

Net worth

Net debt

RECESSION22.533.544.555.566.5$7 trillion20042006200820102012201420162018
Note: Figures shown in 2019 dollars
Source: Federal Reserve
Danny Dougherty/THE WALL STREET JOURNAL
When the housing bubble burst, asset values plummeted, while debt fell much more slowly.
In 2010, the bottom 50% of American households had more debts than assets.
Wealth grew as the recession ended, as assets outpaced debt.
In recent years, the growth in assets has outpaced debt, allowing net worth to recover.
Households with little wealth, however, are more exposed to the vagaries of the economy. Areas that saw a bigger drop in housing wealth after the recession also suffered a sharper decline in consumption, according to research by economists Atif Mian, Kamalesh Rao and Amir Sufi.

“If no shock is happening then everything is fine, but if a shock is happening you have a much more fragile economy,” said Mr. Kuhn.

How can lawmakers address the gap in household wealth, if at all? Join the conversation below.

Leticia Segura ’s house in the West Humboldt Park neighborhood of Chicago lost about half its value during the recession, she said. Today, it is worth about $250,000, still almost $30,000 short of its value in 2007, she said.

Ms. Segura and her husband, Jesus, almost lost the home to foreclosure during the crisis after Mr. Segura lost his job and the couple fell behind on mortgage payments. A government program helped the couple get current, but they remained underwater on their mortgage until just a few months ago, meaning they owed more than their home’s value.

Today, both have new jobs and Ms. Segura feels more comfortable financially. But the couple remains cautious. They have set aside some money to cover the mortgage for three or four months should disaster strike again. “After that we’d just have to pray,” she said.