Women earn significantly less than men for reservation wages

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If you’re currently in the job market, what’s the lowest pay you’re willing to accept for a new job? It’s a question that Federal Reserve Bank of New York researchers ask workers in their Survey of Consumer ExpectationsEach year, they do so three times. They’re studying the so-called “reservation wage,”These data have changed dramatically over time.

According to the latest data, the average wage that workers will accept is up since the pandemic. From July 2021-2022The reservation wage went up from $68,954 a $72,873.

The differences in the responses of men and women show a significant gap. The reservation wage for men increased to $86,259 while it decreased to $59,543 for women.

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Women Expect Lower Salaries Than Men—Or Do They?

We’ve heard all of our lives about the “gender pay gap“—the most recent numbers showing that women earn 82 cents to every dollar earned by men. When you adjust for experience, job type and hours worked, the numbers are even more convincing. Women actually earn 99 cents for every dollar men make.

Similar patterns are observed for reservation wages.

“Women educated in mathematics, IT, and physics are found to report higher reservation wages than other women and there is no difference in pay expectations between them and men,”According to ResearchEwa Cukrowska–Torzewska is an economic sciences professor at the University of Warsaw.

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This means that women tend to study and choose careers that pay less, which in part causes a wage gap. This gap disappears when women choose STEM fields. 

Cukrowska Torzewska explains that the bottom line is that we have to take responsibility for our actions. “a higher presence of women in STEM fields as a way of achieving greater gender equality in the labor markets.”

The Pandemic Effect

Women might be paid less than men because they are not working. Women are often left out of studies.

It’s well documented that women Workforce members left in drovesThe pandemic first began. Even though it was a pandemic, “shecession”Shows signs of recoveryWomen are still more likely to stay at home with their children as a result than men.

The pandemic is a reminder that women are more likely to accept a lower pay rate because they value their free time and will not work as hard.

Why is it important to pay reservation wages?

Final results of reservation wages are in the form real wages. A German StudyThe gender wage gap disappears after accounting for reservation wages, according to our findings.

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