Claudia Goldin

The Great Compression: The Wage Structure in the United States at Mid-Century

The structure of wages narrowed considerably during the 1940s, increased slightly during the 1950s and 1960s, and then expanded greatly after 1970. The era of wage stretching of the past two decades has been a current focus, but we return attention here to the decade that was witness to an extraordinary compression in the wage structure. Wages narrowed by education, job experience, region, and occupation, and compression occurred within these cells as well. For white men, the 90-10 differential in the log of wages was 1.414 in 1940 but 1.060 in 1950. By 1985 it has risen back to its 1940 level. Thus the recent widening of the wage structure has returned to it a dispersion characteristic of fifty years ago. We explore various explanations for the rapid compression in the wage structure during the 1940s and for its maintenance during the subsequent decade or more. We first assess the hypothesis that the Great Depression left the wage structure in 1939 more unequal than in the late 1920s, but we find evidence to the contrary. World War II and the National War Labor Board share some of the credit for the Great Compression. But much belongs to a rapid increase in the demand for unskilled labor at a time when educated labor was greatly increasing in number. These same factors caused the wage structure to remain compressed until its expansion during the past two decades.

Monitoring Costs and Occupational Segregation by Sex: A Historical Analysis

Female manufacturing workers around 1900 were far more likely to be paid by the piece and were rarely employed at the same occupation in the same firm as males. These and related aspects of work organization can be understood through a model in which workers shirk, monitoring is costly, and males and females have different turnover rates. Employers adopt either piece rates or deferred payment. Occupational segregation by sex and differences in earnings result even if workers are equally productive. Establishment-level data on supervising male and female workers in time- and piece-rate positions are examined.

Egalitarianism and the Returns to Education during the Great Transformation of American Education

Secondary school education greatly expanded in the United States from 1910 to 1940, setting its schooling attainment apart from that of all other countries. Barely 10 percent of youth were high school graduates in 1910, but by the mid 1930s the median youth had a high school diploma. In some regions, by the 1930s enrollment and graduation rates rose to levels that were as high as they would be two decades later. The issue addressed here concerns the economic impact of the large increase in the supply of educated labor. Evidence is presented concerning the sharp decline in the wage premium to ordinary white‐collar workers. With the expansion of the high school, large numbers of Americans competed for positions in the coveted white‐collar sector. Although the return to a year of high school remained considerable on the eve of World War II, egalitarianism had evened the playing field for a substantial segment of Americans.

The Long Road to the Fast Track: Career and Family

The career and family outcomes of college graduate women suggest that the twentieth century contained five distinct cohorts. The first cohort, graduating college from 1900 to 1920, had either “family or career.” The second, graduating from 1920 to 1945, had “job then family.” The third cohort, the college graduate mothers of the baby boom, graduated from 1946 to the mid1960s and had “family then job.” Among the fourth cohort, graduating college from the late 1960s to 1980 and whose stated goal was “career then family,” 13 to 18 percent achieved both by age forty. The objective of the fifth cohort, graduating from around 1980 to 1990, has been “career and family,” and 21 to 28 percent have realized that goal by age forty. The author traces the demographic and labor force experiences of these five cohorts of college graduates and discusses why “career and family” outcomes changed over time.

The Economic Cost of the American Civil War: Estimates and Implications

We are right to see power, prestige, and confidence as conditioned by the Civil War. But it is a very easy step to regard the War, therefore, as a jolly piece of luck only slightly disguised, part of our divinely instituted success story, and to think, in some shadowy corner of the mind, of the dead at Gettysburg as a small price to pay for the development of a really satisfactory and cheap compact car with decent pick-up and road-holding capability. It is to our credit that we survived the War and tempered our national fiber in the process, but human decency and the future security of our country demand that we look at the costs. What are some of the costs? Robert Penn Warren, The Legacy of the Civil War (New York: Random House, 1961), pp. 49–50.

Making a Name: Women's Surnames at Marriage and Beyond

This paper tracks the fraction of college graduate women who kept their surnames upon marriage and after childbirth and explores some of the correlates of surname retention. Data from the New York Times, Harvard College alumni books, and Massachusetts birth records are used. Surname retention at marriage greatly increased from 1975 to about 1985 although Massachusetts birth records and the Harvard data show a decrease in the fraction keeping their surnames beginning around the early 1990s. The observable characteristics of importance in surname retention are those revealing that the bride has already “made a name†for herself.

For-Profit Colleges

For-profit, or proprietary, colleges are the fastest-growing postsecondary schools in the nation, enrolling a disproportionately high share of disadvantaged and minority students and those ill-prepared for college. Because these schools, many of them big national chains, derive most of their revenue from taxpayer-funded student financial aid, they are of interest to policy makers not only for the role they play in the higher education spectrum but also for the value they provide their students. In this article, David Deming, Claudia Goldin, and Lawrence Katz look at the students who attend for-profits, the reasons they choose these schools, and student outcomes on a number of broad measures and draw several conclusions. First, the authors write, the evidence shows that public community colleges may provide an equal or better education at lower cost than for-profits. But budget pressures mean that community colleges and other nonselective public institutions may not be able to meet the demand for higher education. Some students unable to get into desired courses and programs at public institutions may face only two alternatives: attendance at a for-profit or no postsecondary education at all. Second, for-profits appear to be at their best with well-defined programs of short duration that prepare students for a specific occupation. But for-profit completion rates, default rates, and labor market outcomes for students seeking associate’s or higher degrees compare unfavorably with those of public postsecondary institutions. In principle, taxpayer investment in student aid should be accompanied by scrutiny concerning whether students complete their course of study and subsequently earn enough to justify the investment and pay back their student loans. Designing appropriate regulations to help students navigate the market for higher education has proven to be a challenge because of the great variation in student goals and types of programs. Ensuring that potential students have complete and objective information about the costs and expected benefits of for-profit programs could improve postsecondary education opportunities for disadvantaged students and counter aggressive and potentially misleading recruitment practices at for-profit colleges, the authors write.

The Cost of Workplace Flexibility for High-Powered Professionals

The authors study the pecuniary penalties for family-related amenities in the workplace (e.g., job interruptions, short hours, part-time work, and flexibility during the workday), how women have responded to them, and how the penalties have changed over time. The pecuniary penalties to behaviors that are beneficial to family appear to have decreased in many professions. Self-employment has declined in many of the high-end professions (e.g., pharmacy, optometry, dentistry, law, medicine, and veterinary medicine) where it was costly in terms of workplace flexibility. The authors conclude that many professions have experienced an increase in workplace flexibility, driven often by exogenous factors (e.g., increased scale of operations and shifts to corporate ownership of business) but also endogenously because of an increased number of women. Workplace flexibility in some positions, notably in the business and financial sectors, has lagged.

Maximum Hours Legislation and Female Employment: A Reassessment

The causes and consequences of state maximum hours legislation for female workers, passed from 1848 to the 1920s, are found to differ from a recent interpretation. Although maximum hours legislation served to reduce scheduled hours in 1920, the impact was minimal. Curiously, the legislation appears to have operated equally for men. Legislation affecting only women was symptomatic of a general desire by labor for lower hours, and these lower hours were achieved in the tight, and otherwise special, World War I labor market. Most important, the restrictiveness of the legislation had no adverse effect on the employment share of women in manufacturing.

The historical evolution of female earnings functions and occupations

Of all the changes in the history of womens market work, few have been more impressive than the rapid emergence and feminization of the clerical sector and the related decline in manufacturing employment for women. Although a century ago few women were clerical workers, as early as 1920 22% of all employed non-farm women were, and about 50% of all clerical workers were women. Employment for women in the clerical sector expanded at five times the annual rate in manufacturing from 1890 to 1930, and during the same period of time wages for female clerical workers fell relative to those in manufacturing. This paper explores the underlying causes of these dramatic sectoral shifts by estimating the relationship between earnings and experience for manufacturing and clerical workers from 1888 to 1940. It is seen that earnings profiles for employment in manufacturing rose steeply with experience and peaked early, while those in the clerical sector were much flatter and did not peak within the relevant range. Returns to off-job training and depreciation with age and with time away from the labor force also differed between these occupations. A model of sectoral shift is developed in which workers choose occupations and therefore the time path of training on the basis of their life-cycle labor force participation and their consumption value of education. The coefficients from the earnings function estimations are used to demonstrate that the decline in the relative wage of clerical to manufacturing work from 1890 to 1930 can be explained by such a model, Finally, it is shown that a sizable percentage of the difference in the growth of female employment in the manufacturing and clerical sectors can be explained by various labor supply factors.