Secondary Wage Effect

Years ago, I used to teach an undergraduate economics course at the University of Minnesota on labor economics. I should say that I was not a professor at that time, just a teaching assistant, but at the U of Mn, T.A.'s were almost the only teachers for undergraduate econ classes.

One subject that interested me was the discussion of the difference in female and male wages. An oft quoted statistic was that for every dollar a man earned, a woman would earn X cents. The “X” would keep rising over time. At that time it might have been 69 cents. Today I think it is up to 76 cents. This increase is reflective of a great revolution going on in the marketplace.

But the question is, “Why is it lower in the first place.” The answer, I knew, was that women have always tended to do different kinds of jobs than men did in the marketplace. Look around and you will see “male jobs” and “female jobs” all around. Sure, some jobs are mixed but many aren’t. But why is that?

One idea I had at that time was that most women who work have a husband who is the primary wage earner. It occurred to me that a secondary wage earner’s priorities in the labor market might be different than a primary wage earner’s. The primary wage earner cares almost exclusively about making as much money as possible since the family really depends on this income. But the secondary wage earner might trade a bit of salary for other benefits associated with work. These benefits might be pleasant work environment, nice job satisfaction, prestige, flexible work hours, no travel or relocation, and/or light work.

For example, my father was an engineer. The work often was unpleasant: he spent many years traveling to Nevada to work in caves that were built to test atomic bombs. Obviously the money was everything. My mother worked as a librarian. She could have made much more money as a bricklayer. Needless to say, she never considered such an option. She wanted to work, but the salary wasn’t the primary function of the work. She liked the work environment of the library and it gave her a lot of non-monetary benefits.

A regular reader of mine, Ravi of Ravisez pointed me to this interesting article on the male-female wage difference. Here is the money quote:

After years of research, I discovered 25 differences in the work-life choices of men and women. All 25 lead to men earning more money, but to women having better lives.

(Link).

For my wife and me, the roles are completely reversed: she now makes more money than I do. If she is transferred, I’ll have to follow and take whatever job is available. We have to do things that improve her career.

This blog is an example of a type of labor that provides no family income but immense job satisfaction. One might view “secondary wage effect” as a form of shirking. I suppose one might view blogging that way. But being the primary wage earner is always immensely satisfying in its own way.