When Better Amenities Widen the Wage Gap

The policy question is not whether better job amenities are good in the abstract. It is how a change in schedules, flexibility, or remote-work access changes who accepts which jobs and how the wage and employment gaps respond. The Chicago Fed model offers two amenity-targeting comparisons and a remote-work application, giving readers a way to judge a workplace change across several outcomes instead of treating a narrower wage gap as the only definition of improvement.

Two amenity targets, two kinds of gap

In the model's baseline, firms choose amenity levels to reflect the average amenity valuation of searchers in the economy. The authors then consider what happens when firms target amenities more toward men or more toward women. These are not simple recommendations for employers. They are controlled thought experiments that show how the same broad lever—job amenities—can shift wages, employment, productivity, and job value in different directions.

When firms target amenities toward men, the modeled gender wage gap becomes smaller but the employment gap becomes wider. The mechanism runs through the offer threshold. With relatively less amenity provision for women, women’s reservation wages rise: a job must offer more productive or monetary value to be worth accepting. Women then accept higher-productivity jobs, which raises the wage position of those who work but leaves more women outside employment in the model. The narrower wage gap is purchased, in this scenario, through a wider employment gap.

The result is easy to misread if “wage gap” is treated as the full objective. A policy that moves employed women toward higher-productivity jobs may improve the wages measured among those who accept work. But if the same policy makes other jobs less acceptable, it can reduce employment access. A change can therefore look favorable in a wage statistic while worsening the share of women able or willing to enter the modeled employment state.

The reverse scenario is also revealing. When firms target amenities toward women—for example, through more generous family-oriented benefits—their participation rises because lower-productivity jobs become more attractive. The gender wage gap widens. The model gives two connected reasons: more women enter jobs that have lower productivity, and the jobs offer amenities that women value more, shifting part of compensation away from cash wages.

This is not a claim that family-oriented benefits harm women. It is a claim about the consequences of measuring one outcome at a time. A job that makes employment possible or sustainable can have high value to the worker even if it pays less than a job with fewer usable amenities. If the policy succeeds in bringing more people into employment, the average wage comparison can change because the composition of employed workers changes as well.

The two scenarios do not produce a universal winner because they optimize different margins. Targeting men in the model narrows the wage gap but increases the employment gap. Targeting women increases participation but widens the wage gap. Neither result says what a society must value; it shows why the objective must be stated before the policy is judged. A decision-maker concerned about access, continuity, or usable time may reach a different conclusion from one focused only on the wage statistic.

The denominator matters here as much as the direction.