The gender wage gap

September 3rd, 2013 at 12:00 pm by David Farrar

Hanna Rosin at Slate writes:

How many times have you heard that “women are paid 77 cents on the dollar for doing the same work as men”? Barack Obama said it during his last campaign. Women’s groups say it every April 9, which is Equal Pay Day. In preparation for Labor Day, a group protesting outside Macy’s this week repeated it, too, holding up signs and sending out press releases saying “women make $.77 to every dollar men make on the job.” I’ve heard the line enough times that I feel the need to set the record straight: It’s not true.

We hear similar lines in NZ.

How to get a more accurate measure? First, instead of comparing annual wages, start by comparing average weekly wages. This is considered a slightly more accurate measure because it eliminates variables like time off during the year or annual bonuses (and yes, men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage gap number). By this measure, women earn 81 percent of what men earn, although it varies widely by race. African-American women, for example, earn 94 percent of what African-American men earn in a typical week. Then, when you restrict the comparison to men and women working 40 hours a week, the gap narrows to 87 percent. …

The big differences are in occupation and industry. Women congregate in different professions than men do, and the largely male professions tend to be higher-paying. If you account for those differences, and then compare a woman and a man doing the same job, the pay gap narrows to 91 percent. So, you could accurately say in that Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”

So still a gap, but less of a gap.

The point here is not that there is no wage inequality. But by focusing our outrage into a tidy, misleading statistic we’ve missed the actual challenges. It would in fact be much simpler if the problem were rank sexism and all you had to do was enlighten the nation’s bosses or throw the Equal Pay Act at them. But the 91 percent statistic suggests a much more complicated set of problems. Is it that women are choosing lower-paying professions or that our country values women’s professions less? And why do women work fewer hours? Is this all discrimination or, as economist Claudia Goldin likes to say, also a result of “rational choices” women make about how they want to conduct their lives.  

Goldin and Lawrence Katz have done about as close to an apples-to-apples comparison of men’s and women’s wages as exists. (They talk about it here in a Freakonomicsdiscussion.) They tracked male and female MBAs graduating from the University of Chicago from 1990 to 2006. First they controlled for previous job experience, GPA, chosen profession, business-school course and job title. Right out of school, they found only a tiny differential in salary between men and women, which might be because of a little bit of lingering discrimination or because women are worse at negotiating starting salaries. 

I’ve blogged previously on how a much much higher proportion of men will bargain up an offered salary, while most women accept whatever is offered.

But 10 to 15 years later, the gap widens to 40 percent, almost all of which is due to career interruptions and fewer hours. The gap is even wider for women business school graduates who marry very high earners. (Note: Never marry a rich man). 

If this midcareer gap is due to discrimination, it’s much deeper than “male boss looks at female hire and decides she is worth less, and then pats her male colleague on the back and slips him a bonus.” It’s the deeper, more systemic discrimination of inadequate family-leave policies and childcare options, of women defaulting to being the caretakers. Or of women deciding that are suited to be nurses and teachers but not doctors. And in that more complicated discussion, you have to leave room at least for the option of choice—that women just don’t want to work the same way men do.  

I’d add the word “some” into that last sentence.

The point is that the gender pay gap is complicated, and the topline figure you hear quoted is almost meaningless. And the solutions are not necessarily legislative. One solution is to create a culture where female staff can negotiate just as assertively as male staff for higher wages, without being labelled a “bitch”, or “stroppy” or a “ball breaker”.  It is the deeper society expectation that some have that women shouldn’t be as assertive as men, that is a big part of the pay gap. And for that expectation to change, means attitudes of both women and men need to change.

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9 Responses to “The gender wage gap”

  1. kowtow (7,634 comments) says:

    Parliament must legislate “equality”.

    Precedent has been set with marriage equality,now everything is possible.Come on persons,aux barricades! We’re on the right side of history now!

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  2. Kea (11,878 comments) says:

    There is huge inequality in the work place. Not enough women are being killed, injured and maimed at work. Almost all work place deaths are men. More women must die, to prove to [someone?] that there is not discrimination.

    One solution is to create a culture where female staff can negotiate just as assertively as male staff for higher wages, without being labelled a “bitch”, or “stroppy” or a “ball breaker”.

    Sounds like Dave gets his info from anti male hate groups. In the modern workplace it is often the male approach that is discriminated against. I have seen this to an appalling degree in the public service especially. (You know… the people who run the country.)

    My boss is a woman and is the best manager I have ever met in my working career. I respect her professionally and personally. But I could never imagine her moaning about discrimination or demanding special consideration. She can handle herself and does not take any shit. I get sick of whining bitches wanting things handed to them on a platter because they have a set of tits and the creepy guys who give into their demands.

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  3. dishy (224 comments) says:

    Pay inequality based on gender will be as nothing to the pay inequality that will ensue IF Labour implements a so-called living wage, especially if that implementation is limited to the public sector. Not all inequalities are equal.

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  4. Fletch (6,026 comments) says:

    I’ve commented on this before as well, and the gap is probably even smaller.

    Jason Mattera has a bit about this “gender pay difference” in his book, ‘Obama Zombies: How the Liberal Machine Brainwashed My Generation’
    (Link to below excerpt on Google Books – http://bit.ly/rVQC5o )

    I like the bit about how Obama is complaining that women don’t get equal pay, yet it is McCain who paid his women more than Obama did…lol

    The reasons for pay difference make perfect sense.

    ps, in the text B.H.O stands for Barrack Hussien Obama

    SO NOW WE move on to the second economic lie the liberal machine uses to hypnotize future Obama Zombies–the evil, nefarious “wage gap” between men and women. Have you heard that women make seventy-seven cents to every dollar a man makes? It’s been the liberal line for a while now. During the election, B.H.O. ran a TV ad in battleground states specifically targeting women, hyping up the inequity in pay between the sexes. The ad starts off by saying how many women work to support their families but are paid only seventy-seven cents to the dollar of their male counterparts. In the background we see women in professional attire and women in hard hats. The ad then accuses John McCain of not understanding our economy since he opposed a law that guaranteed equal pay for equal work.

    While on the stump in New Mexico, B.H.O. said this:

    The choice could not be clearer. It starts with equal pay. Sixty-two percent of working women in America earn half or more of their family’s income. But women still earn 77 cents for every dollar earned by men in 2008. You’d think that Washington would be united in its determination to fight for equal pay.

    So, are women really paid less than men? Yes, it is true that men tend to earn more than women, but don’t assume it’s gender discrimination. Let’s walk through a scenario: If a business could really get the same quality of work from women for the same job at such a discounted rate, why wouldn’t employers hire all women? It would be bad business to keep all men on hand. The smart employers would drop their men and swoop up all the women for a discounted price. There’s no way other businesses could compete. So perhaps there are other differences that account for the pay gap between men and women.

    Cait Murphy, an editor at Fortune, blew the phony wage gap myth out of the water, noting that men and women get paid differently because they’re engaging in different lifestyle choices that affect pay scales. Murphy, who is a woman, cited peer- reviewed research done by another woman, June O’Neill, an economist who served as director of the Congressional Budget Office under Bill Clinton.As Murphy writes, “What [O'Neill] found was that women are much more likely over the course of their lives to cut back their hours or quit work altogether than men, for issues involving the family.”11

    Women’s lifestyle choices matter when it comes to full-time employment because “you go part-time or take years out of the labor force, that has an effect on earnings down the line, due to loss of seniority or missed promotions.”It has nothing to do with sexism. Murphy argues that “of women aged 25-44 with young children, more than a third were out of the labor force; of those women who did have jobs, 30% worked part-time.” Again, this has considerable effects when one is moving in and out of the labor force, as many wages take into account seniority of service. Moreover, getting promotions is often a function of years served and experience gained.”All told,” says Murphy, “women are more than twice as likely to work part-time as men and over the course of their lifetimes, work outside the home for 40% fewer years than men. That accounts for a significant chunk of the pay gap.”But that’s not all. There’s also something, um, a bit more understated, but very important in determining wage factors. Murphy continues:

    Despite the many advances the women’s movement has brought the U.S., what it hasn’t done, thank heavens, is make men and women the same. The simple fact is–and there is nothing nasty or conspiratorial about it–the sexes continue to choose different avenues of study and different types of jobs.Here’s an illustrative example. The college majors with the top starting salaries, according to the National Association of Colleges and Employers, are: chemical engineering (almost $60,000), computer engineering, electrical engineering, industrial engineering, mechanical engineering. Men make up about 80% of engineering majors. Women predominate among liberal arts majors–whose salaries start at a little more than $30,000. Putting it all together . . . these differences–in choice of work, years in the workforce, and hours of work–could account for as much as 97.5% of the differences in pay between men and women.

    Other differences? Men are more likely to work more hours than women; men are more likely to take hazardous jobs than women are, which is why more men are truck drivers, firefighters, police officers, construction workers, flight engineers, and coal miners than are women. And guess what? Dangerous jobs equal higher pay than, say, secretarial jobs. Again, it’s all about choices.Here’s what the liberal machine will never tell its dronelike youth Zombies: The “pay gap” for women shrinks to ninety-eight cents for every dollar earned by men, after factoring in work experience, education, and occupation.12 And women in their twenties in big cities, including New York and Dallas, are making nearly 20 percent more than men in their twenties.13

    You go, girls! In some categories, one researcher found, the starting salaries for women as investment bankers and dietitians, for instance, were considerably higher than men’s.14 Is there actual discrimination in some cases? I’m sure that occurs. But the beauty of the free market is that the company that discriminates for the sake of discrimination will be bad-mouthed and the wronged employee can also go to a competitor. Moreover, the employee can sue.But here’s the grandest irony of all this leftist silliness. Did you know that while B.H.O. was a United States senator he paid his female staffers less than his male ones? Obama’s female employees made on average seventy-eight cents for every dollar a man earned. In real numbers, women brought home an average salary of $44,953.21, which was $12,472 less than the $57,425 average salary that the then-senator paid men. It gets better. McCain’s female staffers not only earned 24 percent more on average than Obama’s gals, but they also earned more than McCain’s male employees.15

    Were the women less qualified in Obama’s office than the men? I have no clue. Whatever the reason, McCain closed the “gender gap” without the force of government.Oh, and here’s another inconvenient truth: women’s wages grew more during conservative administrations than liberal ones. In fact, the administrations of Reagan, George H. W. Bush, and George W. Bush had higher “labor market progress for women” compared to the administrations of Clinton and Carter. For instance, women’s “annual wage growth relative to men’s” for the Reagan administration was 1.6 percent, compared to 0.21 percent for Clinton.16Moral of the story? Liberals’ economic lies have lobotomized my generation

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  5. Matt (223 comments) says:

    Why is it so important that women are paid the same as men? Shall we then legislate that half of women must give up their right to bear children and must instead wait for their partner to become pregnant? That’s ridiculous, just like saying that women have a “right” to equal pay.

    Women are a greater risk than men to hire. They get pregnant, they file sexual harassment lawsuits and they use equality laws to bully their employer. Of course this by no means applies to all, or even most women. But the cost of any of these things happening is significant, so the risk must be built into what woman are paid.

    The time that many women take out of their careers to have children must also be taken into account. This is time they could have spent getting promoted, but instead they go backwards, if anything. Inevitably this affects their earning ability for the rest of their careers.

    Despite this, I expect the gender pay gap to continue to close. Not because society has suddenly become more egalitarian, but because current educational trends will see young men being less and less likely to hold a qualification than their female classmates. Companies wanting top graduates will have no choice.

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  6. gump (1,487 comments) says:

    @Kea

    “I get sick of whining bitches wanting things handed to them on a platter because they have a set of tits and the creepy guys who give into their demands.”

    ————————

    This sentence tells us more about you than you realise.

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  7. Adele Keys (39 comments) says:

    Personally I think the biggest gender is between industries.

    It seems quiet clear that industries dominated by woman employees are paid significantly less than comparable industries that primarily employ woman.

    It’s worth taking a look at the recent court decision ruling that “caregivers are paid abysmally low pay rates because they are women and has dismissed Business New Zealand arguments about the cost of removing pay discrimination as akin to the economic arguments against removing slavery”

    See:

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11113373

    and

    http://www.stuff.co.nz/business/women-of-influence/8983239/Test-case-for-gender-pay-equity

    I don’t believe that a well educated, driven woman would be significantly less successful and well payed in her chosen profession than her male counterpart.

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  8. Ed Snack (1,738 comments) says:

    Gump, and your comment wins the “Bullshitter of the Month Award” Congratulations, fool.

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  9. SPC (5,392 comments) says:

    http://www.bbc.com/capital/story/20130830-bonus-time-still-a-mans-world

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