The gender wage gap

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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