How to close the gender pay gap!

December 22nd, 2014 at 3:00 pm by David Farrar

The Herald reports:

Lesbians earn significantly more than their heterosexual colleagues while gay men earn less, according to a World Bank study exposing unexpected links between sexuality and salary.

In Britain, lesbians are paid an average of eight per cent more than straight women, with the trend even more extreme in other western countries. In the US, the difference is 20 per cent.

And off memory the pay gap is around 10% in NZ, so if many more women become lesbians, the gender pay gap will be eliminated, and everyone will be happy.

Incidentally the gender pay gap in NZ was 13% in 2008 and down to 9.9% in 2014.


The Equal Pay Act Appeal

February 4th, 2014 at 11:00 am by David Farrar

Stuff reports:

Pay equity for women has again reached the courts, with thousands of workers and employers keenly watching the result.

The question about whether women should be paid the same as similarly skilled men in different industries was heard by the Court of Appeal yesterday.

The result of the case, which pits the Service and Food Workers Union against the aged-care sector, could have a drastic impact on other female-dominated industries throughout the country.

In 2012, the union launched a legal challenge fronted by Lower Hutt member Kristine Bartlett, who works at rest home provider TerraNova Homes & Care.

Ms Bartlett says her $14.46 hourly wage is less than would be paid to men with the same, or substantially similar, skills, arguing it was a breach of the Equal Pay Act.

In August, the Employment Court ruled in her favour, stating women in female-dominated industries could now compare themselves to men in other industries requiring similar skills.

Employers, who argued only the same work in the same industry could be compared, were outraged and TerraNova appealed.

I think it was a very bad decision which was more about law making that interpreting the law.

The Equal Pay Act was designed to stop cases where an employer might try and set different pay rates for men and women – such as saying female shop assistants are paid $14 an hour and male shop assistants are paid $15 an hour.

Parliament did not intend it to be say that (for example) nurses (mainly female) must be paid the same as police officers (mainly male). It is about saying female nurses should not be paid less than male nurses. The court’s decision was a massive expansion of the law, and one that should be made by Parliament explicitly – if that is deemed desirable.

Personally I deem it highly undesirable. Pay rates should primarily be determined by demand and supply – not by legislation.

The appeal concludes today, with the court to hear from other parties, including Crown Law, after Attorney-General Chris Finlayson asked for the Government to be represented because the decision could have “important public policy implications”.

The court’s decision is likely to be reserved.

I hope the Employment Court decision is reversed.


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.


The pay gender gap

November 30th, 2012 at 12:00 pm by David Farrar

APNZ at NZ Herald report:

A campaign has been launched to demand equal pay for women after finding that, on average, men are paid at least 10 per cent more than women.

Women should be paid the same as men – of course. But I am unsure that this is an issue that can be solved centrally.

A recent study fund that around 60% of men do not just accept a salary and terms offer but try and negotiate it upwards. By contrast only 10% of women do the same. So reversing that 90% of women just accept what is offered as opposed to 40% of men.

I’d say the best way to close the pay gap is for individual women to be more assertive in pay negotiations.

“Pay equity is a structural problem that requires structural solutions.”

I’m not at all convinced that is the case.


The lesbian pay gap

February 13th, 2012 at 11:02 am by David Farrar

Eric Crampton quotes Big Think:

The wage premium paid to lesbian workers is a bit of a mystery. Sure, lesbian women are better-educated on average, are more likely to be white, live predominantly in cities, have fewer children, and are significantly more likely to be a professional. But even when you control for these differences, the wage premium is still on the order of 6%. …

Eric offers some theories on why this might be:

First, and most importantly, maternity risk. If an employer expects a lesbian employee to be less likely to take maternity leave, and if maternity leave imposes costs on an employer, then the employer will be more likely to hire and to promote the lesbian over the straight woman. What evidence do we have? Petit’s field experimentshowing that maternity risk is responsible for a fair bit of women’s lower average salaries.

How could this be tested in the data presumably available in the original study? Test whether the wage gap between lesbian and straight women is larger for younger women than for post-menopausal women. That will confound with age cohort effects, but there may be a way around it: use state insurance mandates on assisted reproduction, or state policies with respect to same-sex adoption. If some states require that insurers cover fertility treatments as part of an employer’s insurance package and others don’t, or if some states make it easier for lesbians to adopt kids, then we’d expect the wage gap between lesbians and straights to be smallest in those states that make it easiest for lesbians to have kids.

Second, testosterone and negotiation strategies. Women, on average, are less aggressive in wage negotiations. If testosterone correlates with aggressiveness in salary negotiations, and some evidence suggests higher than average testosterone levels among lesbians as compared to heterosexual women (though that evidence iscontested), then we’ve another candidate explanation.

I’d put money on the maternity risk variable. I’d only put money on the negotiations one at decent odds.

I go the other way to Eric. I think the theory of more assertiveness in salary negotiations is most likely to explain the gap.


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The gender pay gap

March 9th, 2010 at 8:28 am by David Farrar

NZPA report:

A new study of graduates with bachelor degrees has revealed that men start earning more than women a year after starting work.

Women’s Affairs Minister Pansy Wong said today her ministry’s study used data from Inland Revenue and looked at the difference between the income of male and female graduates between one and five years after they started their employment.

The pay gap started developing from the first year, and after five years it ranged between 1 percent and 20 percent, with the biggest difference in management and commerce.

“While the income gap varies between different fields of study, no matter what area of study is pursued an income gap has emerged between men and women … and it is quite a significant gap,” Ms Wong said.

“The bottom line is that a bachelor’s degree held by a woman should be worth the same in the marketplace as one held by a man.”

It is disappointing there is a pay gap between male and female graduates, so soon after entering the work force.

The fact that overall average female pay rates are only 88% of male pay rates, has never convinced me this is due to discrimination.  The reality that many women take time out of the workforce when their children are young, makes it unlikely one will ever have the average pay rates the same. There is also the issue of different professions having different gender compositions.

So in a way the overall average pay rates for men and women, are not very useful – just as overall crime rates are also not very useful.

But the study referred to by Pansy Wong, does lend credence to the theory that there is discrimination in pay rates. You would expect a female and male commerce graduate who both enter the same profession to be attracting the same pay rates – at least in the initial years.

The ministry was using the extra $2 million it was being given over four years to increase its ability to address the gender pay gap, she said.

Part of this would be the ministry working with universities to recruit up to 6000 students graduating this year who would be tracked over the next 10 years.

That would also be worthwhile research – far better to track a large group of students, than merely to just compare the average wages over all occupations.

I’m generally reluctant to conclude discrimination, and look for other factors, because discrimination is just so plain stupid. I can’t understand how anyone would think someone is more or less capable in a job because of their gender, and would pay them less. Mind you, I think the discrimination might be subconscious, rather than a conscious decision.