Friday, 5 August 2016

Guess what, folks: Women already have equal pay


Kevin Roberts was forced to resign for telling an interviewer companies should be judged by how happy they make their female employees happy, not by how many with female parts occupy the boardroom. That the debate about gender diversity is over. Not at the American Democratic Convention however, where Senators Elizabeth Warren and Cory Booker could be heard lamenting that American women do not earn “equal pay for equal work.”

The social-justice warriors are out in force, and they appear to have the numbers on their side.

The latest U.S. Department of Labor data show that women working full-time make 81 percent of full-time men’s wages. In the UK the gender pay “gap” is said to be just under 20 percent – and boardrooms still host more suits and ties than they do frocks and high heels. But these figures are both inaccurate and misleading. The statistics look only at raw averages and do not take into account factors such as education, skills, ambitions and hours worked – a few of things that Roberts himself mentioned in what has become his career epitaph.

Control for the Obvious

After controlling for other factors, the gender pay gap practically disappears. Indeed, among single, childless workers under 30, women earn more than men. Legislation to close the gender “wage gap” is misguided: in reality, there is no gap to close.

Gender1Likewise, the official statistics are misleading because they generally average earnings for all full-time women — no matter their education, profession, experience, or hours worked — and earnings for all full-time men. As such, it is not an apples-to-apples comparison.

Even in President Obama’s White House, women earn 84 percent of what men earn, according to published data analysed by American Enterprise Institute scholar Mark Perry.

The US Labor Department classifies “full-time” work as any workweek of more than 35 hours; but men typically work more hours than women. Among full-time workers, men work 43 hours per week, on average, and women, 41 hours per week. Women who work exactly 40 hours per week earn 89 percent of what their respective male peers earn. (When unmarried, childless workers under 30 are compared, a “reverse wage gap” appears, with women earning $1.08 for every dollar earned by comparable men.)

Women and Men Make Different Choices

The causes of the remaining 11 percent wage “gap” are numerous. Take men’s and women’s field of study in college. Men outnumber women in nine of the ten highest-paying majors, while women outnumber men in nine of the ten lowest-paying majors. According to the Georgetown University Center on Education and the Workforce, for example, women make up a statistically insignificant share of petroleum-engineering majors and only 7 percent of electrical-engineering majors — degrees that open the door to lucrative professions. On the other hand, women account for 59 percent of studio-art majors, 56 percent of drama majors, and 88 percent of elementary-education majors — degrees that lead to relatively low-paying careers.

It would be wrong to conscously choose what you know is a low-paying career path, then demand restitution for the lower-paid trajectory then taken.

Employers often pay more for employees with strong quantitative skills. And, according to the American Community Survey, majors with high SAT math scores are more likely to lead to higher salaries; yet for various reasons, women are less likely to choose majors that require high math SAT scores. After graduation, more women than men work for nonprofits, which pay less: according to the DOL, of the 9.3 million U.S. workers in the private, nonprofit sector in 2015, 6.3 million were female.

Women are also more likely to leave the labour force temporarily to raise children, which contributes to the work-experience gap between men and women. (According to the Kaiser Family Foundation, 97 percent of adults who identify as “homemakers” are women.) In a 2016 paper, Francine Blau and Lawrence Kahn of Cornell University find that “recent research suggests a continued and especially important role for work force interruptions and shorter hours in explaining gender wage gaps in high skilled occupations.”

Gender2Women are more likely to work part-time, too. In 2015, 25 percent of women worked part-time, compared with 12 percent of men, according to the US Bureau of Labor Statistics. However, when part-time workers are compared in apples-to-apples fashion, the wage gap is reversed: women earn $1.03 for every dollar earned by comparable men.

It is also true that men work in more dangerous jobs, which often pay more to compensate for the greater risk: in 2014 America, for example, men experienced 92 percent of fatal injuries on the job, despite working 57 percent of total hours. Men, in other words, are roughly nine times more likely to die from work-related injuries. Employers cannot be blamed for the fact that men are vastly more likely to enter professions that kill or severely maim them, but they can be expected to properly compensate them for the risks they are choosing.

Look before You Legislate

Various academic studies have found that, when women are compared with men in the same jobs, the same credentials, and the same job tenure—true apples-to-apples comparisons — the wage gap narrows to 3 cents to 7 cents on the dollar. This small remaining wage gap may be due to discrimination or to factors that have not yet been measured.

Gender3To correct this alleged injustice, men who speak the truth are harried out of their jobs, and politicians introduce things like the Paycheck Fairness Act. But despite President Obama’s enthusiastic support, the Paycheck Fairness Act failed to pass even the Democratic-controlled Congress. So, as an example of how modern politics works, the ill-named Equal Employment Opportunity Commission will instead require companies to report the wages, occupations, hours worked, and race and sex of their employees -- in an effort to implement the Act by regulation and circumvent Congress. 

If the Commission succeeds in collecting this data, the increased threat of litigation over pay differences between men and women, as well as between certain minorities and whites, would undoubtedly raise the cost of employment, thereby discouraging hiring.

Women who believe that they are legitimate victims of wage discrimination do already have legal avenues for redress. It is currently illegal to pay women less than men for the same work, and has been for some time – in the US, since as far back as 1963.

Isolated incidents of discrimination no doubt exist and may never be stamped out entirely. But when all the factors behind divergent pay numbers are accounted for, men and women earn roughly the same. The equal-pay-for-equal-work crusaders have already won.

But do you think that will make them shut up?

diana-furchtgott-rothDiana Furchtgott-Roth
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, is director of Economics21 and senior fellow at the Manhattan Institute.
A version of this post appeared previously at E21 and FEE.




  1. Going to take a liberty here Peter and copy and paste my NBR comment to Keri Henare's statement: 'The stat that Roberts was asked about was "women make up 46.4% of the advertising industry, yet only 11.5% of creative directors within ad agencies are female". It doesn't require a doctorate in statistics to understand that the many statistics like this are indicative of a problem. Suggesting that their isn't a problem shows wilful ignorance.'

    My reply ... damn, couldn't post it due to comment work limit. My rebuttal can be read here

  2. Should I be angry about the women I work with who make thousands more a year than I do?
    I Physically work much harder, but I don't have the same skills as they do, so should I demand equal or superior pay even though I can't do the same work? Should I resent my employer and try to get the the government to punish him because I am not valued in the same way as these highly skilled women? Am I just stupid for being grateful for having a job I love, and for the way I am treated like family? I am so confused.


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