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April 19 2016

Debunking The Wage Gap Myth

The Claremont Independent
featuring Carrie L. Lukas

On April 12th, feminist organizations across the United States acknowledged Equal Pay Day, a date which symbolizes just how far into the new calendar year a woman must work in order to earn what a man did in the previous year. The White House reports that a typical full-time working woman in the U.S. in 2014 made only 79 cents for every dollar that a full-time working man earned. Based on this data and “decades of research,” the White House has concluded that women face a “real and persistent problem” of pay discrimination across the country. But upon closer examination, the gender wage gap reveals itself to be based far more in fiction than in fact.

First, the oft-cited 79-cent figure offers a woefully incomplete picture of the actual disparity or lack thereof between the wages of men and women. The Bureau of Labor Statistics (BLS) calculates the popular figure by taking the median annual earnings of all full-time male and female workers and dividing them into one another. Though this approach gives us a gross approximation of how much more men earn than women on average, it fails—as the BLS freely admits—to “control for many factors that can be significant in explaining earnings differences.”

One of these factors is hours worked. Though the Bureau of Labor Statistics only includes full-time workers—those employees who work 35 or more hours a week—it does not distinguish between those who work beyond this cutoff. This difference turns out to be significant, as men tend to work longer hours. According to the Department of Labor, 25 percent of full-time male workers spent 41 or more hours on the job, while only 14 percent of female full-time workers did the same. And when only men and women who work more than 40 hours a week are compared, the wage gap shrinks by more than half to only ten cents.

Differences in occupation and experience also explain the wage differential between men and women. In 2013, PayScale—an online compensation information company—conducted a survey of men and women across over 120 different occupational categories. The survey grouped the salaries of the respondents by occupation and level of experience and then found the median pay for each gender within each category, thereby isolating men and women with similar jobs and experience and comparing them side-by-side. According to The Atlantic, PayScale’s study showed that the wage gap “nearly evaporates” when workers of similar experience and occupation are compared. As PayScale’s chief economist Katie Bardaro noted, “the gender wage gap disappears for most positions” when education and management responsibilities  are considered.

PayScale’s survey also uncovered a late-career wage gap between women and men. Though both sexes command similar wages at the start of their careers, female wages tend to fall behind those of men over time. But this differential is less evidentiary of pay discrimination against women than it is a result of men and women fulfilling different career preferences and making different life choices. For example, an international study conducted in 2013 by the career networking site LinkedIn found that nearly two-thirds of professional women view “finding the right balance between work and personal life” as their definition of success in the workplace, while less than half prioritize “earning a high salary.” And as Carrie Lukas from the Independent Women’s Forum.

But according to Claudia Goldin, an economics professor at Harvard University, men feel differently, preferring “income growth” to “temporal flexibility” in the workplace. This is part of the reason why the ten most dangerous occupations in the United States—all jobs which pay well relative to the education level they require but involve an extraordinary risk of bodily harm or death—are all male-dominated, with all but one of these jobs having more than a 94 percent male workforce. As Mark Perry from the American Enterprise Institute cheekily notes, males are so heavily represented in the most dangerous occupations that the next “Equal Occupational Fatality Day”—the day on which the number of work-related deaths of women will match the number which men experienced last calendar year—will be over thirteen years from now.

The different preferences of males and females manifest themselves in other ways too. In college, women tend to select majors which lead to lower-paying careers, while men do the opposite. According to research by Georgetown University economist Anthony Carnevale, only one of the ten lowest-paying majors—“theology and religious vocations”—is chosen more often by men, while “pharmacy sciences and administration” is the only one of the top ten highest-paying degrees which is majority female. But as I mentioned before, women tend to value having a meaningful job more than earning a high income, which explains their dominance of social work professions, like psychology and education, which generally are less lucrative than other professions.

The most significant difference in preferences between men and women, however, has to do with children. Because women opt to stay home and raise their children more often than men do, the median wage of women late in their careers does not keep pace with that of men, who usually decide to become or remain the principal breadwinners of their household. But when a man voluntarily exits the workforce for several years to raise his child, he cannot reasonably expect when he returns to command a wage equal to or higher than that of a woman who stayed at her job during the man’s absence and continued to acquire experience. The same holds true for the working woman who decides to leave her job in favor of rearing her child. Leaving the workforce to have and raise a child is a choice, a choice which carries foreseeable economic consequences and a nondiscriminatory impact.

Having accounted for the various variables which contribute to the wage gap—hours worked, occupation and experience, and different preferences—we now turn to the critical final argument made by progressives with respect to the gender wage gap. By this line of reasoning, the earnings differential between women and men is reflective of a “real and persistent problem” of pay discrimination in the United States which, as the White House puts it, “continues to shortchange American women and their families.” Even if economics can explain some or even most of the wage gap by “factoring in the kind of work people do” or “qualifications such as education and experience,” discrimination is the cause of whatever pay disparity remains. Therefore, the argument concludes, pay inequity must be addressed through even more sweeping government mandates and wage controls.

Single, childless women and men are the ideal sample with which to evaluate this claim. If systematic pay discrimination actually exists, women who have not yet raised a child or made any particularly dramatic life choices which can alter their earnings should have lower wages than men. But according to Time Magazine, an analysis of 2,000 communities in cities across the United States revealed that the median full-time salaries of unmarried, childless women “are an average of eight percent higher” than those of similarly situated men. In Atlanta and Memphis, this wage gap increases to a whopping 20 percent. In New York City, it is 17 percent. Coupling these figures with PayScale’s finding that “the gender wage gap disappears” when the education and responsibilities of young workers are considered, the claim that pay discrimination against women is a persistent problem which requires dramatic federal remedies simply does not hold water.

Equal Pay Day embodies a disingenuous and misleading narrative about the gender wage gap in the United States. The oft-cited 21-cent wage gap figure does not account for a multitude of factors such as occupation, experience, career preferences, and major life choices which, when combined, virtually eliminate the wage differential between men and women. And with no substantive evidence of systematic pay discrimination against women in sight, it seems that January 1st would make for a much better date for Equal Pay Day.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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