Thursday, October 25, 2012

The female wage gap myth

By Dean Kalahar

We constantly hear that discrimination and exploitation force women to make 77 cents for every dollar a man makes. It’s time to end the wage gap myth with a dose of common sense economics.

First of all, the wage gap is based on inappropriate use of data and statistical analysis. In the U.S. the 77 % number is calculated by looking at the median yearly earnings of women to men. The median is defined as the middle value of all the wages in a given sample. Using the median is useful if we are comparing winter temperatures between New York and Tampa, where one dimensional data has validity, but applying it to humans that have free will and biological differences proves nothing except that demagoguery works.

Is the median wage lower for women, absolutely, but the statistic is not an apples to apples, job for job comparison and thus has nothing to do with “paying women less than a man for doing the same job.” Using the median without taking into consideration specifics of individuals in the workplace is intentionally misleading or ignorant.

So what causes the variation in pay? Personal and workplace choices account for much of the gap. Labor Department research shows that men choose more dangerous and high stress jobs. Men choose higher paying career fields. And men hold more full time jobs, and work longer hours, weekends, and nights than women. All these factors lead to higher wages regardless of gender.

Stanford economist Thomas Sowell shows that “women are typically not educated as often in such highly paid fields as mathematics, science, and engineering, nor attracted to physically taxing and well paid fields as construction work, lumberjacking, coal mining and the like.” All these factors create differences in pay that have nothing to do with the exploitation of women.

Maybe the biggest reason is biology. Women make up 50% of the workforce but give birth to 100% of the babies. And if women choose to have children, their incentives change and this affects their choices of jobs, careers, continual service and hours spent on the job. The New York Times reported that among Yale alumni in their forties, ―only 56 percent of the women still worked, compared with 90% of the men. It goes without saying that traditionally men do not face the same incentives of biology and child rearing as women.

When these variables are included to the unadjusted 23 cent wage gap difference, the gap falls to 5-7 cents; according to a 2010 study by The United States Congress Joint Economic Committee’s Comprehensive Review of Women in the US Economy. Thomas Sowell concurs showing that “Women who remain single earn 91 percent of the income of men who remain single, in the age bracket from 25 to 64 years old.” And what’s left of the 5% gap is bridged by systemic socio-cultural factors, not by intentional causation based on discrimination.

If we actually compare apples to apples in the workforce, the facts will disturb those who are married to the vision of women victimization.  According to Marty Nemko and data compiled from the Census Bureau, unmarried women who've never had a child actually earn more than unmarried men. In a 2010 study of single childless urban workers between the ages of 22 and 30, Reach Advisors found that women earned an average of 8% more than their male counterparts. And according to the Labor Department, “of men and women who work 30 to 34 hours a week, women make more, 109 percent of men’s earnings.”

Sowell backs up these findings “comparing never-married women and men who are past the child-bearing years and who both work full-time in the twenty-first century shows women of this description earning more than men of the same description.”

Basic economics tells us that it makes no sense for an employer to pay a man more than a woman, if they can get the same productivity out of hiring the woman; unless the employer likes discrimination more than they like profit. To believe that women are paid 75 percent of what men receive for doing the same work is to believe employers can afford to pay 3 male workers the same as they pay 4 female workers that would produce 25 percent more output, and stay competitive in a economy that sees most businesses last less than ten years.

Even prior to all the hand wringing about pay inequality, free markets proved there was no pay discrimination. Sowell’s research shows that single women in 1971 who had worked continuously since high school earning slightly more than men of the same description. This fact was conveniently missed in 1972 when an executive order was signed creating affirmative action for women who were being underrepresented in the workplace.

The facts just don’t add up in the wage gap argument. To say that men are paid more than women for the same job is an attempt to redefine the laws of supply, demand, profit motive, and human nature. Class, gender, and racial victimhood pay big dividends for politicians, but only if gullible, ill-informed citizens buy false rhetoric like the female wage gap. 

No comments:

Post a Comment