77 Cents on the Dollar

The Myth of the Wage Gap

By Jason Coxgender-pay-gap-graphic-final

As the old story goes, Jack and Jill go up the hill to fetch a pail of water. For their body-breaking work, their boss gives them a good day’s pay. While Jack is presented with a crisp new dollar bill, Jill only receives three shiny new quarters. Such is the state of the American labor market. Or is it?

Just as I modified this classic children’s rhyme, so too do politicians desperately in need of an election miracle. President Obama recently expressed his intent to remedy the notion that women are paid 77 cents on the dollar of what men make. Companion legislation followed, and was blocked, in the Senate under the name of the “Paycheck Fairness Act.”

All of this may sound well and good, you might say government must step in and stop discriminating bosses. Except for one thing. The idea that women make less than men for the same job, and same work, is largely a myth.

Politicians decrying this supposed discrimination will mix the “Same job, same work” line with the data that women make 77% of what men do. But what does this data actually say? This number is obtained by averaging the salary of all men, and all women in the country. That means this does not isolate men and women working in the same job, with the same education, same skills, or a host of other variables.

As a 2009 paper by the CONSAD Research Group written for the Department of Labor finds, all but 5-7 cents of the raw wage gap can be definitively attributed to different choices made by men and women in the labor force. This includes career interruptions by women making the choice to raise a family, women’s increased willingness to exchange raw salary in exchange for health benefits, the increased likelihood that women will work part-time vs. full-time, and preference for higher hour flexibility. Chief among these however, are that men and women choose to pursue different occupations, all potentially starting with choices made in college.

A large portion of the raw wage gap has been shortened in the last few decades due to the increased percentage of college students that are women. That being said, not all majors are created equal. Men are more likely to choose majors that lead to higher paying jobs than women, especially engineering fields, which on their own make up 8 of the top 10 highest paying degrees.

This all comes before the lack of economic rationale for discriminating against employees. Any employer actively choosing to discriminate against female employees will find their progressively minded competitors more than willing to steal workers with a higher paycheck. A discriminatory boss will find themselves without the best workers, and will suffer in the marketplace without a need for government action.

The proposition that men and women are paid differently for the same work is mostly false. With that knowledge, one is left asking the question: if a politician is willing to manipulate this data for their electoral benefit, how else might they be misleading you?

If there is truly a concern about the inequity of men and women, the answer is not government legislation to enable more lawsuits. The social stigma that young women face in pursuing interest in the fields of science, technology, engineering, and mathematics can hamper any effort for them to reach the highest salary levels. But we must be reminded that the individual right to pursue one’s own interests, whether or not it enables one to reach an equal outcome, is one of the ultimate virtues that we hold dear in a free society.

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