The Truth about the Wage Gap

This same myth has pervaded American politics and society for too long. President Obama calls for reform on the gender pay gap difference between men and women, along with other politicians such as Hillary Clinton and Jim Beall. This issue has become so hot that even different states are asking voters to vote to close the “wage gap.” The argument goes like this: Women earn 77 cents compared to a man’s dollar (statistic derived from Bureau of Labor Statistics). Different variations can go with different values ($0.78 or $0.79). Wage gap proponents explain that the pay gap discrepancy is attributed to employer discrimination against women. Can discrimination on a national scale explain the discrepancy in the wage gap statistic that we hear from politicians and feminists? In the following paragraphs, I will explain the reasons for the pay gap seen in the data, why men and women actually earn the same (sometimes women earn even more), and how these proponents (liberals, liberal politicians, social justice warriors, 2nd and 3rd wave feminists) are wrong.

Inference and Law

One issue is the inference of the statistics. To say that men earn more than women on average does not conclude or mean that women earn less than men for the same qualifications or work they do. It is an average, not a conclusion that every woman will or has earned less than men in a particular occupation. Another point is that it’s actually illegal to pay women lower than men for doing the same work thanks to the Equal Pay Act of 1963 [1]. This means equal work and production, not necessarily job title. Yet, some feminists will argue that even with the law, they still see women not earning the same for doing the same work in the past 50 years. Through economic logic, we can examine this peculiarity.

Economics of Discrimination

If women and men have the same years of experience, qualifications, education, skills, and do the same work with the same quality, then the only changing factor is the 23% bargain in labor cost reduction that women provide. Since it costs employers 23% more to hire men of equal value, and there is no other distinguishing factor that men can provide to justify their cost, why would employers ever hire men? Discrimination against women based on misogynistic bias will actually cost businesses dearly because their competitors will hire these women to reduce labor costs, which will leave them with a higher profit margin and more market share (marginal producers or least efficient businesses will eventually stop operating). We would actually see more women being hired for these jobs and see them increase in wages as they accumulate human capital (experience) while maintaining their positions. Men looking for work would actually have to lower their pay expectations in order to become more attractive to employers, which will actually close the “wage gap.” With or without a law, the conclusion still remains the same after this analysis on the cost of discrimination. So why do we still see discrepancies in the data for so many decades? It is because of job choice, major choice, experience, skills, marital status, whether they have children, education level, and other factors that signal to employers about labor value.

Physical Attributes, Workplace Deaths and Hours Worked

In the past, men were able to work certain jobs due to their physical abilities. Jobs requiring physical strength are more aptly filled by men. Now that the economy has progressed to the technological sector, knowledge-based work, service based jobs, and the creation of capital goods (machinery, tools), jobs can be filled by both men and women since they can compete with other skills and attributes other than physical strength. There are still jobs that require physical strength, which can skew the data. In addition to that, men tend to take more dangerous jobs than women, which require employers have to pay significantly higher for people who are willing to take that task (92% of men die on the job) [2]. In 2014, men represent about 92.3% of work related deaths [3]. Again, job choices are a big factor in the wage gap. Women tend to work jobs that have more flexibility and part time hours, which means that they earn less due to working less hours while also choosing jobs that compensates for a better work-life balance that may pay a lower wage. Men tend to work more overtime hours in full time (35 hours or more) jobs than women as well, usually working weekends and uncomfortable working conditions. Male full time workers tend to work nearly 2 more hours compared to women in terms of overtime hours on average [4].

Different Majors

Not only that, the data show that women majored in different fields compared to men (men majored more in stem fields). This leads to different job choices when getting out of college, with a majority of men becoming engineers and going into fields that pays significantly higher than other industries. The argument from wage gap proponents is that more women earned more college degrees than men, with 57% of them earning a bachelor’s degree in 2014. The problem with this argument is that not all college degrees are the same. As stated before, men tend to major in engineering, computer science, and other majors that industries pay a high salary. According to Glassdoor, 80% of college students majoring in engineering are men (different concentrations and it’s 8 out 10 highest paying major), 57% for statistics and 52% for majors such as finance, economics, and business. Engineering is the top major for high starting salaries, which explains the discrepancy in the data between men and women (women majored in social work, Spanish, liberal arts, etc.). In other words, even though men represented 43% of bachelor degrees, they represent about 72% on average for the top 10 majors [5]. What we can extrapolate from the data is that women and men take far different paths in life, making different choices that show the gap in earnings. We must compare people of similar qualities and marital status. The real comparison is between never-married men and never-married women of similar qualifications, and married men and  women.

Male and Female Behavior and Real Comparisons

The effects of marriage have different effects on both men and women. As men marry, their wages actually increase while women decrease. This could be explained through gender roles. Men work more hours and continuously work as their wives take care of domestic responsibilities such as bearing children and making decisions on allocating where household income will be spent (women are in charge about 80% of buying decisions in American households). Men focus more on earning money while their wives assume the domestic responsibilities. This represents an economic cost to women, but women believe that sacrificing years or time to provide her husband adequate time into his career will pay off in the end for the family. When they come back to work, their gap in employment affects their earnings. Married women without children will earn more on average compared to women who do not have children, which illustrates that being a parent poses costs. When it comes never-married women, they tend to earn more than men in some cases (women past their child-bearing years and have never married earned more than their male counterparts) [6]. In 2008, women (childless and single) earned more than their male counterparts by 8% on average. In Atlanta, the disparity is 121% above men’s earnings [7]. According to James Chung from Reach Advisor, “…Young women in New York City, Los Angeles and San Diego making 17%, 12% and 15% more than their male peers, respectively. And it also holds true even in reasonably small areas like the Raleigh-Durham region and Charlotte in North Carolina (both 14% more), and Jacksonville, Fla. (6%),” [8]. Overall, people with comparable skills show that women can earn even more than what their male counterparts earn.

Concluding Remarks and Revisiting Wage Gap Arguments

From what we can extrapolate from the data, it would seem that men and women earn different wages due to life choices, not discrimination. I find most of the arguments made by wage gap believers to be highly unconvincing. This stems from their misinterpretation of statistics, their insistence that a gap in earnings equals to discrimination, and their lack of logical reasoning. There could be instances of individual discrimination against women, but that alone cannot explain the gap in the average or median wages on a national scale or any particular industry. They would have to prove that both men and women employers have discriminated against women based on misogynistic bias or a regulation or law that pushes all of them to discriminate against women that will affect their earnings. I find that highly implausible since women business owners make less than half of what male business owners earn, and they have no employer to discriminate against them [9]. Furthermore, when comparing women and men of comparable qualities, some studies found that there are still tiny gaps in wages (example: 95 cents on a dollar compared to men), they would still say it’s a gap and it should be fixed [10]. They say that there is nothing else to explain the discrepancy besides discrimination. In the absence of data or evidence, these proponents would infer discrimination. The burden of proof lies on them, not the people who believe the wage gap is a myth. As it stands, the wage gap is nothing more than a myth perpetuated by social groups like feminists and liberals without any real logic or empirical evidence to validate their claims.

Sources:

  1. https://www.eeoc.gov/eeoc/publications/fs-epa.cfm
  2. Sowell, Thomas. “Male-Female Facts and Fallacies.” Economic Facts and Fallacies. New York, NY: Basic, 2011. 56-65. Print.
  3. http://www.aei.org/publication/some-thoughts-on-equal-pay-day-and-the-23-gender-pay-gap-myth/
  4. https://www.aei.org/publication/new-bls-report-on-womens-earnings-much-of-the-17-gender-pay-gap-in-2014-explained-by-age-marriage-hours-worked/
  5. https://www.aei.org/publication/highest-paying-college-majors-gender-composition-of-students-earning-degrees-in-those-fields-and-the-gender-pay-gap/
  6. Sowell, Thomas. “Male-Female Facts and Fallacies.” Economic Facts and Fallacies. New York, NY: Basic, 2011. 71-77. Print.
  7. http://www.wsj.com/articles/SB10001424052748704421104575463790770831192
  8. http://www.dailywire.com/news/4858/7-facts-you-need-know-debunk-equalpayday-lie-ben-shapiro#
  9. http://www.cbsnews.com/news/the-gender-pay-gap-is-a-complete-myth/
  10. http://www.huffingtonpost.com/entry/no-the-gender-pay-gap-isnt-a-myth-and-heres-why_us_5703cb8de4b0a06d5806e03f

 

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