-- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

One of the concerns of working women is the “pay gap” – the alleged payment to women of 78 cents for every dollar earned by a man.  But there are more behind these numbers than first meets the eye, because women work different hours, major in different subjects, and choose different careers.

The 78 percent figure comes from comparing the 2007 full-time median annual earnings of women with men, the latest year available from the Census Bureau.  The 2007 Department of Labor data show that women’s full-time median weekly earnings are 80 percent of men’s.

Just comparing men and women who work 40 hours weekly, without accounting for differences in jobs, training, or time in the labor force, yields a ratio of 87.2 percent, with a smaller pay gap.

These wage ratios are calculated from government data and do not take into account differences in education, job title and responsibility, regional labor markets, work experience, occupation, and time in the workforce.  When economic studies include these major determinants of income, rather than simple averages of all men and women’s salaries, the pay gap shrinks even more.

A report by Jody Feder and Linda Levine of the Congressional Research Service entitled “Pay Equity Legislation in the 110th Congress,” declared that “Although these disparities between seemingly comparable men and women sometimes are taken as proof of sex-based wage inequities, the data have not been adjusted to reflect gender differences in all characteristics that can legitimately affect relative wages (e.g. college major or uninterrupted years of employment).”

Many academic studies of gender discrimination focus on the measurement of the wage gap.  Dozens of studies have been published in academic journals over the past two decades.  These studies attempt to measure the contributing effects of all the factors that could plausibly explain the wage gap.  The remaining portion of the wage gap that cannot be explained by measurable variables is frequently termed “discrimination.”

Generally, the more information about women that is included in the analysis, the more of the wage gap that can be explained, and the less is the residual portion attributable to “discrimination.”  An analysis that omits relevant information finds a greater unexplained residual, and concludes that there is more discrimination.

Simple wage ratios do not take into account other determinants of income.  A female nurse might earn less than a male orthopedic surgeon.  But this would not be termed “unfair” or “discrimination” because the profession of surgeon requires more years of education, the surgeon might work different hours from the nurse, and the nurse might have fewer continuous years of work experience due to family considerations.

Baruch College economics professor June O’Neill, in an article published in 2003, shows that when data on demographics, education, scores on the Armed Forces Qualification Test, work experience, child-related factors, and percent female in the occupation are analyzed, the wage ratio becomes 97.5 percent, an insignificant difference.

In another study, Professors Marianne Bertrand of the University of Chicago and Kevin Hallock of Cornell University found almost no difference in the pay of male and female top corporate executives when accounting for size of firm, position in the company, age, seniority, and experience.

Lower pay can reflect decisions—by men and women--about field of study, occupation, and time in the workforce.  Those who don’t finish high school earn less.  College graduates who major in humanities rather than the sciences have lower incomes.  More women than men choose humanities majors.

Employers pay workers who have taken time out of the work force less than those with more experience on the job, and many women work fewer hours for family reasons.  When women choose jobs that allow more flexibility and less travel in order to accommodate family, they find that they end up earning less.

Yet a choice of more time out of the workforce with less money rather than more time in the workforce with more income is not a social problem.  A society that gives men and women these choices, as does ours, is something to applaud.

Although documented cases of discrimination exist, and are rightly settled in the courts, when all the factors behind the pay numbers are calculated, men and women earn about the same.

By Eric Auchard

LONDON, July 24 (Reuters) - Investors have proved all too ready to interpret positive earnings trends from Intel, IBM and Apple as signs of economic recovery and to justify a continued rally in technology stocks.

Now they are taking the wrong lessons in reverse by reading disappointing results from Microsoft Corp as evidence that a nascent rebound in the economy has stalled.

By the same token, it's mistaken to read the best quarterly results in two-and-a-half years for Samsung Electronics, the world's biggest maker of memory chips, as any indicator of progress on the economic front.

Look past the headlines and you'll find factors specific to each of these companies that say little about any fresh demand for technology in this economy.

The truth is that technology companies have done a terrific job of cutting costs and preserving cash flow, even as revenue growth has continued to shrivel or turn negative. (See Reuters analysis).

But demand for new products and services remains scarce, except in isolated pockets. Apple and Blackberry-maker Research in Motion make must-have gadgets that resist economic penny-pinching.

Remember why investors put up with the volatility of technology stocks in the first place? Winners in the sector are famous for generating outsized growth for hot products or services independent of economic cycles.

Microsoft's fiscal year-end results reflect the dynamics of the company's own product cycles as much as the economy. The company reported its first-ever drop in annual sales of Windows software as overall revenue fell by 17 percent.

But the world's largest software maker is on the cusp of a major upturn in its business that is expected to follow the introduction of the next version of its operating system, Windows 7 in October. It's natural, then, that business and consumer buyers might pause until Windows 7 gives them new reason to buy PCs in 2010 and beyond.

Sure, the company blamed a poor macroeconomic climate. But Microsoft has been saying much the same thing for the past year, namely, that an "economic reset" to lower levels of growth is underway in the world.

Meanwhile, Samsung's quarterly results out Friday showed it benefiting from a recovery in memory chip pricing that is only indirectly related to underlying economic demand. Firming pricing in memories followed a two-year industry slump created by a glut of over production. Again, no signs of economic uptick here.

Samsung, which is also the world's second largest maker of mobile phones, is enjoying robust demand for these products thanks to clever designs. These are stealing market share from rival mid-priced phones. The gains are coming in spite of an expected 10 percent drop in global cell phone demand this year.

Furthermore, the positive results earlier this month from Intel and IBM said less about the economy than they did about the success of specific turnaround strategies the companies have been put in place over the years (See Intel column).

IBM has sharply raised its 2009 year earnings outlook as it has refocused on higher-margin software and services businesses instead of hardware. This success is a product of financial reengineering and cost-cutting, not improving demand. Note that IBM revenue is set to fall 9 percent in the course of 2009.

In general, second-quarter results have provided further evidence that technology demand is stabilizing, albeit at lower levels.

The danger for investors is reading too much into these reports. Half way through the year, there is little evidence of fresh corporate spending or new consumer demand for technology. Outside China, much of the activity has been restocking of depleted inventories. Economic recovery remains illusive.

-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. You can read some of Eric's recent columns here.--

(Editing by David Evans; Photo: Reuters/Rick Wilking)

By Eric Auchard

LONDON (Reuters) - Intel Corp has cheered up investors by once again making forecasts about its financial performance. The trouble with reading too much into its rebound, however, is that this is largely due to productivity gains of its own making, rather than a broader awakening of demand.

To be sure, Intel's revenue, profit and margins surged past all published analyst expectations for the second quarter. Partly, this was merely the "snapback" that occurred after Intel throttled back production to as low as 25 percent of factory capacity in the first quarter, amid a glut of unsold chips and shriveling demand.

Things got so bad that it quit commenting on its outlook for the first two quarters of 2009.

The bigger news was its answer to the question of what was happening in the second half: Third-quarter margins should improve to around 53 percent on revenue around $8.5 billion, and could move up toward historic high levels by year-end. The comments sent Intel shares up as much as eight percent and sparked broad-based buying in technology shares around the globe.

However, there is little here to bolster confidence in other bellwethers of the technology sector reporting this week. Intel is benefiting from healthy demand in China and -- to a lesser extent -- the United States, among consumers rather than businesses. But these are not swing factors for the likes of Nokia, IBM or Google.

IBM must defy the widespread evidence of weak corporate activity that Intel and others cite. But the company's reinvention as a business services provider makes it likely to once again produce stable results that say little about the overall health of the wider technology sector. Its sales of computers and storage could slip more than expected and currencies will hurt, but if contract signings hold up in its core services segment, IBM will remain a safe haven.

Google is expected to show negligible revenue growth compared with a year ago. This is a dangerous season historically for the company and has led to repeated disappointments. Recent industry data shows paid search, the source of Google revenue, slowed faster than ever in the second quarter. Increased capital spending tied to network outages could be another negative factor.

Nokia is at the mercy of soft demand for phone replacements in a weak global economy. It will be further hurt by currency fluctuations. Quarterly revenue is expected to fall by more than 20 percent versus a year ago. The backlog of unsold handsets that hurt Nokia last year has been worked off. But there are few scenarios in which the company might boost its outlook for the second half.

The difference comes down to this: Intel has been investing for years in the transition to ever smaller 32-nanometer-scale chips that are far more efficient than the prior generation of chips at 45-nanometer scale. Even in the absence of fresh economic demand, efficiencies are once again working in Intel's favor. These are factors that other technology companies can only dream of.

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own. At the time of publication Eric did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. --

(Editing by Martin Langfield; Photo: Reuters file photo)

- Brendan Wood is Chairman of Brendan Wood International, a global intelligence advisory firm. Recently, BWI published the World’s TopGun CEOs as ranked by 2500 institutional investors, which provides insight into the executives in whom shareholders feel the greatest confidence. The opinions expressed are his own. -

Brendan Wood International tracks the competitive position of investment bankers in global and regional markets. It also compiles the confidence rankings of hundreds of global shareholders in corporate investments, including those in the world’s leading banks. As of mid-2009, the Brendan Wood Investor Panel found a mixture of sharp criticism, but also some occasional strong praise for these “newly refurbished” financial behemoths.

First, the bad news: while all the banks have by now somewhat improved their situation from what it was earlier in the year – repaying $68 billion in government assistance, raising new equity, and carrying out a number of boardroom shuffles – their improving news and modest profit reports have not led to any total absolution from the Brendan Wood Panel for the worst falls from grace when the credit crisis exploded.

Citigroup still draws some harsh judgements, and not just for the hangover consequences of the Sandy Weill and Chuck Prince eras, but for its more recent direction by present CEO, Vikram Pandit.

Responses from the Brendan Wood Panel were taken before Pandit’s recent new top management shuffle (Edward “Ned” Kelly previous CFO is now Strategy and M&A leader becoming Vice-Chairman, John Gerspach, previous controller and Chief Accounting Officer is now CFO, and ex Merrill Lynch Vice Chairman Eugene McQuade is now CEO of Citibank NA, not to mention the stepping down of Chairman and CEO Bill Rhodes), but it appeared unlikely that any such changes would be greeted with great enthusiasm from shareholders.

The unhappiness of Bank of America shareholders with the costs and immediate consequences of the Merrill acquisition are now a matter of public record. It showed up in the shareholder commentary from the Brendan Wood Panel, but there was also recognition that the Bank actually did very well on investment banking performance rankings, leaping up to the same kind of level as JP Morgan Chase in the second quarter.

Again in the case of Citigroup, some shareholders expressed discontent that went beyond the specific issue of the expensive Merrill acquisition, fearing ‘a disharmonious culture’. But there was also recognition from shareholders that the large Merrill distribution network can still be a gradual source of increasing strength.

Much more positive assessments were offered for JP Morgan Chase, and of the specific contributions made by Jamie Dimon. He was cited for ‘doing a pretty good job of keeping a balance’ between wholesale banking and the recently increased retail component, and of working with a good risk management team, finding areas to “counterbalance” those risks his bank has been taking.

HSBC and Wells Fargo were two other major banks with CEOs who won plaudits from shareholders. HSBC may be recalled by some as once having been one of the largest early bank acquirers of an American company loaded with subprime mortgage debt, an acquisition that the bank’s Chairman, Stephen Green, later admitted with disarming frankness was one they wish they never had made. Nonetheless, they came through the whole crisis with much less visible damage than other global banks, and the Brendan Wood Panel’s comments included one that CEO Michel Geoghegan was “one of the best CEOs out there,” who has “guided the bank through the crisis much more effectively than his peers, and has a wealth of experience.”

John Stumpf of Wells Fargo drew similar enthusiasm, for “consistency and principles,” and for skill in executing deals: ‘He is one of the best in the business of the cross-sell.’ Wells Fargo also drew remarks that ‘management had considerable influence on who sat on its board, but that this was no bad thing’, thus making the board an active participant rather than a passive and uninvolved group.

Goldman Sachs, unsurprisingly, also continued to receive some strong recommendations from the Brendan Wood Investor Panel, especially for “strong risk management skills.”

There were not too many kind words from shareholders about other commercial and investment banks. But there also appeared to be, for the most part, a stoic acceptance of their existing structures, with some likely new regulatory controls coming in any case. It was noted that British banking regulation required much greater board independence than found in American practice, but that this had not made any apparent difference in the impact of the credit crunch on either side of the Atlantic.

Overall, shareholders can scarcely be regarded as taking entirely “public interest” views on the great risks into which most banks entered over the last decade. After all, many enjoyed a rather long run of 20 percent annual returns, and it appears that many of the losses now coming home to roost will be at least partially laid off on taxpayers.

However, the comments from the Brendan Wood Investor Panel are a useful realistic source about investment perception, and of general attitudes in the business community. Shareholders have been chastened by their recent experience, but not entirely persuaded that government has found the right answers to restoring a healthy and well-capitalized financial sector.