Are women paid less than men?

August 14, 2009

Diana-FurchtgottRoth.jpg — 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.

10 comments

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My favorite study on wage inequality was done by a Swedish researcher. When all other things were equal, women still earned less. Upon digging further, he determined that women didn’t play enough hardball during wage negotiations, and also were less likely to leave for more money (thereby staying at a lower paying job). Having hired many people, I find the negotiating factor to be sadly too true. So girls — let’s demand more! We’re so much more dependable than men, so we deserve it! Fight!

Posted by Etherialgirl | Report as abusive

people are in Jobs which may be valued fdiferently based on Knowledge, Time on the Job, working condition and hours. Women gravitate to jobs that require less education, accumulate less experience and are in better conditions and do not require longer hours or shifts. Most employers have jobs evaluted based on these factors. All persons on those jobs are paid the same rate. Only by comparing like jobs and hourly rate are comparisons valid.

Posted by R Thatcher | Report as abusive

Saying inequality basically equals equality isn’t clever, it doesn’t move things in a good direction, it’s bad math and it inevitably leads one to conclude that some “women” (for instance, the writer of this column) don’t want real equality at all. Real men and women would never insist on cheapening the absolute definition of equality with loads of abominable, pointless, mealy-mouthed excuses for an evidently flawed status quo.

Might as well be sleeping with The Enemy, Ms Roth… But please, please, don’t ever reproduce. You’ve done enough damage, thank you.

To all others: equality IS attainable. Bring it on.

Posted by The Bell | Report as abusive

Firstly, I would like to applaud the author for approaching this topic from a fresh perspective. The work practices of women and men are vastly different and therefore it is not empirically correct to directly compare them without adjusting for certain differences.

With regards to the first poster, your argument has merit however this is tainted by the unfounded comment that women are more dependable than men. Frankly I fail to see the relevance of this to the overall argument.

I would also like to draw attention to the so called Reuters ‘House Rules’:

•We moderate all comments and will publish everything that advances the post directly or with relevant tangential
•We try not to publish comments that we think are offensive or appear to pass you off as another person, and we will be conservative if comments may be considered libelous.information.

The post by Bell utterly fails in any shape or form to advance the argument nor is it relevant. It is also deeply offensive in its suggestion that the author should refrain from reproducing. It is this kind of small-minded drivel that takes away from the underlying issue and hampers any progress. Bell if your post is any indication of your real beliefs I suggest that you should do us all a favour and heed your own advice!

Posted by M | Report as abusive

Tsk, tsk, M: the challenge here having been to reproduce statistical models of actual validity in alleged pursuit of equality in key areas of employment, you just had to go dragging the topic into the sexual gutter, didn’t you?

If you were a sporting person and possibly American – not to say that you are either – statistics would count above everything and there’d be zero tolerance for major league manipulation. Swindle of any magnitude begets headline scandal-fodder in these areas, by the ton.

Why should the terms on which human beings of either gender make a decent living be treated differently?

If workplace equality is an attainable goal, one worth striving for, then certainly not by moving the goalposts around in mid-game to the point where a 20- or 22-point spread is declared to equal zero. No serious commentator ever trivializes that degree of deviation and expects to get away with it unscathed. That would be mathematically unsupported besides being popularly decried.

The playing field is manifestly uneven when status quo jockeys must invoke Old Economy home-making bias to explain First-World pay-gaps. It’s far too early to call the job game a draw. There continues to be a gap, QED. Besides setting a bad example mathematically speaking, those who sweep the problem under the rug aren’t doing anyone any favors at all.

The ongoing objective in a just society is to do things right; no declaration of false victory is ever acceptable, with the gender gap no exception to the general paradigm.

Equality between all people – which should never have gone missing in the first place – may eventually be restored by uncompromising discourse and relentless effort on the part of broad-minded and honest people. The odds of your being among them, M, just aren’t particularly good right now.

Posted by The Bell | Report as abusive

Bell, that’s a lot of words, but I don’t get your point. I agree with M, your comments seem to be offensive in that you spend more time making personal attacks against M than you do making arguments for or against the well written article.

Bell: “you just had to go dragging the topic into the sexual gutter, didn’t you?”

It seems to me that you did that when you said “Might as well be sleeping with The Enemy, Ms Roth… ” and “please, please, don’t ever reproduce”.

Bell:
“If you were a sporting person and possibly American – not to say that you are either – statistics would count above everything and there’d be zero tolerance for major league manipulation. Swindle of any magnitude begets headline scandal-fodder in these areas, by the ton.”

I agree. So where are your statistical arguments? And why do you engage in manipulation?

Bell:
“Why should the terms on which human beings of either gender make a decent living be treated differently?”

Define “decent living”. While perhaps not true for the moment in this economy, most educated Americans make a “decent living”. And thanks to the liberties we enjoy in the US, they get to choose the terms on which they so do. As this article points out, people make choices on the hours they work and the money they make against time with family or a more personally fulfilling career.

Certainly, the terms on which one makes a decent living should not be treated differently on the basis of gender. And this article argues persuasively that it in fact is not, despite oft heard “scandal-fodder-swindel” to the contrary.

Perhaps you are making an argument about entitlement – that all people are entitled to earn the same wage regardless of the quality, character, or volume of contribution they make to society. The article argues against that point, too.

Bell:
“If workplace equality is an attainable goal, one worth striving for, then certainly not by moving the goalposts around in mid-game to the point where a 20- or 22-point spread is declared to equal zero. No serious commentator ever trivializes that degree of deviation and expects to get away with it unscathed. That would be mathematically unsupported besides being popularly decried.”

I do not get your metaphors. This article is a post-hoc analysis, and is certainly not “mid-game”. The article enlightens us as to the data-supported causes of the 22 point spread in gender wage inequality, and specifically that none of that spread is due to gender discrimination in 2009.

Bell:
“The playing field is manifestly uneven when status quo jockeys must invoke Old Economy home-making bias to explain First-World pay-gaps. It’s far too early to call the job game a draw.”

How do “status quo jockeys” invoking “Old Economy” (what?) to explain pay-gaps make a “playing field” uneven, manifestly or otherwise? How are you trying to say that the two are related? The “explanations” are the cause of the “uneven playing field”? Selectively ignoring explanations is the opposite of the broad-mindedness you claim to posess.

Bell:
“There continues to be a gap, QED.”
Indeed there does. A commendable tautology. And fully supported by the article. Forgive me for pointing this out, but I think the article went just a trifle further than your proof to also illustrate some of the causes of that gap.

Bell:
“Besides setting a bad example mathematically speaking, those who sweep the problem under the rug aren’t doing anyone any favors at all.”

Well, I for one am discontent to sit staring at the shadows cast upon the wall by the fire, and as a result of this article feel somewhat closer to the mouth of the cave.

Bell:
“The ongoing objective in a just society is to do things right;”
Ah. Is it? Well, let’s say it is. What would be right, in this case? To use an example from the article, I think its right that a nurse earn less than an orthopedic surgeon, regardless of gender. I think its right to let a person, regardless of gender, have the freedom to choose to be either an orthopedic surgeon or a nurse, to choose how much work they want to put into it, and to choose the wages commensurate with each.

Bell:
“no declaration of false victory is ever acceptable, with the gender gap no exception to the general paradigm.”

I agree. But you have not provided any arguments to convince me that this article’s “declaration of victory” is a false one. Metaphors are not convincing.

Bell:
“Equality between all people – which should never have gone missing in the first place – may eventually be restored by uncompromising discourse and relentless effort on the part of broad-minded and honest people. The odds of your being among them, M, just aren’t particularly good right now.”

Your premise is false. People just are not equal. We never have been, and we never will be. We are all unique, and we all contribute differently: in different amounts, in different quality, and in different character. We must not take back more than we put in. To expect to take back as much for the contribution of a rotten fruit as for the contribution of a fresh one is simply immoral and unjust, and a paradigm blind to gender.

Posted by BlueEyes | Report as abusive

I agree with this article…I am a kitchen designer in Iowa City, and I have been designing kitchen for almost 15 years. I have an associates degree with an emphasis in interior design. There is another designer at the same please who has been doing kitchens for 14 years, and has not degree for interior design. I have been at this job for 3 1/2 years, and he has been there for 2 1/2 years…I have never had a raise in my base salary or given any contractor accounts, yet he was given a $650/mo raise less than a year after starting and also was given several contractor accounts so he makes at minimum $7800/year more than me, even though I have been there longer and have a degree!!!! Unfair!!!

Kathy,

It is unfair than you are paid less than your peer, but it is probably not because you are being discriminated against because you are a woman.

Believe it or not, the same thing happens to men when comparing their salaries to other men, and it also happens when men compare their salaries to other women. In fact, I know of one situation in particular where at least three men all worked for a woman who was unqualified and unable to suitably perform her job, as judged by her peers, and yet even though those men are more qualified and capable than she for her role, she continues to be paid more than those men, and all but one of those men remain un-promoted today.

While some of those men remained in their positions anyway, a number of other high-talent people who were either her peers or people who saw her role as a possible next step in their careers, quit the company for better jobs, looking for either better pay or better opportunities.

The point is that the choice that anyone has when they are not being paid well enough relative to their peers is to look for another position that will pay the salary they deserve. If the boss can keep you around paying you what he is paying you, even if you grumble about unfairness, she has no reason to pay you more.

One of the points this article makes is that not everybody cares about their salary above other factors. Some people choose to stay at jobs because they like like the hours, or the people they work with, or they like the projects they are working on, or they are scared to go out looking for another job.

Kathy, if you are a talented interior designer and you want more pay, you have to do the legwork to go out and find someone who will pay you more, or go independent and sell jobs to contractors directly.

Posted by Sarah | Report as abusive

Women are NOT paid less than men. Not anymore. This is just more feminist lies to keep getting more and more. This is the tactic of a spoiled brat child and they are using it to pout their way to power. Everywhere I have ever worked in the last 12 years,there has been women managers. I have only had one male manager and he got knocked down from manager to floor worker simply because a group of women workers went upstairs to the boss and litterally started crying and making threats about inequality. He lost his manager job to one woman, and got knocked down to asst. manager, later this same female went to the boss and came back down and the guy had been busted to floor and replaced by yet another female, thus losing both titles. This is what I saw with my own eyes, I can only assume, (being this easy) that this is happening all over America/Canada/Europe. I have also seen a substantial amount of statistical lying coming from feminists as well and there is heavy proof of it in a book called “Sommers, Christina Hoff – Who Stole Feminism; How Women Have Betrayed Women”. This is a woman who saw what we men are seeing and chose to go with TRUE equality, not just one that leans in her favor. I have gotten outpaid by women my whole life and I have a Power Engineering degree. It seems that even when I have better credentials, there is a certain quota of women that have to be plugged in no matter what. Where is this protection for men? Where are our government subsidized programs that protect us from organizations like feminism, who abuse their power and are on a warpath against men. Who protects us from women who are power hungry and have a battle tank called the government that (for some reason) supports ONLY women’s rights and has a total disregard for men. This is one -sided and true statistics are showing that despite all of the doctoring and created media supporting feminists and demonizing men. When men complin about inequality they are considered “empowered” , men are considered crybabies and their manhood is challenged in an attempt to keep them from wanting to speak out against this injustice. I for one, won’t fall for this trick. Call me what you will, I am getting the true word out and in spades.

Posted by chessmassacre | Report as abusive

[...] for federal intervention is disputed. Other experts say the gap is essentially explained by the various demographic factors and there’s no documentation of any systematic problems of [...]

Furthgott-Roth has it wrong about humanities study. Humanities grads are the ones in enterprises who make sure technology gets commercialized and marketed successfully. The human centered skills of communication, empathy, relationship building are the essential skills for taking engineers’ patents and turning them into real businesses. They are also the skills of client development and client service that are not outsourced to low wage countries. IBM refashioned themselves as a services company on this basis. In any case, a person doing the same job, regardless of degree, should be paid the same. It is job experience not undergraduate courses that matter in business. Especially, the longer we are out. There is excellent REAL scholarship about this. Amar Bhide is perhaps the best in The Venturesome Economy. And, he is no AEI “scholar”. The fact that she introduced it into the mix shows that they have something to hide about wage equality. Humanities study should have nothing to do with it. Quite the opposite, those skills are a needed complement to “male” engineering and “sciences” skills in the enterprise. Humanities students are specifically targeted by Investment Banks for IT services units that require whole-system thinking and approaches.

Posted by Planck | Report as abusive