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May 2014 Brief: Volume 21, Number 13

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“There Are Observable Differences…”

 

by Deborah D. Thornton

 

 

Yes, there is a “wage gap” between men and women – but importantly, “There are observable differences in the attributes of men and women that account for most of the wage gap.” In a 2009 report by the CONSAD Research Group for the U.S. Department of Labor, the “statistical analysis that includes those variables … leave(s) an adjusted gender wage gap that is between 4.8 and 7.1 percent.”[1] A real wage gap, back in 2009, of only 5 to 7 percent. So for every dollar a man makes, a woman with comparable experience and education will make 95 cents. Is that less? Yes. Do we (after the experience of Obamacare) need a new federal law, thousands of pages of regulations, increased government control, and more trial lawyers to attempt to address it? No.

 

According to the Labor Department report, the raw wage gap is caused by three main factors:
1. A greater percentage of women than men tend to work part-time. Part-time work tends to pay less than full-time work.
2. A greater percentage of women than men tend to leave the labor force for child birth, child care, and elder care. Some of the wage gap is explained by the percentage of women who were not in the labor force during previous years, the age of women, and the number of children in the home.
3. Women, especially working mothers, tend to value ‘family friendly’ workplace policies more than men. Some of the wage gap is explained by industry and occupation, particularly, the percentage of women who work in the industry and occupation.[2]

 

The report documents six factors which go into wage decisions and affect the amount women are paid: “occupation, human capital development, work experience, career interruption, motherhood, and industry sector.”[3] The main factor listed is “differences between the occupations in which men and women typically work.” Though one can argue that the choice of occupations is biased by education, in an era when significantly more women than men attend and graduate from college at all degree levels (associate, bachelor’s, master’s, and doctorate), this argument would seem moot.[4]

 

Over the last 25 years, women have “become more educated, have increased their rate of participation in and their attachment to the labor force, and have moved into jobs traditionally held predominantly by men.”[5] The increased use of workplace computers and technology and their ability to use this technology benefits women. If women are working in lower-paid industries, it is because they chose to. There is no documented reduction in wages for mothers with a college education, and mothers who take time off for child rearing quickly regain ground after re-entering the workforce.[6] Many women chose jobs offering non-financial compensation. In summary, the “Mommy gap” – according to the U.S. Labor Department – is fiction.

 

Even when considering the “raw” or un-weighted wage gap, Bureau of Labor Statistics data shows that between 1979 and 2013 women’s median earnings as a percent of men’s has consistently increased, from 62.5 percent to 83 percent.[7] Those quoting a 77 percent wage gap are using not only raw numbers, but ones which are very old. When the various individual decision-making factors between men and women are taken into account, the “real” wage gap in 2014 is probably about 3-4 percent – or less, in this writer’s judgment.

 

A real wage gap of 4 percent, in a 40-hour work week over 52 weeks a year, amounts to a real income difference of about $800 in a $20,000 job. Yes, that amount would be a rent check. Should there be any difference, when the employee has the same experience, the same education, and is performing at the same level? No. Are there legal protections in place to address this issue? Yes.

 

Women should stand up for themselves and insist on that extra 4 percent. Given that women’s wages increased by 3 percent in 2013, while men’s decreased by 1 percent, any woman who asks for a 4 percent increase will probably be paid more than a man with the same job, experience, and educational background.[8]

 

In summary, the Department of Labor says, “…this study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.”[9]

 

To repeat, “almost entirely the result of the individual choices being made by both male and female workers.”

 

Further, the report states –
It is not possible now, and doubtless will never be possible, to determine reliably whether any portion of the observed gender wage gap is not attributable to factors that compensate women and men differently on socially acceptable bases, and hence can confidently be attributed to overt discrimination against women.[10]

 

Yet the 239 women currently working in the White House are paid, on average, $10,000 per year less than the men ($74,000 to $65,000), or a full 12 percent less.[11] The question should be, “Why is President Obama discriminating against women, when other law-abiding businesses are not?” Shouldn’t he first follow the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act of 2009 – which he signed into law – before asking for another Obamacare?

 

(Endnotes)
[1] “An Analysis of Reasons for the Disparity in Wages Between Men and Women,” CONSAD Research Group, U.S. Department of Labor, January 12, 2009, p. 1, <http://www.consad.com/content/reports/Gender%20Wage%20Gap%20Final%20Report.pdf> accessed on April 14, 2014.
[2] Ibid., pp. 1-2.
[3] Ibid., p. 6.
[4] Mark J. Perry, “No commencement speaker will mention the huge gender college degree gap for the class of 2013 favoring women,” American Enterprise Institute, May 13, 2013, <http://www.aei-ideas.org/2013/05/no-commencement-speaker-will-mention-the-huge-gender-college-degree-gap-for-the-class-of-2013-favoring-women/> accessed on April 14, 2014.
[5] “An Analysis of Reasons for the Disparity in Wages Between Men and Women,” p. 7.
[6] Ibid., p. 10.
[7] “Weekly and Hourly Earnings Data from the Current Population Survey,” by Gender, 2003 – 2013, <http://data.bls.gov/pdq/SurveyOutputServlet> accessed on April 14, 2014.
[8] Ibid.
[9] “An Analysis of Reasons for the Disparity in Wages Between Men and Women,” p. 2.
[10] Ibid., p. 36.
[11] Michael D. Sheer and Annie Lowrey, “As Obama Spotlights Gender Gap in Wages, His Own Payroll Draws Scrutiny,” The New York Times, April 7, 2014, <http://www.nytimes.com/2014/04/08/us/politics/as-obama-spotlights-gender-gap-in-wages-his-own-payroll-draws-scrutiny.html?_r=0> accessed on April 14, 2014.

 

Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

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