For years, serious economists have discounted claims of a so-called “gender pay gap,” the assertion that women are being discriminated against by only paying them 84 cents for every dollar a man is paid. While there was pay discrimination in the past, that practice is illegal today. Whatever pay gap still exists is shrinking over time and is easily explained by economic, not discriminatory, factors.
Pay-gappers point to Federal Reserve Bank data showing median earnings for full-time work for those 18 and older. For men it’s $391 per week, but only $330 for women. Thus, women earn roughly 84 cents for every dollar a man earns. But that’s not the whole story.
Fortunately, The Myth of American Inequality: How Government Biases Policy Debate, by former Senator Phil Gramm, Robert Ekelund and John Early, provides the rest of the story.
The Fed is comparing all full-time men to all full-time women. The data make no provision for different types of jobs, extra time worked, education, experience, etc. And those variations make a huge difference.
First, the Gramm book explains that the Census Bureau considers 35 hours a week as full time. But it also points out that men, on average, work about two hours a week more than women. So even if all men and women earned the same wage, men’s weekly earnings would be higher than women’s just because of the extra hours. That difference accounts for about 4 cents of the pay gap.
Second, public school teachers work an average of 38 weeks per year. But the book says the Census Bureau treats that as if it were 52 weeks. By arbitrarily lengthening the time, teachers appear to be making less. Why would that make a difference in the gender pay gap?
There are about 3.6 million public and private school teachers. Roughly 75 percent are women, 25 percent are men. Any process that appears to lower teachers’ pay will have a disproportionate impact on what women appear to earn—accounting for 1 cent of the pay gap.
Third, men have, on average, more working experience than women of the same age—about 13 percent more. More experience often means more income, and about 5 cents of the pay gap.
Fourth, there is also time lost from work for child rearing. Interestingly, the book claims that women who have not married have a 9-cent pay gap, married women have a 22-cent pay gap, and women who have been widowed, divorced or separated have an 18-cent pay gap.
Fifth, occupational choices make a huge difference. Historically, men have been more willing to take jobs with longer hours, less flexibility and more danger than women. Those jobs tend to pay more. Men have also tended to go into higher-paying professions, such as medicine, engineering, and law. But that is changing. More and more women are entering the higher-paying professions which will, over time, reduce the pay gap.
The authors claim that when all factors are considered, there is only a 1.5-cent pay gap. That’s a positive economic sign, but it won’t get much attention because some politicians need a big pay gap to demagogue.
August 22, 2023