The Equal-Pay Myth that Refuses to Die

December 2, 2018 by Dan Mitchell @ International Liberty
 

While capitalism is the only system to produce mass prosperity, I actually support free enterprise more because it is a moral system based on voluntary exchange. The various forms of statism, by contrast, are based on government coercion.


But non-coercion not the only moral reason to support capitalism. I also applaud that free markets penalize racism and sexism. Simply stated, narrow-minded people are going to lose business to ethical competitors and forego income if they make choices based on animus rather than what makes economic sense.

This doesn’t mean an end to racism and sexism, but it certainly suggests that systemic and pervasive discrimination is very unlikely without government intervention (such as the Jim Crow laws that created government-enforced racism).

This is why I’m naturally suspicious of the claim that there’s a gender pay gap.

Mark Perry and Andrew Biggs of the American Enterprise Institute summarize the issue, pointing out that wage differences reflect personal choices and economic realities

…the 20% gender wage gap is actually a tiresome statistical myth that persists in the face of overwhelming evidence to the contrary. …The reality is that men and women make very different career and work choices, and frequently play very different family roles, especially for families with children. While gender discrimination undoubtedly occurs, it is individuals’ choice – not discrimination – which accounts for the vast majority of gender differences in earnings. …Compensating wage differentials are differences in pay that are designed to attract employees to jobs that otherwise would be undesirable. …The undesirable aspects of certain jobs can range from the mundane to the gruesome. For instance, men have longer average commute times to their jobs than women. In the U.S., the average male spends 33 more hours commuting to work each year. How much extra pay would you demand to spend the equivalent of four additional eight-hour days sitting in traffic or on a bus riding to work? …men are also much more likely to be injured or killed on the job. Economists have long found that, all else equal, more dangerous jobs pay higher average wages than safer jobs. And the 20 jobs with the highest occupational fatality rates are on average 94% male and 92.5% of workplace fatalities overall are men.

Writing for the Hill, Christina Hoff Summers of AEI issues a challenge that left-feminists are unable to answer. They never even try.

Everywhere we hear that for the same work, women only make 77 cents for every dollar a man makes. Think about that. If it were true, why wouldn’t businesses only hire women? Wages are the biggest expense for most businesses. So, hiring only women would reduce costs by nearly a quarter — and that would go right to the bottom line.

She points out that academic research repeatedly had debunked the claim that there is systemic discrimination that requires government intervention.

…this claim has been debunked over and over again. …The 23-cent gender pay gap we often hear about is simply the difference between the average earnings of all men and women who work full-time. It does not account for differences in occupations, positions, education, job tenure, or hours worked per week. When economists account for these relevant factors, the wage gap narrows to a few cents. By now, even feminist wage gap activists agree — at least when pressed.

Speaking of academic evidence, the Wall Street Journal opines about some recent research from Harvard economists.

Progressives claim that the pay difference between men and women is caused by sexism that government must redress. But a new study offers compelling evidence that the choices and priorities of women account for much of the disparity. The study examined data from the Massachusetts Bay Transportation Authority because it is a union shop with uniform hourly wages in which men and women adhere to the same rules and enjoy the same benefits. Workers are promoted based on seniority, not performance. Male and female workers of the same seniority have the same options for scheduling, routes, vacation and overtime. Under such rigid work rules, even a sexist boss or manager would have little ability to give men preferential treatment. Yet even at the Transportation Authority, female train and bus operators earned less than men. To explain why, Harvard economists Valentin Bolotnyy and Natalia Emanuel looked at time cards and scheduling from 2011 to 2017, also factoring in sex, age, date of hire, tenure, and whether an employee was married or had dependents. They found that male train and bus operators worked about 83% more overtime hours than their female colleagues and were twice as likely to accept an overtime shift on short notice. …The study ratifies the common-sense observation that men and women often have different priorities, and the best way to accommodate them is through the marketplace, not the untender mercies of government.

Notwithstanding all this evidence, some journalists are willing to publicize nonsensical numbers. Here are some excerpts from a column by Annie Lowrey in the Atlantic.

Do women earn…a shocking 49 cents on the dollar, as calculated by the social scientists Stephen Rose and Heidi Hartmann in a new analysis published by the Institute for Women’s Policy Research? …According to Rose, …the most accurate way to compare women’s and men’s earnings is to take the career-long view. “When you look at all women versus all men over time, the gap is 51 cents,” he said, referring to the 15-year figure. …What might help close this wide, long earnings chasm? Rose and Hartmann suggest…paid family leave and child-care subsidies…public-policy changes would give women more control over their working lives, and would help foster a more equitable workplace. And that would be good for everybody.

I’m guessing Ms Lowrey knows this study is tripe because she seeks to preserve her credibility by noting that pay gaps basically disappear when using honest numbers.

The most common way to measure the gender earnings gap is to look at how much women working full-time and year-round make, and compare it with what men working full-time and year-round make. …That number has some significant shortcomings, researchers have long argued. Women work different kinds of jobs than men do and have different levels of work experience, too. …Comparing apples to apples and oranges to oranges, women earn close to what men earn: Women in similar workplaces with similar titles and similar credentials make pretty much what their male peers do, whether they are fast-food employees making close to the minimum wage or corporate executives making hundreds of thousands of dollars a year.

But she doesn’t explain why the study is garbage.

To understand that, we’ll turn to Carrie Lukas, who debunks the IWPR numbers for National Review.

The study claims that the wage gap has been woefully understated, and that in reality women “earn just 49 cents to the typical men’s dollar, much less than the 80 cents usually reported.” How did they come to this jaw-dropping conclusion? Simple. They have redefined the “gender wage gap.” They are no longer looking at full-time workers, or even at consistent part-time workers. Rather, they are comparing the earnings of all women and all men who worked at any point during a 15-year period. More than four out of every ten women took more than a year out of the work force during that period, which was nearly twice the rate of men. As a result, women, on average, earned a lot less. That’s hardly a shock. …IWPR is misleading readers with the suggestion that the “wage gap” is really 49 cents on the dollar. …those who care about women’s economic advancement should seek to build an awareness of the very real consequences of the choices women make they decide what to study, which fields to enter, and how to plan their work lives so they can make informed choices.

Let’s close with this video from Ms. Sommers, which includes some rather amusing information about hypocrisy in the Obama White House.



P.S. Since I mentioned the previous administration, it’s worth noting that one of Obama’s appointees to the Council of Economic Advisers refused to defend the White House’s absurd claim that women only got 77 cents for doing the same work as men.

P.P.S. Given its track record of shoddy and biased output, is anyone surprised that the Paris-based Organization for Economic Cooperation and Development is pushing dishonest gender pay data?