Good OpEd by Mark Perry and Andrew Biggs in the WSJ on The ’77 Cents on the Dollar’ Myth About Women’s Pay, Once education, marital status and occupations are considered, the ‘gender wage gap’ all but disappears.
While the BLS reports that full-time female workers earned 81% of full-time males, that is very different than saying that women earned 81% of what men earned for doing the same jobs, while working the same hours, with the same level of risk, with the same educational background and the same years of continuous, uninterrupted work experience, and assuming no gender differences in family roles like child care. In a more comprehensive study that controlled for most of these relevant variables simultaneously—such as that from economists June and Dave O’Neill for the American Enterprise Institute in 2012—nearly all of the 23% raw gender pay gap cited by Mr. Obama can be attributed to factors other than discrimination. The O’Neills conclude that, “labor market discrimination is unlikely to account for more than 5% but may not be present at all.”
These gender-disparity claims are also economically illogical. If women were paid 77 cents on the dollar, a profit-oriented firm could dramatically cut labor costs by replacing male employees with females. Progressives assume that businesses nickel-and-dime suppliers, customers, consultants, anyone with whom they come into contact—yet ignore a great opportunity to reduce wages costs by 23%. They don’t ignore the opportunity because it doesn’t exist. Women are not in fact paid 77 cents on the dollar for doing the same work as men.
Administration officials are (very) occasionally challenged on their discrimination claims. The reply is that even if lower average female pay is a result of women’s choices, those choices are themselves driven by discrimination. Yet the choice of college major is quite free, and many colleges recruit women into high-paying science or math majors. Likewise, many women prefer to stay home with their children. If doing so allows their husbands to maximize their own earnings, it’s not clear that the families are worse off. It makes no sense to sue employers for choices made by women years or decades earlier.
Is there discrimination in the world, yes. Is it as common as politicians want you to believe, I doubt it. I believe politicians hyper inflate the actual amount of discrimination to go on a crusade to change the world. Let the market work. If a place wants to discriminate, let the market punish them, not the government. Compared to the population of the U.S., only a fraction of the people and ideas lie within the political machine. Don’t limit the ideas to change the world for the better to politicians, allow the common woman and man, i.e. the market, to make the world better.