Everything You Need to Know about the Non-Existent Wage Gap between Men and Women

An essential part of a free market economy is the price system. The competitive pricing of goods and services transmits information to producers and consumers and creates incentives for the efficient allocation of resources. Just as the circulatory system or nervous system enables our bodies to function.

And when you weaken or cripple markets with various forms government intervention (price controls, taxes, third-party payer, etc), that leads to distortions that reduce prosperity.

This is why “paycheck fairness” proposals to address the supposed “gender pay gap” are so risky for prosperity. It’s no exaggeration to say that these “comparable worth” schemes are designed to empower bureaucrats and politicians to override market forces.

What makes all this especially frustrating is there is no systemic discrimination against females in the workplace.

One of the leading scholars in this field is Christina Hoff Summers of the American Enterprise Institute. She has dissected the data and demonstrated that there is no pay gap once factors such as occupational choice and work hours are added to the equation. And now she has a must-watch video on the subject from Prager University.

All of her data is very compelling, but the most persuasive part of the video is at the beginning when she asks why profit-seeking businesses don’t fire men and hire women if there really is a wage gap.

Statists might respond that businesses are part of some evil patriarchy and that there’s some sort of oligopolistic conspiracy to forego income in order to oppress females. But if that’s what they really think, why don’t these leftists start their own businesses and take advantage of the supposed pay gap? Not only would they earn large profits, but they would also bankrupt existing firms that ostensibly are engaging in discrimination.

Sounds like a win-win, right?

And if they respond by saying that they don’t happen to have business skills because they chose to study more enlightened topics while in school, then ask them why progressive companies from France or Sweden aren’t entering the American market and earning lots of business?

Or are they part of the patriarchal conspiracy as well? Like almost all theories based on conspiracies, this is nonsense.

Let’s close with some wisdom on this issue from one of my colleagues at the Cato Institute. Vanessa Brown Calder cites a considerable amount of data on occupational choice, but also focuses on quality-of-life and family issues.

…women are considerably more likely to absorb more care-taker responsibilities within their families, and these roles demand associated career trade-offs. Sheryl Sandberg’s Lean In describes 43% of highly-qualified women with children as leaving their careers or off-ramping for a period of time. And a recent Harvard Business Review report describes women as being more likely than men to make decisions “to accommodate family responsibilities, such as limiting (work-related) travel, choosing a more flexible job, slowing down the pace of one’s career, making a lateral move, leaving a job, or declining to work toward a promotion.” It’s fair to assume that such interruptions impact long-term wages substantially. In fact, when researchers try to control for these differences, the wage gap virtually disappears. …It’s likely that other, more nuanced but documented differences, like spending fewer hours on paid work per week would explain some of the remaining five percent pay differential.

The philoso-raptor agrees.

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?

P.P.S. Even the Obama-era Council of Economic Advisers had enough integrity to disavow the feminist pay-gap numbers.

P.P.P.S. On an amusing note, here are some news reports about my interaction with the feminist left during my college years.

Read Full Post »

Another Amazing Example of Government Stupidity and Political Correctness

If you had to pick the most inane, pointless, and intrusive example of government stupidity, what would you pick?

We have lots of examples of regulators running amok.

• Regulations making it difficult for trucking firms to weed out drunk drivers.
• Year-long sting operations by federal milk police.
• Rules harassing coffee shops with bikini-clad sales staff.
• OSHA requirements for expensive safety harnesses for people working 11 feet off the ground.

But we also have really absurd examples of wasteful spending.

• Forcing taxpayers to pay millions of dollars for pro-Obamacare and pro-IRS propaganda.
• Doing interviews – at a per-person cost of $6,000 – about erectile dysfunction and sticking the tab on us.
• Giving disability benefits to a grown man who wants to wear diapers and live as an “adult baby.”
• Squandering $400K on experimental underwear that detect cigarette smoke.
• Paying 35 times the market price for some Kindles.
• A $100,000 library grant to a city without a library.
• Throwing $100 million in the garbage by subsidizing a leftist bureaucracy in Paris that advocates for higher taxes in the United States.

We even have examples of government stupidity that can be characterized as a combination of wasteful spending and foolish regulation, such as one part of the government squandering money on research about how to encourage condom use by providing prophylactics of different sizes while another part of the government has regulations preventing the private sector from providing prophylactics of different sizes.

Today’s post, however, could win a prize for the most profound and disturbing example of government stupidity. It mixes foolish red tape with over-the-top political correctness.

Here are some jaw-dropping details of the federal government running amok in Michigan.

A set of seating is being torn down outside the Plymouth Wildcats varsity boys’ baseball field, not long before the season begins, because the fields for boys’ and girls’ athletics must be equal. A group of parents raised money for a raised seating deck by the field, as it was hard to see the games through a chain-link fence. The parents even did the installation themselves, and also paid for a new scoreboard. But, after someone complained to the U.S Education Department’s Office for Civil Rights, an investigated by the department determined the new addition was no longer equal to the girls’ softball field next door, which has old bleachers and an old scoreboard.

This is utterly absurd for several reasons, most notably that the federal government shouldn’t have any role in education, much less efforts to micro-manage high school sports facilities.

But even if one accepts that Washington bureaucrats should interfere in such matters, it’s important to understand that it is bureaucratic lunacy to interpret “Title IX requirements to offer equal athletic opportunities to both boys and girls” to somehow mean equal seating.

Sexist bleachers?!?

What happens if there are fewer people who want to watch female sports? Should there be a requirement to build bleachers that are mostly empty?

Or maybe we can blend Obamacare to Title IX and create a mandate that parents and others in the community have to attend female sporting events 50 percent of the time?

Actually, I shouldn’t even joke about such an idea, lest some bureaucrat think it’s a serious proposal.

P.S. The Keynesians will be happy. They like it when wealth and/or capital is destroyed since that supposedly forces “stimulative” rebuilding exercises.

Read Full Post »

Member of Obama’s Council of Economic Advisers Admits White House 77 Cents Pay Gap Claim Is Bogus

President Obama and many other leftist politicians are running around the nation claiming that supposedly greedy employers are deliberately choosing to reduce their profits.

They’re not actually making that specific claim, but that’s what they’re asserting, for all intents and purposes, when they claim that women are not getting equal pay for equal work.

Inaccurate, but nonetheless clever

If genuine and pervasive sexism existed, then non-discriminatory employers could dramatically reduce labor costs – and therefore dramatically increase profits – by getting rid of overpaid male workers and hiring women. Does anyone really think entrepreneurs and business owners are willing to sacrifice big profits simply because of anti-women animus?

That’s what Obama would like us to believe. And he wants the government to have the power to second-guess the decisions of private businesses. Heck, he probably would like to make America like Europe, where there are efforts to impose gender quotas.

And one of his chief economists tried to back up the President’s claims. Here’s some of what Ashe Schow wrote on the issue for the Washington Examiner.

While detailing executive actions President Obama plans to take Tuesday regarding equal pay for women, Betsey Stevenson, a member of the White House Council of Economic Advisers, said very defiantly that…women… continue to make less than men. …“They’re stuck at 77 cents on the dollar, and that gender wage gap is seen very persistently across the income distribution, within occupations, across occupations, and we see it when men and women are working side by side doing identical work.” That sounds awfully specific. Stevenson certainly sounds like she’s saying men and women doing the exact same job are earning very different pay.

Ms. Stevenson certainly was trying to be a loyal employee.

But then something very unusual happened. A journalist actually asked a real question.

And Ms. Stevenson, who obviously didn’t want to make herself a laughingstock to her colleagues in the economics profession, was forced to admit that the President is peddling nonsense.

…as soon as Stevenson was actually questioned about the statistic by McClatchy reporter Lindsay Wise, the White House adviser crumbled, admitting her earlier comments were inaccurate. “If I said 77 cents was equal pay for equal work, then I completely misspoke,” Stevenson said. “So let me just apologize and say that I certainly wouldn’t have meant to say that.” …Don’t expect Obama to admit any of this as he travels around the country continuing to claim that women don’t earn as much as men.

So why did Ms. Stevenson quickly back down? Well, perhaps she is familiar with the work of Christina Hoff Sommers, who has explained that men and women do get equal pay when you adjust for career choices, labor supply, and other factors.

There’s lots of evidence that the supposed sexist pay gap is a political weapon rather than economic reality.

Mary Perry and Andrew Biggs of the American Enterprise Institute just wrote a very thorough debunking of the pay gap myth for the Wall Street Journal. Here are some of the key passages, starting with an explanation that the pay gap largely disappears when you make apples-to-apples comparisons.

…the numbers bandied about to make the claim of widespread discrimination are fundamentally misleading and economically illogical. …Men were almost twice as likely as women to work more than 40 hours a week, and women almost twice as likely to work only 35 to 39 hours per week. Once that is taken into consideration, the pay gap begins to shrink. Women who worked a 40-hour week earned 88% of male earnings. Then there is the issue of marriage and children. The BLS reports that single women who have never married earned 96% of men’s earnings in 2012.

Wow. No wonder Steve Chapman wrote that the left’s pay-gap rhetoric is “a myth resting on a deception.”

But there’s more.

Risk is another factor. Nearly all the most dangerous occupations, such as loggers or iron workers, are majority male and 92% of work-related deaths in 2012 were to men. Dangerous jobs tend to pay higher salaries to attract workers. Also: Males are more likely to pursue occupations where compensation is risky from year to year, such as law and finance. Research shows that average pay in such jobs is higher to compensate for that risk.

Finally, Perry and Biggs seal the argument by pointing out that discrimination doesn’t make sense in a competitive market.

…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.

By the way, this does not mean that discrimination doesn’t exist.

I’m sure there are still some employers who let sex or race play a role in their decisions. But such people are not only immoral, but also stupid. They are giving up potential profits to indulge their own insecurities.

And other employers will take advantage of their foolishness.

In other words, the free market is the best way to fight discrimination, not government intervention.

P.S. Walter Williams explains that racial and sexual profiling sometimes makes sense.

P.P.S. I explain that anti-discrimination laws can boomerang against intended beneficiaries.

P.P.P.S. There is real evidence that tall people and attractive people are paid more, though I nonetheless argue that government is incapable of addressing this issue.

P.P.P.P.S. For those who are genuinely worried about discrimination, particularly against minorities, the real issues to address are Social Security and government schools.

Read Full Post »