Gender Pay Inequity – The 24-cents Pay-Gap: Myth or Reality? (Do women make less than men?)

The 76-cent myth: Do women make less than men? The wage-gap ratio isn’t best gauge for pay discrimination, and overemphasizing it can undermine an important issue. Then it comes to pay discrimination, the one statistic you hear over and over is that women make only 76-cents for every one dollar a man earns.

To the average person, that ratio gives the false impression that any woman working is at risk of being paid 24 cents less per dollar than a man in the same position. However, this wage-gap ratio reflects a comparison of the median earnings of all working women and men who work at least 35 hours a week on the job, any job. That’s it. It doesn’t compare those with equal work, equal training, equal education or equal tenure. Nor does it take into account the hours of overtime worked.

The wage gap, in short, “is a good measure of inequality, not necessarily a measure of discrimination,” said Heidi Hartmann, president of the “Institute for Women’s Policy Research”. Unequal doesn’t always mean unfair. Much depends on the reasons for disparity…

Factors may include: more women choose lower-paying professions than men; they move in and out of the workforce more frequently; and they work fewer paid hours on average. The fact is that women are still society’s primary caregivers, that some higher-paying professions require either too much time away from home or are still less hospitable to women than they should be.

However, while those factors account for a good portion of the wage gap, actual pay discrimination likely accounts for the balance, experts say. Hartmann believes discrimination accounts for between 25% and 33% of wage gap. Compensation specialist Gary Thornton, HR management consulting, figures at least 10% to 15% does. Whatever the breakout, there certainly are numerous studies that show discrimination — however unconscious — still exists.

In the article Hiding the Truth About the Pay Gap Between Men and Women by Michael J. Eastman writes: The first bill signed into law by President Obama, was the “Lilly Ledbetter Fair Pay Act”, overturning a U.S. Supreme Court decision and vastly expands the opportunity to file pay and other discrimination cases. Paying someone less because of their sex is illegal and two federal laws, the “Equal Pay Act of 1963” and “Title VII of the Civil Rights Act of 1964”, provide the framework whereby victims of pay discrimination can seek redress. However, some argue that these two laws are not effective at eradicating pay discrimination and that the laws must be changed. Central to their argument is the so-called “pay gap,” the difference between the average earnings of men and women.

The argument that the pay gap must be closed rests on the assumption that the pay gap is largely attributable to employer discrimination. However, if the pay gap is to be used to justify such significant changes in the law, it seems entirely appropriate to examine the pay gap itself. Does it really measure employer discrimination? Do other factors play a greater or lesser role?

Economists who have studied the pay gap have observed that numerous factors other than discrimination contribute to the wage gap, such as hours worked, experience, and education. Recognizing the importance of unbiased research on the pay gap, the Labor Department contracted with “CONSAD Research Corporation” for a review of more than 50 existing studies as well as a new economic and statistical analysis of the pay gap. CONSAD’s Report, which was finalized on January 12, 2009, found that the vast majority of the pay gap is due to several identifiable factors and that the remainder may be due to other specific factors they were not able to measure.

CONSAD found that controlling for career interruption and other factors reduced the pay gap from about 20% to about 5%. Data limitations prevented it from considering many other factors. For example, data did not permit an examination of total compensation, which would examine health insurance and other benefits, and instead focused solely on wages paid. The data were also limited with respect to work experience, job tenure, and other factors.

The Labor Department’s conclusion was that the gender pay gap was the result of a multitude of factors and that the “raw wage gap should not be used as the basis for [legislative] correction. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of individual choices being made by both male and female workers.”

In the articleThe Myth of the Wage Gap by Diana Furchtgott-Roth writes: Focus on individuals rather than averages, and apply the “Civil Rights Act” and the “Equal Pay Act” to eradicate cases of discrimination as they occur. How much less do equally-qualified women make? Surprisingly, given all the misused statistics to the contrary, they make about the same. Economists have long known that the adjusted wage gap between men and women-the difference in wages adjusted for occupation, age, experience, education, and time in the workforce-is far smaller than the average wage gap.

Adjusting for age removes a lot of the gap: according to data published in “Employment and Earnings” by the Department of Labor; women aged 16 to 24 made 91 percent of what men made. The wage gap shrinks dramatically when multiple factors are considered. Women with similar levels of education and experience earn as much as their male counterparts. Using data from the “National Longitudinal Survey of Youth”, economics professor June O’Neill found that, among people ages twenty-seven to thirty-three who have never had a child, women’s earnings are close to 98 percent of men’s. Professor O’Neill notes that “when earnings comparisons are restricted to men and women more similar in their experience and life situations, the measured earnings differentials arc typically quite small.”

In the blogThe Gender Pay Gap is a Complete Myth by Steve Tobak writes: “The data is clear that for the same work men and women are paid roughly the same. The media need to look beyond the claims of feminist organizations”, says Marty Nemko.  He forcefully debunked that ultimate myth that women make less than men by explaining why; when you compare apples to apples, it simply isn’t true. And he gives 8 reasons why the widely accepted and reported concept that women are paid less than men is a myth.

The timing couldn’t be better – on “International Women’s Day 2011”. What better time to empower women with the truth instead of treating them like victims. And, in case you’re wondering, Nemko’s source of information is primarily the U.S. Bureau of Labor Statistics – rock solid.  It’s hard to argue with Nemko’s position which, simply put, is this: When women make the same career choices as men, they earn the same amount as men. “As far as I’m concerned, this is one myth that has been officially and completely busted”.

In the article Face the Facts: Gender Pay Gap Is Real by Catherine Hill writes: Is the gender pay gap a “complete myth”? That’s what blogger Steve Tobak contends in a recent post, relying on the arguments of Marty Nemko, the co-president of the “National Organization for Men”. Tobak’s take-home message is this: “When women make the same career choices as men, they earn the same amount as men.” The “American Association of University Women (AAUW)” would agree this is a very empowering message for women, and one that we would love to promote–if only it were true.

Unfortunately, study after study, including AAUW’s own “Behind the Pay Gap”, shows that even when women make the same choices as men, they earn less. Tobak is correct in saying that some of the pay gap between men and women is due to career choices. Men and women still tend to work in different occupations, and traditionally male occupations such as engineering and home appliance repair pay more, on average, than traditionally female occupations like teaching and child care.

Whether the work of an engineer is more important or valuable than the work of a teacher is certainly debatable, but the fact is that work traditionally done by women is valued less in the marketplace than work traditionally done by men, and this accounts for part of the pay gap.

In the articlePerpetuating Wage Gap Myth For Trial Lawyers by Dana Loesch writes: According to a new analysis of 2,000 communities by a market research company, in 147 out of 150 of the biggest cities in the U.S., the median full-time salaries of young women lawyers are 8% higher than those of the guys in their peer group. In two cities, Atlanta and Memphis, those women are making about 20% more. This squares with earlier research from Queens College, New York, that had suggested that this was happening in major metropolises.

But the new study suggests that the gap is bigger than previously thought, with young women in New York City, Los Angeles and San Diego making 17%, 12% and 15% more than their male peers, respectively. And it also holds true even in reasonably small areas like the Raleigh-Durham region and Charlotte in North Carolina (both 14% more), and Jacksonville, Fla. (6%). What? Yes! Here’s the slightly deflating caveat: this reverse gender gap, as its known, applies only to unmarried, childless women under 30 who live in cities. The rest of working women — even those of the same age, but who are married or don’t live in a major metropolitan area — are still on the less scenic side of the wage divide.

In the articleWomen In Tech Make More Money And Land Better Jobs Than Men by Alyson Shontell writes: According to a study by CNBC, 91% of males who are computer science majors and find jobs within six months of graduation and earn an average starting salary of $60K. In contrast, 95% of women who find jobs within that same time frame are paid an average salary of $62K. Neumont University, which teaches a 2.5-year computer science program, says their women are extremely valuable within the industry, getting placed better, and faster, than males.  But only one out of every twenty students is female. Tech companies are looking for diversity, they say, and research has shown that women coders are actually better communicators.

In the article Why the Wage Gap?” writes: The reality is that discrimination is not a significant reason why women earn less than men on average. Yes, there are bad employers out there who still might discriminate against women. But in the aggregate women are outperforming men in terms of college-graduation rates, advanced degrees, purchasing power, and even higher earnings in some areas. So what, then, explains the difference in pay between men and women? It comes down to choices. Even Warren Farrell, who has served three times on the board of directors of the National Organization for Women, explains in his book “Why Men Earn More” that choices largely account for the differences in earnings between men and women.

While more women than men are earning bachelor’s degrees, for instance, women are choosing to major in less competitive disciplines. A study produced by the Federal Reserve Bank of New York in 2009 considered what factors male and female students use to choose a major. While it’s hard to pinpoint just one reason for their decision, the author found that men and women alike made their choice based on potential outcomes.

The difference is that female students on average cared more about “non-pecuniary” issues like parental approval and enjoyment of future work, while male students were concerned with just the opposite — “pecuniary” issues such as likelihood of finding a job, earning potential and social status of future jobs.

Similarly, more than three-quarters of American teachers are women. So while nearly half the nation’s workforce is composed of women, many are choosing fields that are less lucrative than the ones many men are choosing. Some of these differences may be explained by biology and may reflect innate aptitudes and preferences, while others may be a function of society and culture.

Of course, nature and nurture can be difficult to separate — individuals with a natural talent may find they are driven by their environment toward disciplines that make use of that talent. A recent Harvard economics study found that while women have made tremendous strides in terms of gaining access to careers in business — females now make up 40 percent of MBA classes nationwide — some of these careers are more challenging for women (and men) who want to have families.

In fact, the study found that at the time of their 15th college reunion, fewer than half of the female MBAs reported having children and working, compared to two-thirds of the female MDs. Top jobs in finance still require longer hours — for both sexes — than even other highly skilled professions like medicine and law.  The choices women make have costs — salary must be weighed against time spent with family, time for other personal activities, etc. But the costs, according to some, are the result of a woman’s free choice, not an injustice imposed on her by society.