Equal Pay Day Celebrates a Tiresome Myth That Just Won't Die
By Andrew Biggs & Mark Perry
April 10, 2018
Equal Pay Day falls on April 10 this year, and supposedly represents how far into 2018 women must continue working to earn what their male counterparts earned last year. The National Center for Pay Equity promotes Equal Pay Day annually to bring attention to the so-called “gender pay gap,” which claims that women receive 20% lower pay on average for doing the same work as men. But 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.
Labor economists have conducted numerous studies over many decades to explain differences in earnings among all types of workers. Economists believe that two main factors influence the earnings received by a given worker.
The most important factor is the skills and productivity that an employee brings to the job. This can include both formal education, skills learned on the job through work experience and the sheer amount of time that a person works. Data show that male employees tend to have more years of work experience than females, and also work more hours per week on average than women.
Men also tend to gravitate toward college majors with greater market value than women. For instance, roughly 80% of engineering and computer science majors are male while two-thirds of liberal arts, drama, dance, education and fine arts majors are female. There is nothing wrong with these choices, but it’s also reasonable to expect these choices to translate into wide variations in earnings after graduation, since market forces in the labor market determine salaries for different educational specialties.
But there’s a second component of earnings, which labor economists call “compensating wage differentials” that also explains gender variation in salaries. Compensating wage differentials are differences in pay that are designed to attract employees to jobs that otherwise would be undesirable. As Adam Smith said in The Wealth of Nations, “The wages of labor vary with the ease and hardship … of the occupation.”
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?
While a long commute is an inconvenience, 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. Relatively safe occupations such as office and administrative support and education, training, and library occupations are roughly three-quarters female. If you think it’s reasonable for dangerous jobs to pay higher salaries, then you should also conclude that men on average should earn more than women.
But there are positive factors as well. For instance, employees might willingly accept a lower salary if their job is rewarding or focuses on issues the employees believe in, be it helping children, protecting the environment, or fighting cancer. This is the realm of non-profits, and 7-in-10 employees of non-profit organizations are female. The typical claim that women are underpaid relative to men accounts for none of these factors.
Proponents of the gender pay gap myth would have you believe that any difference in earnings between men and women is the result of gender pay discrimination. The reality is that men and women are different – they gravitate to different college majors, they have different levels of work experiences, they play different family roles, and they often work in very different types of jobs.
It is bizarre to imagine that men and women would earn precisely the same on average despite those differences. It would also be completely unrealistic to suggest that the 20% difference in annual earnings is exclusively or even largely the result of gender discrimination. But to celebrate Equal Pay Day, those are some of the statistical fairy tales that you have to accept.
Showing posts with label Gender equality. Show all posts
Showing posts with label Gender equality. Show all posts
10 April, 2018
14 October, 2014
The Mythical ‘Pay Equity’ Crisis
The Mythical ‘Pay Equity’ Crisis
Democrats won’t tell you, but equal pay for women is already the law.
By GERALD SKONING
Oct. 13, 2014 7:13 p.m. ET
As the 2014 midterm campaigns come down the home stretch, Democrats are pounding on the issue of “equal pay for women.” In his speech at Northwestern University on Oct. 2, for example, Mr. Obama said that we must “make sure a woman is paid equal to a man.” Democrats are “for equal pay for equal work,” Hillary Clinton said at a recent rally in Iowa, “and our opponents are not.” North Carolina Sen. Kay Hagan’s campaign has blasted Thom Tillis, her GOP opponent, for opposing “federal equal pay legislation.”
As a campaign issue, demands for pay equity are beside the point. Equal pay for women has been the law of the land for more than a half-century.
Democrats say we need another new federal statute to protect women because the existing panoply of federal and state laws prohibiting pay discrimination on the basis of gender are insufficient. Specifically, they have continued to press for passage of the Paycheck Fairness Act, which according to its congressional sponsors would “provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex.” In reality, this bill would expand litigation opportunities for class-action lawyers seeking millions of dollars from companies without ever having to prove that the companies intentionally discriminated against women.
The Paycheck Fairness Act instead is meant to address the fact that “on average, full-time working women earn just 77 cents for every dollar a man earns,” as the Obama White House explains on its website. This is not a claim that any woman earns less than any man for the same work. Pay “disparities” between men and women generally reflect other factors such as interrupting a career to raise children, the types of jobs men and women on average choose, the type of education they have (sociology vs. engineering), etc.
Since 1963 it has been unlawful under the federal Equal Pay Act for an employer to pay a female employee less than a male employee for equal work. Sex discrimination in wages is also prohibited by Title VII of the Civil Rights Act of 1964. For employees of federal contractors and subcontractors, Executive Order 11,246 prohibits gender-based pay discrimination.
Finally, 46 states have antidiscrimination statutes mandating equal pay for equal work. While the enforcement schemes of these laws vary from state to state, the remedies those statutes provide are comparable to those available under federal laws.
Today, the Equal Pay Act and Title VII provide a woman who prevails on her wage discrimination claim a virtual smorgasbord of effective remedies. They include, but aren’t limited to, back pay, attorneys’ fees, injunctive relief, prejudgment interest, $300,000 in punitive and compensatory damages, an additional $10,000 in penalties, and a prison sentence of up to six months for an employer who willfully violates the law.
A government contractor or subcontractor—as some 270,000 American companies are—may face serious penalties for gender-based wage discrimination, including termination or suspension of any existing contract, and take remedial action including elimination of illegal pay practices, seniority relief, and monetary and equitable relief to identified class members.
Campaign rhetoric and simplistic election-year sound-bites can and do mislead voters into thinking that gender-based wage discrimination is a national crisis and that women have no recourse whatsoever in the face of invidious pay discrimination by their heartless employers. Nothing could be further from the truth. Several layers of tough federal and state laws protect women from pay discrimination.
Moreover, powerful federal and state agencies like the Equal Employment Opportunity Commission, the Labor Department and its Office of Federal Contract Compliance Programs, and 46 state agencies are charged with overall enforcement of the respective federal and state laws and their prohibitions of sex-based wage discrimination. In short, serious enforcement muscle is available to women who are discriminated against on payday.
So our lawmakers should ask themselves, do we really need another federal statute protecting women’s rights to equal pay? The laws already exist in spades. Those laws contain tough sanctions, generous remedies for violations, and establish powerful government enforcement agencies to pursue offenders.
Vigorous enforcement of the arsenal of tough federal and state laws prohibiting sex discrimination in wages will ensure continued progress toward the important national goal of true equal opportunity, as well as pay equity, for all. The Democrats’ populist campaign mantra about “pay equity” is empty rhetoric.
Mr. Skoning is a labor and employment lawyer in Chicago.
As the 2014 midterm campaigns come down the home stretch, Democrats are pounding on the issue of “equal pay for women.” In his speech at Northwestern University on Oct. 2, for example, Mr. Obama said that we must “make sure a woman is paid equal to a man.” Democrats are “for equal pay for equal work,” Hillary Clinton said at a recent rally in Iowa, “and our opponents are not.” North Carolina Sen. Kay Hagan’s campaign has blasted Thom Tillis, her GOP opponent, for opposing “federal equal pay legislation.”
As a campaign issue, demands for pay equity are beside the point. Equal pay for women has been the law of the land for more than a half-century.
Democrats say we need another new federal statute to protect women because the existing panoply of federal and state laws prohibiting pay discrimination on the basis of gender are insufficient. Specifically, they have continued to press for passage of the Paycheck Fairness Act, which according to its congressional sponsors would “provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex.” In reality, this bill would expand litigation opportunities for class-action lawyers seeking millions of dollars from companies without ever having to prove that the companies intentionally discriminated against women.
The Paycheck Fairness Act instead is meant to address the fact that “on average, full-time working women earn just 77 cents for every dollar a man earns,” as the Obama White House explains on its website. This is not a claim that any woman earns less than any man for the same work. Pay “disparities” between men and women generally reflect other factors such as interrupting a career to raise children, the types of jobs men and women on average choose, the type of education they have (sociology vs. engineering), etc.
Since 1963 it has been unlawful under the federal Equal Pay Act for an employer to pay a female employee less than a male employee for equal work. Sex discrimination in wages is also prohibited by Title VII of the Civil Rights Act of 1964. For employees of federal contractors and subcontractors, Executive Order 11,246 prohibits gender-based pay discrimination.
Finally, 46 states have antidiscrimination statutes mandating equal pay for equal work. While the enforcement schemes of these laws vary from state to state, the remedies those statutes provide are comparable to those available under federal laws.
Today, the Equal Pay Act and Title VII provide a woman who prevails on her wage discrimination claim a virtual smorgasbord of effective remedies. They include, but aren’t limited to, back pay, attorneys’ fees, injunctive relief, prejudgment interest, $300,000 in punitive and compensatory damages, an additional $10,000 in penalties, and a prison sentence of up to six months for an employer who willfully violates the law.
A government contractor or subcontractor—as some 270,000 American companies are—may face serious penalties for gender-based wage discrimination, including termination or suspension of any existing contract, and take remedial action including elimination of illegal pay practices, seniority relief, and monetary and equitable relief to identified class members.
Campaign rhetoric and simplistic election-year sound-bites can and do mislead voters into thinking that gender-based wage discrimination is a national crisis and that women have no recourse whatsoever in the face of invidious pay discrimination by their heartless employers. Nothing could be further from the truth. Several layers of tough federal and state laws protect women from pay discrimination.
Moreover, powerful federal and state agencies like the Equal Employment Opportunity Commission, the Labor Department and its Office of Federal Contract Compliance Programs, and 46 state agencies are charged with overall enforcement of the respective federal and state laws and their prohibitions of sex-based wage discrimination. In short, serious enforcement muscle is available to women who are discriminated against on payday.
So our lawmakers should ask themselves, do we really need another federal statute protecting women’s rights to equal pay? The laws already exist in spades. Those laws contain tough sanctions, generous remedies for violations, and establish powerful government enforcement agencies to pursue offenders.
Vigorous enforcement of the arsenal of tough federal and state laws prohibiting sex discrimination in wages will ensure continued progress toward the important national goal of true equal opportunity, as well as pay equity, for all. The Democrats’ populist campaign mantra about “pay equity” is empty rhetoric.
Mr. Skoning is a labor and employment lawyer in Chicago.
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