Democratic gubernatorial candidate Wendy Davis has found an issue she thinks has some traction in her effort to become the governor of Texas: equal pay for equal work.
And it’s not just her. President Obama, desperately trying to change the subject from the multiple problems and failures of Obamacare, has also picked up the gender wage gap theme. Both want new laws that they claim would reduce or eliminate the gap.
The problem is that many people, including the media, don’t understand this issue well, so here are some economic facts.
The “women earn 77 cents for every dollar a man earns” statement tells us little. That number comes from comparing the national median income of men and women. It takes nothing into account: education, type of job, salary vs. wages, benefits, nothing.
The wage gap has narrowed since 1980. But since the gender wage gap is being widely cited, it is worth noting that it has narrowed significantly since about 1980. During the 1960s and ‘70s, women’s median earnings were 60 percent of men’s or lower, but began climbing steadily around 1980 until they hit 77 percent today. Why? According to economists June O’Neill and David O’Neill, much of it has to do with work experience.
Women started entering the workforce in much larger numbers in the 1970s. As they gained experience and skills, their incomes started to climb. However, women’s labor force participation rate began to decline in 2009, which could have an impact on that decades-long trend.
Women are increasingly getting graduate degrees. Lifetime earnings are strongly correlated with higher levels of education. The O’Neills point out that until recently, men went on to post-graduate education in far greater numbers than women. But that has changed over the past decade. In 2009, women took 60 percent of the master’s and 52 percent of the Ph.D.s.
Women disproportionately choose lower-income occupations. Income is also strongly correlated with certain professions, and women tend to chose the lower-paying careers. For example, in 2009 women received 67 percent of the education, 63 percent of English and 60 percent of the sociology doctorates, but only 39 percent of business, 22 percent of computer and IT, 21 percent of engineering, and 32 percent of physical sciences doctorates. So even though women are getting more advanced degrees, their career choices may negatively affect the wage gap.
When all factors are considered, there is very little wage gap. The O’Neills discuss several other factors, but taken together they conclude, “Without better data, all we can conclude is that labor market discrimination is unlikely to account for a differential of more than 5 percent but may not be present at all.”
Liberals want to make everything about race and gender, but in most cases it’s about the choices we make.