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U.S. House Passes a Sham Bill Based on a Sham Statistic

The U.S. House of Representatives passed the Paycheck Fairness Act on April 15 based on one of the most misleading statistics produced by the U.S. Census Bureau: the gender pay gap. 

According to the Census Bureau, women make 82 cents for every dollar a man makes. 

Liberals have latched on to that alleged discrepancy for years, using it as a pretext to claim employers are discriminating against women, paying them less than men for the same work. 

But as most economists concede—at least the honest ones—that number is essentially meaningless because it doesn’t compare apples to apples. 

Here’s how the Bureau describes the gap: “The female-to-male earnings ratio compares the median earnings of women working full-time, year-round to the median earnings of men working full-time, year-round.” 

That’s it! The number doesn’t take into consideration important distinctions such as what type of work men and women are doing. 

Consider an over-simplified example: Suppose all men chose to become physicians and all women chose to became public school teachers. The gender pay gap would be huge, yet it would tell us nothing about gender pay discrimination. 

Another problem, the Bureau defines full-time work as 35 hours or more per week. 

Take another over-simplified example in which every woman chose to work 35 hours a week in order to have more time to spend with children and family, and every man worked 40 hours a week. 

Even if all males and females were paid the same hourly wage, the Census Bureau’s approach would show that women made 87 cents for every dollar a man earned—simply because women chose to work five fewer hours each week. 

The only relevant information derived from the Bureau’s gender pay gap is the positive change over time. As Census Bureau data show, the gap has steadily improved from 60 cents in the early 1980s to 82 cents today. American Enterprise Institute economist Mark Perry has shown that improvement is in part because more women are choosing higher-paid professions, especially in the STEM fields. 

Yes, some employers did pay similarly qualified women less than males for the same work years ago. But that practice has declined significantly over time. 

Indeed, far from discriminating against women, most companies, organizations, universities and corporate boards are on a mission to find more qualified women. And that demand is likely pushing their compensation higher than the market rate. 

Of course, isolated cases will arise where some employer intentionally discriminated against female employees. But that is likely to be the exception, not the rule.  And there are already laws on the books to address that problem. 

It is always bad policy to push legislation based on a misleading statistic, and the Bureau’s gender pay gap is about as misleading as they come.