Don’t believe the hype. The gender wage gap isn’t worse than you thought. It’s not 80 cents to the dollar, and despite economically illiterate media reporting, it’s certainly not 49 cents to the dollar.
If you read “data journalism” about a “gender wage gap,” it’s often a blunt comparison of the real median annual earnings of men and those of women both working full-time and year-round. In 2017, the Census Bureau found that the ratio was 0.805. The media dishonestly turns this ratio into a dollar value, declaring that women make 80 cents for every dollar a man makes. Or, according to a new study, that women “earn just 49 cents to the typical men’s dollar.”
We can debate whether the reasons behind this disparity are a bad thing, but to act as though median annual earnings translate to employer bias is moronic at best and willfully deceitful at worst.
The primary reasons behind the “gender wage gap” have to do with macro-level career choices, not specific employer bias.
If employers really could get away with paying women less than men for the exact same job, there wouldn’t be a man employed in the country. Consider American corporations’ willingness to outsource jobs to countries with cheaper labor. The people who run businesses don’t care about pink or blue; they care about green.
The 49-cent study says that “strengthening enforcement of equal employment opportunity policies and Title IX in education” will narrow the gender pay gap. Strengthening Title IX has its own merits, but neither of these things will decrease the gender pay gap.
Here are a few things that will.
Mostly, women who care about career advancement ought to be proactive in their life planning. In most American cities, young, childless women under the age of 30 earn more than their male counterparts. It’s not a bad thing to take extensive time off to raise children, but women have to acknowledge that as every job involves the accumulation of human capital which makes them more economically valuable, taking extensive time off hinders that economic growth.
Finally, women have to be assertive in their wage negotiations. A Harvard study found that women are less likely than men to negotiate for higher wages if they’re applying for a job that does not explicate that wages are negotiable. A Glassdoor survey found that, whereas half of men negotiate their salaries upon accepting a job, just 3 in 10 women do.
Predictably, pay transparency helps. A Danish study found that companies with transparent salaries saw a “wage gap” reduced by seven percent. While employees can’t bet on companies instituting policies which will cause them to spend more on employees, the lesson is clear: Women must settle for more.
The more people in the workplace, the higher our GDP. It ought not be a partisan point that private industry should have a vested interest in cultivating more talent in training and promoting women. Let’s not delude ourselves with pithy aphorisms and bad economics to earn grievance points.
