The Gender Wage Gap Lie

You know that “women make 77 cents to

every man’s dollar” line you’ve heard a
hundred times? It’s not true.
By Hanna Rosin|Posted

Aug. 30, 2013

When men and women do the same job, the wage gap is less than the widely report "77
cents on the dollar."

How many times have you heard that “women are paid 77 cents on the dollar for doing
the same work as men”? Barack Obama said it during his last campaign. Women’s
groups say it every April 9, which is Equal Pay Day. In preparation for Labor Day, a
group protesting outside Macy’s this week repeated it, too, holding up signs and sending
out press releases saying “women make $.77 to every dollar men make on the job.” I’ve
heard the line enough times that I feel the need to set the record straight: It’s not true.

The official Bureau of Labor Department statistics show that the median earnings of full-
time female workers is 77 percent of the median earnings of full-time male workers. But
that is very different than “77 cents on the dollar for doing the same work as men.” The
latter gives the impression that a man and a woman standing next to each other doing the
same job for the same number of hours get paid different salaries. That’s not at all the
case. “Full time” officially means 35 hours, but men work more hours than women.
That’s the first problem: We could be comparing men working 40 hours to women
working 35.

How to get a more accurate measure? First, instead of comparing annual wages, start by
comparing average weekly wages. This is considered a slightly more accurate measure
because it eliminates variables like time off during the year or annual bonuses (and yes,
men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage
gap number). By this measure, women earn 81 percent of what men earn, although it
varies widely by race. African-American women, for example, earn 94 percent of what
African-American men earn in a typical week. Then, when you restrict the comparison to
men and women working 40 hours a week, the gap narrows to 87 percent.

But we’re still not close to measuring women “doing the same work as men.” For that,
we’d have to adjust for many other factors that go into determining salary. Economists
Francine Blau and Lawrence Kahn did that in a recent paper, “The Gender Pay
Gap.”.”They first accounted for education and experience. That didn’t shift the gap very
much, because women generally have at least as much and usually more education than
men, and since the 1980s they have been gaining the experience. The fact that men are
more likely to be in unions and have their salaries protected accounts for about 4 percent
of the gap. The big differences are in occupation and industry. Women congregate in
different professions than men do, and the largely male professions tend to be higher-
paying. If you account for those differences, and then compare a woman and a man doing
the same job, the pay gap narrows to 91 percent. So, you could accurately say in that
Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”

The point here is not that there is no wage inequality. But by focusing our outrage into a
tidy, misleading statistic we’ve missed the actual challenges. It would in fact be much
simpler if the problem were rank sexism and all you had to do was enlighten the nation’s
bosses or throw the Equal Pay Act at them. But the 91 percent statistic suggests a much
more complicated set of problems. Is it that women are choosing lower-paying
professions or that our country values women’s professions less? And why do women
work fewer hours? Is this all discrimination or, as economist Claudia Goldin likes to say,
also a result of “rational choices” women make about how they want to conduct their
lives.  

Goldin and Lawrence Katz have done about as close to an apples-to-apples comparison
of men’s and women’s wages as exists. (They talk about it here in a Freakonomics
discussion.) They tracked male and female MBAs graduating from the University of
Chicago from 1990 to 2006. First they controlled for previous job experience, GPA,
chosen profession, business-school course and job title. Right out of school, they found
only a tiny differential in salary between men and women, which might be because of a
little bit of lingering discrimination or because women are worse at negotiating starting
salaries. But 10 to 15 years later, the gap widens to 40 percent, almost all of which is due
to career interruptions and fewer hours. The gap is even wider for women business school
graduates who marry very high earners. (Note: Never marry a rich man). 

If this midcareer gap is due to discrimination, it’s much deeper than “male boss looks at
female hire and decides she is worth less, and then pats her male colleague on the back
and slips him a bonus.” It’s the deeper, more systemic discrimination of inadequate
family-leave policies and childcare options, of women defaulting to being the caretakers.
Or of women deciding that are suited to be nurses and teachers but not doctors. And in
that more complicated discussion, you have to leave room at least for the option of choice
—that women just don’t want to work the same way men do.