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CIAO DATE: 8/01
Still Hyping the Phony Pay Gap
On The Issues
March 2000
The allegedly significant gap between what equally qualified men and women earn for their labor is a fiction. Its advocates continue to ignore three important factors that affect the difference between what the average male worker and the average female worker are paid.
In a speech on January 24, President Clinton declared that women "get paid only 75 percent for the same kind of work" that men do and added, "It's as if [women] were only picking up three paychecks, instead of four, in four pay periods.
"The average woman has to work, therefore, an extra 17 weeks a year to earn what a similarly qualified man in the same kind of job makes," the president said.
To solve this alleged problem, the president asked Congress to allocate $27 million to the Equal Employment Opportunity Commission and the Department of Labor and to pass Sen. Thomas A. Daschle's Paycheck Fairness Act, which would set wage guidelines for different occupations.
Unfortunately, the president is ill-served on this question by staffers who let him believe that equally qualified women make only 75 cents on a man's dollar. This is not true. Study after study shows that women who are in the same jobs as men, who have the same qualifications, and who don't cut back on their time in the work force because of child-rearing, earn practically the same amount as men-about 95 cents on the dollar. Moreover, any woman who feels that she is discriminated against has the legal right to sue.
The Origins of the Wage-Gap Myth
The frequently used 75-cents number is the average full-time woman's wage divided by the average full-time man's wage. It compares women who have chosen to be social workers to men who have chosen to be lawyers; women who majored in English literature to men who majored in math; and women who work 35 hours a week to men who work 48 hours.
Equal pay for equal work is the law of the land, but the law does not say that men's and women's average wages have to be equal. And the averages are different for many reasons, none of which the Labor Department and the EEOC could change with $27 million.
First, women have not been in the work force as long as men; 1978 was the first year in which 50 percent of women were in the labor force. Thus fewer women than men have the experience and qualifications to earn high salaries. Many of today's highest earners received their education and training in the 1960s and 1970s, a time when few women trained for high-paying careers.
Second, even though women now earn 40 percent of law and business degrees, as well as half of medical degrees and 55 percent of all bachelor's and master's degrees awarded, many still choose specialties that pay less. They receive about half the doctorates in public administration and communications but only 12 percent of the doctorates in engineering and 24 percent of those in math. Economists Charles Brown and Mary Corcoran found that when educational choices were accounted for, women made 94 percent of men's earnings.
Third, because 80 percent of women bear children, they often choose careers with more flexible hours that will enable them to combine work and family, thereby sacrificing higher pay. In a 1997 study, Prof. Jane Waldfogel of Columbia University showed that women without children made 95 percent of men's wages, while women with children made 75 percent.
Fixing What Isn't Broken
The average wage gap has been shrinking over time and is expected to diminish further as women invest in higher education, move into higher-paying professions, and rise to positions of leadership in firms. Daschle's bill, however, attempts to narrow the gap by having the Department of Labor set wage guidelines for men's and women's occupations. Although the guidelines are described as "voluntary," nothing prevents the president from saying that the federal government will contract only with companies that adopt them: "The guidelines . . . shall be designed to enable employers voluntarily to compare wages paid for different jobs to determine if the pay scales involved adequately and fairly reflect . . . [these] requirements for each such job, with the goal of eliminating unfair pay disparities between occupations traditionally dominated by men or women."
Wage guidelines, also known as comparable worth or pay equity to give them more appeal, purport to help women but usually work against their interests. Take the case of Ontario, Canada, which has had government wage guidelines since 1988. Last summer Bell Canada was faced with large claims from telephone operators, who sued to be paid the same amount as technicians. The company paid the claims, but contracted with Excell Global Services of Arizona to provide any future expansion of operator services. Thus, while Canadian operators have higher wages, any future jobs will come to the United States.
Unemployment for both men and women is at a 30-year low, wages and labor force participation rates for women are at an all-time high, and the economy is expanding robustly. Is it really believable, in our litigious society, at a time of low unemployment, that women, a better-educated majority of the population, quietly and consistently would accept being paid less than their due?
The 75-cents wage gap story is fiction. Women really do bring home four paychecks a month.
Diana Furchtgott-Roth is a resident fellow at AEI. A version of this article appeared in the Washington Post on January 31, 2000.
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