Thursday, July 08, 2010

Most of the Gender Pay Gap Disappears After Controlling for Marriage and Having Children

The Department of Labor recently released its annual study Highlights of Women’s Earnings in 2009 and opens the report with the following statement:

"In 2009, women who were full-time wage and salary workers had median weekly earnings of $657, or about 80 percent of the $819 median for their male counterparts. In 1979, the first year for which comparable earnings data are available, women earned about 62 percent as much as men. After a gradual rise in the 1980s and 1990s, the women's-to-men's earnings ratio peaked at 81 percent in 2005 and 2006."

MP: Doesn't the BLS' use of the term "male counterparts" (Webster definition: "one remarkably similar to another") imply an "apples to apples" comparison between male and females workers, as if all relevant explanatory factors have been controlled for, i.e. the ceteris paribus condition has been imposed?

In the chart above, BLS data show that marriage and having children affect male and female earnings differently, so that men and women workers can't really be considered "counterparts" in a statistical sense, and any unadjusted comparisons would be comparing apples to oranges.  For example, single women earn about 95% of what men earn, but married women earn 75.6% of what married men earn (from Table 1), and married women with children between the ages of 6-17 earn 70.25% of their male "counterparts" (Table 8).  Also from Table 8, for the marital status that includes "never married, divorced, separated and widowed," and with "no children under 18 years old," women in that group make 96.3% of their "male counterparts." 

According to the BLS report, marriage and motherhood can explain a large portion of the gender pay gap.  


At 7/09/2010 8:40 AM, Anonymous Anonymous said...

I'm not sure how this shows that there is no gender discrimination, because if that were the case, then why wouldn't men who had children also suffer an income setback? What it shows is that in relationships with children, where both parents may be employed, the woman is seen as being encumbered while men are not. So MOTHERS are discriminated against. In fact, career counselors tell women NEVER to say that they have children in an interview because it counts against them so strongly. As a woman who has experienced gender discrimination as a single woman and as a mother who has been told to hide any evidence of having children on linkedin, I would say this is still gender discrimination.

At 7/09/2010 9:07 AM, Anonymous Anonymous said...

So really we can say there is a 3.7% pay discrimination against women, and nearly a 30% one against mothers? That fits with everything I've heard before.

And to the above poster, as a man, I've been told many times to hide the fact I have kids in interviews too. Employers are keen to the fact that children take commitment that may distract from work. And since in America the wife tends (nto always) to be the primary caregiver it impacts them more then the husband.

At 7/09/2010 11:23 AM, Anonymous Ian Random said...

I don't know why, but women where I work love to work part time even if they have no kids at home. That is they started fulltime and requested part time status.

At 7/09/2010 11:54 AM, Anonymous Anonymous said...

Yeah this clearly still shows a gender gap. There may be less discrimination against single women without children but clearly shows discrimination against married women with children. This will be the next step in overcoming and hopefully be a generational thing.

This also stems from a very American concept that "working hard" equals working longer hours. This is a fallacy and very misdirected. The opposite is actually true - longer hours equals decreased productivity per hour and overall.

At 7/09/2010 12:36 PM, Anonymous Anonymous said...

I wonder if munch in the way of statistics exsist for other countries (I think scandinavia) that give significant time off for fathers after the birth of a child. If missing that time sets them back an equivollent amount.

Also as to the accuracy of the data, is 3% significant?

-Anon 9:07 AM

At 7/09/2010 1:18 PM, Anonymous Anonymous said...

Thomas Sowell covers this at length in at least one of his books (I think Basic Economics is one). It's worth reading all the facts. There seems to be "discrimination" against lifestyle and career choice more than anything, if that's even possible.

At 7/09/2010 1:25 PM, Blogger Marko said...

I know that tall men on average make more money than short men. I would like to see the chart on blond women verses brunettes and red heads - bet there are differences there too. I would also like to see the differences in pay based on where you went to college, and based on your political opinions, and what you had for breakfast.

What would be surprising is if everyone made exactly the same pay regardless of who you are. That is not true even among government employees. If more government regulation was the solution to this, wouldn't government employees all get exactly the same pay? Maybe they are not regulated by the government enough.

According to the declaration of independence, the purpose of government is to secure the rights to life, liberty and the pursuit of happiness. To me, that doesn't include regulating wages, so I wouldn't do that. Let the market decide what people are worth in the market place. If someone mistreats you, sue them under a tort theory at common law, or get a new job. Better yet, start your own business.

At 7/09/2010 2:17 PM, Blogger Milton Recht said...

The data for salary and wages is from the US Census CPS (Current Population Survey), where individuals report their income without verification for any period they wish, week, month, 6 months, year, etc., and converted into an hourly or weekly wage by Census.

The wage data, including tips, is before taxes and deductions and does not include the value of any employer paid benefits.

There are reasons to believe women (particularly women with families) choose lower wages for increased benefits, such as employer paid family health insurance, more vacation days, etc. The total compensation if one includes the value of the benefits may actually be greater for women who take home lower wages than for men who taker home more pay.

When one looks at a the actual pay (as opposed to reported pay) of a homogeneous benefit group such as federal workers, the pay gap between women and men disappears when controlled for experience and responsibility.

There is probably a tendency for men to inflate their reported earnings (manliness equated with earnings) and for women to under report their earnings.

The Census and BLS make the CPS data readily available to the public for analysis so it is used in many studies, but the old saying of garbage in garbage out probably applies.

The data is good for seeing overall trends in pay overtime (assuming reporting distortions do not change overtime), but it has tremendous weaknesses for making bold statements about subcategories unless the data is first adjusted to correct for its limitations. However, the value of benefits, health insurance, vacation, sick days, life insurance, etc., is not generally available from other sources by worker to correct the data.

At 7/10/2010 8:29 PM, Blogger ruddyturnstone said...

This again.

Women, particularly mothers, work fewer hours, are less likely to work full time, are less likely to work overtime, are less likely to take jobs with lousy commutes, are less likely to take jobs in the middle of nowhere that pay a premium for that reason, are less likely to do jobs that pay a premium for being dirty, dangeours, or physically demanding. Even within professions or occupations, women, and especially mothers, take jobs in the less demanding (in terms of hours, commute, dirt, stress, danger, etc) specialities. Same is true of women and mother in sub-specialities of specialties.

Mothers work fewer hours because they want to. Because they want to spend time with their children. And because they would rather do it than have their husbands do it. Then, they turn around and complain that they are not promoted as quickly or make as much money as the men. Most single men, and many single women, devote themselves to their career. Married men with children less so. And married women with children least of all. Yet, somehow, that shouldn't matter?

You want to be a Mom. You want to be on "the Mommy track." You want to take maternity leave after maternity leave. But, somehow, that should not be reflected in wages?

Where I have worked, employers bend over backwards to accomadate mothers with leaves, with part time schedules, with special hours, with never asking (never mind demanding) the same committment to overtime during peak periods that the other workers must endure. Mothers spend a good portion of every day they do show up talking on the phone with their kids, or the kids' caregvivers. They take days off when their kids are sick, or to take them to the doctor, and so on. These moms have to be retrained when they come back from leaves. While they are on leave, the company can't hire a permanent replacement, so the work either gets shunted onto the other employees, or onto a temporary worker who has no incentive to do a good job, since he will be let go soon anyway. The other workers have to train the temp. The temp himself is usually a yo yo who can't get a permanent job. Yet the returning woman just can't understand why Joe, who was there the whole time doing his job--and maybe hers too--gets the promotion and pay raise while she doesn't.

Women and mothers, on average, are much more likely to take an undemanding, "inside" job, even though it pays less, than a tough job out in the wind, rain, cold and snow. Women tend to work in retail or as clerks or secretaries of one sort or another. Men tend to work in construction, manufacturing, mining, in the sewers, on the power lines, etc.

To use an admittedly exagerated example, men are ice road truckers, women work in the offices of the ice road trucking company in Anchorage. But, to the government stat boys, they are all the same. They are "counterparts." When there is a mining accident, how many women are down there injured or dying? None. They work in the mining company office. Even on the construction sites, when do you see a woman running a jackhammer? Almost never. No, she is the flag person. Yet they are "counterparts" when it comes to comparing pay.

I have nothing against this arrangement, per se. All jobs should be open to everyone, regardless of gender or marital or parental status. But women CHOOSE the jobs they do. And they choose the lower paying ones, because they have other positives to them.

At 7/10/2010 8:46 PM, Blogger ruddyturnstone said...

Look at tables 1 and 2 of the report. They simply add up all the men in the full time workplace, all the women in the fulltime workplace, and compare earnings. That's it! That's how they get their 80 per cent figure. It's totally ridiculous. No other comparison would be made this way.


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