Economic Woman

Econometrics, gender, equity and more.

Equal to what?

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I know that I should be all over Equal Pay Day, but it usually leaves me frustrated. I’ve never seen a statistic on the wage gap that didn’t leave me with questions. Does that estimate account for differences in work hours, education, occupation, or childcare responsibilities? What age group are we talking about? What time period? What has changed since then?

Different answers to those questions lead to a different numbers, and that’s one reason we see so many conflicting stats. That’s also why we have some people claiming that the wage gap no longer exists.* So I’d like to ask what I hope will be a clarifying question: What would the end of the wage gap look like?

1. Radical parity

The most popular wage gap statistic is that American women make 77% of men’s earnings. That ratio is calculated based on the median earnings of men and women who work year-round and full-time. This doesn’t account for differences in occupation, education, hours above and beyond the full-time threshold, or any number of other factors. While it corrects for differences in current labour force participation, by excluding the larger proportion of women who work at home, it doesn’t correct for past participation, the reality that among full-time workers more women than men have taken time off in the past.

If this ratio is our indicator, then the wage gap can close in a couple ways: (1) when women working full-time are paid exactly as much as men, even as we continue to work fewer years in total, in occupations that tend to be lower-paid, or (2) when men and women participate in the labour force in exactly the same way, i.e. are equally likely to take time off or cut their hours to raise children, and equally likely to choose any given occupation. I’m not sure this is what most people have in mind when they quote the 77% stat.

2. An end to pure discrimination

Another view holds that the wage gap will be closed when men and women with exactly the same characteristics make the same amount of money. Folks in this camp are only worried about the gap that we can’t attribute to any characteristic other than gender. They are less concerned with the fact that women are more likely to work in lower-paid fields, and take on the labour market penalties of childbearing. This is the gap that tends to be measured by economists, and while it is smaller than 23%, it is non-zero.

3. The right to live like a man

An extreme version of this view is that the wage gap is fine so long as there is some set of choices women can make that allow them to earn as much as men. These people tend to compare the wages of childless men and women, often only young and/or educated, in the same occupations. Don’t like the 77 cent deal you’re being offered? Go to law school, strap on some shoulder pads, golf with the big boys and never, ever marry.

So what is a reasonable finish line? I don’t think #1 is likely, in the short run, though it’s worth pushing back against the restrictive gender roles that got us into this bind. But the weakness of narrower views is that they gloss over the process by which women come to be primary caregivers, the element of coercion in what we tend to characterize as choices.

Plenty of women would spend more time in the workforce if they could find a daycare near work, work more flexible hours, convince their husbands to help out around the house, or be taken seriously by their bosses.** I find #3 especially frustrating, because of the double standard it presents. If men can have kids without making big sacrifices at work, women should be able to do the same. But that’s not really my point. I’m just saying that any measure of the wage gap comes, implicitly or explicitly, with some assumptions about the finish line.

* The other reason, of course, is that people misunderstand or wilfully obscure the truth. Luckily, Echidne is around to set them straight.

** Also, as long as some occupations remain almost entirely segregated by gender we can’t separate the effects of occupation and gender. When we control for segregated occupations, as we do in #2 and #3, we can’t rule out the possibility that nurses for example are paid so little because they are women, not the other way around.


Written by Allison

15 April 2011 at 4:55 pm

Posted in Uncategorized

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  1. Nursing is dominated not by women but by women and gay males (in Canada, often nonwhite). A pairing of that sort is not coincidental, but would be of little comfort to anyone who wishes to discriminate against nonmale jobs.

    Joe Clark

    22 April 2011 at 1:48 pm

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