Why the Pay Gap Myth?

Ah, yes!  It's the debate that won't die.  Are women being paid a wage or salary equal to that of a man?  It sounds like a simple question, but as always, the answer tends to be more complicated.

You wouldn't think so if you were one of the few million people that watched the recent Academy Awards Show.  It's that time of year where the Hollywood elite leave their gated communities to grace us with their presence as they walk down the red carpet while pausing and posing to make sure the cameras get photos of them at just the right angle before they retreat to an auditorium and pat themselves on the back for being masters of the universe.

The ratings for the Academy Awards have been in decline for some time now.  I personally haven't watched it since Titanic won best picture.  So it seems that the Academy compensates by raising controversial and polarizing issues to get a little buzz going.  Since Michael Moore didn't release a "documentary" this year, the responsibility fell onto Patricia Arquette.



To paraphrase Arquette's acceptance speech for her award for Best Supporting Actress: Women are awesome because they give birth and should be paid the same as men.

And the crowd goes wild with applause and accolades.

Let's not break our arms patting a woman on the back too hard for having a uterus.  If she doesn't get impregnated by a man then she isn't giving birth to squat.  I'd rather focus on qualifications.

Or if your workplace is anything like mine, you have a poster like this one in the break room to remind you that women are earning less than the men for the same work.

So if equal pay is the law in Illinois then how are women earning 29 cents less for every dollar a man earns?  How are companies still getting away with paying women less than a man?  Also, if this is the law and the pay gap still exists between men and women, then why would we expect additional legislation to solve the problem?  Yet, this is what President Obama is suggesting.

Where Does the Myth Come From?

The 77 cents the women are earning for every dollar a man does is an often parroted statistic.  It seems to have originated from median incomes of male and female full-time workers according to the Bureau of Labor Department and the US census.  However, this statistic is a very rough aggregate and it shouldn't mean to imply that a man and a woman sitting side by side at the same computers are being paid differently.

I can excuse somebody like Patricia Arquette for parroting wrong information but I'm scratching my head over Obama's claim of women earning 77 cents on every dollar a man earns because a Bureau of Labor Statistics report for 2013 actually claims women are earning 82 percent of what a man earns!  The report still looks at full-time workers, but it breaks down earnings to a weekly basis and not annually.  So once we get down to specifics we see a little more granularity in the data and not just a rough aggregate and the wage gap shrinks and suggests that some of the pay gap may be because women are simply working less.  Keep in mind that 35 hours per week is considered full-time employment. Some of this pay gap may be because we are comparing women working 35 hours a week with men that are working 40 hours a week.  It's an apples versus oranges comparison.

Using the government's own data, we can already see that there can be some extenuating circumstances to explain the pay gap.  People like Obama and Arquette either don't know this or are deliberately misrepresenting it for some political objective.

What do the Economists Say?

It gets worse for Obama and Arquette.  A study conducted by economists Francine Blau and Lawrence Kahn show that when you correct for variables such as union protections, occupation and industry the pay gap shrinks to women earning 91 percent of what a man earns!  Women seem to be making a respectable 91 cents for every dollar a man makes when you factor in the type of work that is being done.  I see a lot of numbers thrown around in this debate about the pay gap, but I have never seen this 91 percent figure.  I wonder why?  More on that in a minute.

As I mentioned, comparisons in earnings are often apples versus oranges comparisons.  In Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors, authors Marianne Bertrand, Claudia Goldin and Lawrence Katz do the best apples versus apples comparisons that I've seen so far.  In this study, they tracked MBA degree recipients that graduated from the University of Chicago during the years 1990-2006.  After taking into account course work, schooling, GPA and profession, the authors found that salaries were virtually identical for about the first 10-12 years of their career path.  It is only after this time frame where salaries begin to diverge, almost exclusively, due to pauses in career paths of women or generally women working fewer hours.

What Actually Happens in the Real World

Their results mesh pretty well with my observations in the STEM fields.  After 10-12 years in the work force, a woman feels that she has earned her feminist merit badge and answers the ringing of her biological clock by trying to find a husband or browbeating the boyfriend she has into starting a family.  Of course, once the woman gets pregnant and starts maternity leave, she swears that she will come back full throttle to the cheers of you go grrll, but it never happens.  All the new mothers I knew came back to work on a part-time basis or not at all.  The work is simply too demanding of her time and new mother and child get separation anxiety when they are apart after 6 weeks of bonding with each other after birth.  Even if she was allowed to bring the newborn to work with every accommodation made for nursing breaks and diaper changes, the quality of her work would still suffer because her attention would be divided.

This is what gets me about actresses like Arquette and any other Hollywood elite that pushes for equal pay.  There have been countless actresses that have "given birth to future taxpayers" and despite having the disposable income and flexible scheduling, they still take time off from performing in movies until a point where their child is toilet trained at least, and then expect studios to pay them the same rates as if they were working that whole time.  Ain't gonna happen.

What I found most interesting in this study by Bertrand, Goldin and Katz was that the pay gap was widest when women were married to more affluent (meaning rich) men.  Is it because companies believe they can low-ball an offer to a woman married to a richer man, or do woman lose drive and desire to succeed knowing there is an accomplished man to depend on?

Or perhaps, they just need to be better at pricing their skill set and experience and negotiate accordingly.  When asked why Jennifer Lawrence was being paid less than their male costars in American Hustle, Amy Pascal from Sony Pictures brought up a good point:

I run a business.  People want to work for less money, I'll pay them less money. I don't call them up and say, 'Can I give you some more?'

You see, when my job was wearing a paper hat while flipping a hamburger, it made sense to me that a woman standing at the grill next to me should be paid the same wage.  But then, we went to college where I studied and got a degree in chemistry while she got a degree in liberal arts as an English major.  Guess who's going to get paid more?  When I negotiate salary and benefits I'm simply trying to get the highest salary I can with my skills and experience.  It doesn't even enter my mind what other people at that company are earning.

A lot of press gets written about wages and salary when debating whether or not there is a pay gap but that is only one part of total compensation.  What about health insurance (a benefit that has higher value for women than men, by the way)?  What about flex time?  Sick leave?  Stock options?   When it was suggested that Mary Barra was being paid less as CEO of General Motors than her industry peers, it was demonstrated by General Motors' disclosure that CEO salary is actually a very small part of the total compensation package for a CEO.  Much of the compensation takes the form of intangibles such as stock options and allowances, just like all the other CEO's.  Once again, apples and oranges.

If you think about it, one of the most compelling reasons to believe that the pay gap is a myth is that we can reasonably predict that every corporation in America could save a ton of money by preferring to hire women over men if the pay gap was actual reality.  However, this isn't what we see.  Looking at the data should at least suggest that there are many factors that include line of work and life style choices that determine pay.

So why does the myth persist?

The interesting thing is that none of this information is hard to find and a lot of it is derived from the government's own sources.  This means informed politicians and the media personalities should actually know that the gender pay gap is a myth.  So why do we keep hearing about it?  Why does this myth persist?

Framing
George Lakoff discusses some possible causes in his article 12 Traps That Keep Progessives From Winning.  Many of the traps that Lakoff discusses boils down to how political discussions get framed and how the audience responds to what is being said on a cognitive level.

I see this played out in debates many times, and not just political ones.  Even arguments in a marriage boil down to this simple idea. On the surface a candidate may declare his position or make a statement about some issue, but what is happening on a deeper psychological level is that he's framing the debate and setting the tone and cadence to what his opponent must respond to.  To borrow a military analogy, you always want to be the general that chooses the battlefield so that your enemy must respond and react to you.  Otherwise, you're responding to your enemy's frame and you're at a disadvantage.  Even in games like chess, the person moving first has an initial advantage.

Framing is probably even more important than what is being said on a psychological level.  What's being said doesn't even need to be true.  One can say that global warming is a myth or that vaccines and GMO's cause autism and he is still setting frame because now his opponent must spend time and resources addressing the claims instead of making his own point.  Claims of a gender pay gap achieves the proper framing very nicely.  It invigorates your support base while at the same time depriving your opponents ability to control the frame and tempo.

Evolutionary Psychology
Evolutionary psychology has been an emerging field of study within the past few decades that has yielded a lot of insight into many behaviors and cognitive processes originating as evolutionary adaptations that aided in the survival of a species.

To take as an example, consider the widespread fear of spiders and snakes among humans.  In the distant past, before there were such things as medical care and doctors, a bite from a spider or snake was a genuine threat to a person's life. Humans (more likely our evolutionary ancestors) learned to avoid them by evolving a fear of them.  Despite us acquiring knowledge about snakes and spiders, how interesting they are, how valuable they are to an ecosystem, and our ability to medically treat being bitten by one, once one of them enters our house, we want them dead!  Concurrently, we are not nearly is fearful of more modern threats to our lives such as fast moving traffic or electricity.  We still exercise caution, but these innovations have only been around for several generations at the most.  There hasn't been enough time for us to evolve as visceral a fear for these recent innovations as we have for spiders and snakes.

So what does evolutionary psychology have to do with the debate about the gender pay gap?  Our evolutionary ancestors evolved an empathy for how women might be feeling about their environment.  From an evolutionary history perspective, things that women were traditionally concerned about were often a direct threat to their family or tribe such as proximity to predators or hostile and competing tribes,  or whether the area they were settled in produced enough food and shelter for survival.  Survival of our species was dependent upon women raising such issues and men being empathic enough to risk their lives or devote effort into eliminating or mitigating the issue.  In modern times, our environment has been largely subdued and we live in unprecedented safety and prosperity.  However, our evolutionary instincts are still within us.  Basically, women will still complain and raise issues with things they aren't comfortable with and the men will devote effort to fix it.  It hardly matters if its about high crime rates in their neighborhood, a leaky roof or the gender pay gap.  When women complain men will be driven to solve the problem.  Consequently, politicians will try and draw votes by gaming these evolutionary instincts and suggesting they care about women's issues more that their opponent.

These psychological reasons is why the gender pay gap is still a keynote issue despite the data suggesting otherwise.

For further reading:
Christina Hoff Sommers also debunks the gender pay gap myth.