Government Can't Fix Real Gender Pay Gap

The remaining work on the pay gap has to be done in places where the government, or indeed any explicit policy, has difficulty going.
Want more money? Work more hours. Photographer: Scott Olson/Getty Images

In today's episode of dueling op-eds, Mark Perry and Andrew Biggs of the American Enterprise Institute argue against the "myth" that women earn 77 cents for every dollar earned by a man.

The 23% gap implies that women work an extra 68 days to earn the same pay as a man. Mr. Obama advocates allowing women to sue for wage discrimination, with employers bearing the burden of proving they did not discriminate. But the numbers bandied about to make the claim of widespread discrimination are fundamentally misleading and economically illogical.

In its annual report, "Highlights of Women's Earnings in 2012," the Bureau of Labor Statistics states that "In 2012, women who were full-time wage and salary workers had median usual weekly earnings of $691. On average in 2012, women made about 81% of the median earnings of male full-time wage and salary workers ($854)." Give or take a few percentage points, the BLS appears to support the president's claim.

But every "full-time" worker, as the BLS notes, is not the same: Men were almost twice as likely as women to work more than 40 hours a week, and women almost twice as likely to work only 35 to 39 hours per week. Once that is taken into consideration, the pay gap begins to shrink. Women who worked a 40-hour week earned 88% of male earnings.

Then there is the issue of marriage and children. The BLS reports that single women who have never married earned 96% of men's earnings in 2012.

At MSNBC, however, Irin Carmon argues that the pay gap remains a large societal problem:

Conservatives often attack the "77 cents on the dollar figure" because it doesn't account for the fact that women are concentrated in lower-paying jobs or may work fewer hours. But as White House economic adviser Betsey Stevenson recently explained in an interview with msnbc, "Some of women's choices come because they experience sexism. Some of women's choices come because they are disproportionately balancing the needs of work and family. Which of these choices should we consider legitimate choices, and which of them should we consider things that we have a societal obligation to try to mitigate?" She added, "Much of what we need to do to close that gap is to change the constraints that women face. And there are things we haven't tried."

When all other factors are identical, the gap shrinks but does not disappear. A study by the American Association of University Women found that among recent college graduates with matching credentials, a quarter of the pay gap, or 5%, remained. Ten years later, it grew to 12%. Meanwhile, pay gaps widen in situations where there is overall income inequality -- including in this country, where women make up nearly two-thirds of minimum wage workers and are underrepresented in the highest-paying fields, such as technology and finance.

The rest of the piece is an interesting but sort of irrelevant discussion of the difficulties of filing an anti-discrimination lawsuit, which assumes what it purports to prove: that women are victims of discrimination, rather than the authors of their own, lower-paid, fate.

Who is right?

Well, we're not going to settle the age-old dispute here about whether women choose to spend more time on childcare and housework because they care more about kids and housework or because they are victims of a sexist culture. I will offer one piece of anecdotal evidence, which is that women can escape some of this burden by being, like me, an untidy person married to a neat freak. Yet none of the women I know have adopted this strategy, or plan to.

But we can, pretty confidently, answer a related question: How much of the pay gap is driven by those choices, and how much is driven by sexism in the workplace? The answer seems to be that almost all of the gap is driven by choice of occupation, and working hours, with an emphasis on working hours. Childless women who work the same hours as men make very close to what men do.

Does that mean there is no discrimination against women? No. The residual gap that's left after you control for age, experience, work hours, choice of profession and so forth, is small. But it's not zero. That residual most likely represents sexism. As a woman, I kind of take exception to that.

Most of the gap, however, seems to be driven by the fact that women work less, and that in many high-paying professions, how much you get paid is a function of how much you work ... but not a linear function. There are outsized rewards to working the kinds of hours that make it very hard to care for a family.

As I've inched into middle age, I've noticed an interesting progression among my female friends, which I described last year:

There are always exceptions on both sides: women who will sacrifice anything for the career they feel called to and men who would rather be home. But on average, the women I talk to just aren't nearly as willing to sacrifice close friendships, and family relationships, for the sake of their jobs.

We can say that they shouldn't have to, of course, but the sad fact is that there are trade-offs in this world. In your 20s you can finesse them -- work super hard and also have a roaring social life -- because you have boundless energy and no one depending on you. This is the age at which young women write furious articles and Facebook posts denouncing anyone who suggests that women opt-out of high pressure jobs for any reason other than the rankest sexism.

As you age, your body refuses to cooperate with your plan to work from 7 a.m. to 11 p.m. and then hang out with friends. Your parents start to need you more, if only to lift heavy things. And of course, there are kids. You start having to make direct trade-offs, and then suddenly you look up and you haven't seen your friends for two years and your mother is complaining that you never call. This is the age at which women write furious articles defending their decision to step back from a high-pressure job and/or demanding subsidized childcare, generous paid maternity leave and "family friendly policies," a vague term that ultimately seems to mean that people who leave at five to pick up the kids should be entitled to the same opportunities and compensation as people who stay until 9 to finish the client presentation. These pleas usually end (or begin) by pointing to the family-friendly utopia of Northern Europe.

What they are talking about is a world where pay and opportunities scale linearly with effort -- where working half time means that you get almost half of the pay and perks of someone who works full time. Unfortunately, as I also noted last year, this isn't universally true anywhere:

There is no paradise where women enjoy prestige work at high salaries for part-time efforts, nor where men and women all head home after 37 hours with no impact on their careers. There are countries where more women work than they do here, because of all the mandated leave policies and subsidized childcare -- but the U.S. puts more women into management than a place like Sweden, where women work mostly for the government, while the private sector is majority-male. A Scandinavian acquaintance describes the Nordic policy as paying women to leave the home so they can take care of other peoples' aged parents and children. This description is not entirely fair, but it's not entirely unfair, either; a lot of the government jobs involve coordinating social services that women used to provide as homemakers.

There are not enough hours in the day to be the parents we would like to be, do the jobs we would like to do, and have the marriages we would like to have. Everyone is going to have to prioritize.

There are professions where this is more or less possible: Pharmacists, as Claudia Goldin points out, get paid mostly in proportion to the hours they work. But in all sorts of professions, availability really matters. It matters even if you're less productive after 60 hours than you were at 40 hours, because a client would rather talk to a slightly burned-out lawyer who knows everything about the case, and can explain it whenever is convenient for the client, than to one of two lawyers who know most of what is going on in the case, and are only available when they don't have family duties.

You can see some professions, like medicine, moving to more of a shift work model as the profession feminizes. But in others, the women drop out and will continue to drop out unless companies radically change how they do business.

I think you can make a strong case that at least some of these decisions are driven by residual cultural sexism -- that women who would rather pursue careers than family duties feel pressured to be supermom, or unable to find men who will support their career ambitions. I think that's unfair. But I also have to ask: What specific thing are we supposed to enact to fix this?

That's the point of these op-eds, isn't it? We are supposed to do something. The problem is, what?

Let's say that pay disparity consists of a small amount of residual sexism, plus a large difference in family responsibilities. What should a company do? What should the government do?

The part of pay disparity driven by sexism is so small that it will be very difficult to detect in any given case, or even in aggregate. The sexism that drives it probably mostly operates below the conscious level, in men and women who know that they don't like hard-charging, opinionated women, but don't recognize that this is partly because they're women.

The part of pay disparity that is driven by differential ability to work long hours is easy to detect, but what do we do? Mandate that everyone be paid a flat rate by the hour? Put everyone in the country on something like the government's GS system? Cap working hours? To state the meaningful solutions is to reject them.

The solutions that often do get proposed -- mandatory paid maternity leave for at least a year, generously subsidized childcare, more flexible schedules and so forth -- would certainly make it more convenient for working women to be mothers, but to the extent that they make it easier to take off chunks of time, they might even increase pay disparity, not decrease it, particularly among educated women. Subsidized day care is not going to help anyone work 14 hours a day. You can mandate paternity leave, but you cannot mandate that men use it to take care of their kids, rather than getting some work in.

When married men were paid more than single women as a matter of explicit policy, this was relatively easy to fix. When married men are paid more than single women because their wives are relieving them of the burden of home duties, it's a lot harder to describe a remedy. To the extent that it's needed,* the remaining work to be done on the pay gap has to be done in places where the government, or indeed any explicit policy, has difficulty going: inside families, or the subconscious recesses of our minds.

* I know a lot of full-time moms who would angrily dispute the idea that it's imperative to drive forward until men and women put in equal time in the home and at the office.

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    Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @asymmetricinfo.

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