What is Behind Men and Women Pay Differences?

The number 77 cents on the dollar is often used when discussing the income of men vs. women but this number is based on aggregate numbers of women versus men workers and it doesn’t take in account why this aggregate number exist and what happens if you control for similar data. Compare apple to apple as opposed to apples to oranges. AEI scholar Mark Perry noted, “It’s an important, but overlooked point that there really is no gender wage gap, rather, there’s a gender earnings gap and that pay gap has almost nothing to do with gender discrimination. That is, there is almost no evidence that men and women working in the same position with the same background, education and qualifications are paid differently. Whether it’s the Target Corporation, Facebook, the University of Virginia, the United Way, the White House or McDonald’s, there is almost no evidence that any of those organizations have two pay scales: one for men (at a higher wage) and one for women (at a lower wage). Of course, that would be illegal, and if that practice existed, organizations would be exposed to legal action and “half the legal profession would be taking such cases on contingency fees”…. What certainly does exist is a well-documented gender earnings gap when the unadjusted median earnings of men and women are compared without correcting for any of the dozens of relevant factors that explain the natural differences in earnings by gender.”

To pay a woman a lower wage for the same job as a man is illegal and has been for decades. The key to discovering the difference in income between men and women is not policy but choices that men and women make in their daily lives. What is overlooked is that men on the average work longer hours, have more experiences and engage in more dangerous and physical work compared to women. Many women balance family and work, and it is not uncommon for women to talk time off work to raise family. In 2012, AEI June and Dave O’Neill contributed the vast majority of the difference in pay to factors other than discrimination. They concluded, “Labor market discrimination is unlikely to account for more than 5% but may not be present at all.”

93% of workplace fatalities are men, demonstrating that men are more willing to take on more riskier jobs, jobs that pay more and according to data provided by OECD, the average commute time for men is higher than women. The later point shows that men are more willing to take longer commute to work if it means more money and for many women, the longer commute time takes away from raising the children at home.

The real question is why there is a gap between men and women; the answer is complicated and not so simple. Many women chose to take time off to raise family or often take more time to do family chores whereas men work longer hours. Statistics show that married couples and families headed by two parents’ households earn more money than single heads of households.

In 2013, Pew Research showed that 40% of women were the main breadwinner but when one looked inside the statistics, Pew showed 63% of women who were the head of households were the only breadwinner in the household and only 23% of women in married households earned more than the man in the households. Couples with women as the main breadwinner earned four times that of those single female heads of households who were the main breadwinner. This is one factor in growing inequality in the United States as more families are headed by a single parent and the earning power favoring married couples over single parent households adds to this inequality.

Marriage is one factor in differences in family income and this factor leads to host of choices that leads to differences in income between men and women. It is important to understand how these choices that both men and women make in their lives lead to overall difference in income. It means that men and women when they are married will make choices that will restrict one or the other income over their lifetime and society may benefit from those choices overall due to the importance of raising children.

When men’s and women’s career choices are controlled by factors such as similar experiences and jobs, the differences in earnings disappeared. The question that remains is are there policies that can reduce the differences? Considering that women have made strides in reducing these numbers over the past decades and that women are graduating with college degrees in bigger numbers than males, the answer would appear that leaving things alone will be better overall than doing “something in the name of equality.”