Part I of this series discussed Massachusetts Senator Elizabeth Warren???s fundamental misunderstanding of basic economics in relation to wages and compensation, specifically in relation to the minimum wage debate. Here, in Part II, the economics behind another of Senator Warren???s favorite boogeymen will be discussed: the gender pay gap.
In an op-ed she penned in support of the Paycheck Fairness Act, a bill that would effectively disclose employee incomes and make it easier for female employees to sue their employers if they believe sexism is afoot, Warren claimed, ???women today still earn only 77 cents for every dollar a man earns.??? This is, again, an egregious misrepresentation of economic data for the sake of political expedience.
Certainly, if you take the income of all women versus the income of all men, the median income of women is roughly 77 percent to that of men. That doesn???t mean there is a vast nationwide conspiracy against women. If we think about that parameter for more than the five seconds it takes for Warren and others to spout it off, we realize it doesn???t make a shred of economic sense to ascribe it to sexist discrimination. Warren and her supporters want us to believe that employers can get away with paying women 23 percent less than they can men. If this really were the case across all businesses and industries, why would anyone hire men in the first place? Businesses aim to maximize profit by keeping costs down, so why would they pay 23 percent more for labor than Warren apparently believes they have to under current law?
The fact is that, while median incomes across the entire population do differ for men and women, this difference is the result of perfectly natural and benign variances in the economic choices made men and women. Men tend to pursue education and careers in hard sciences and engineering at a higher rate than women. Women, on the other hand, dominate liberal arts and social sciences. The simple fact is that engineers make more money than social workers and English teachers. This dynamic would hold equally true comparing a female petroleum to a male elementary school teacher. Women also tend to leave the workforce early on and work part-time at a greater rate in order to assume domestic family roles such as having and caring for children. When, or if, women that have left the workforce in order to focus on caring for families re-enter the labor market, they are often months, if not years, behind their male counterparts in experience, leading to lower average pay. Finally, an even more obvious contributor to the observed ???pay gap???, is the role of hazard pay. Men dominate hazardous jobs such as working oilrigs and coalmines, which both offer substantial incentives to counter-balance their inherent danger.
Again, the Bureau of Labor Statistics can help us adjust for some of these factors with their data. In 2013 married women with children in the home under 18 did earn roughly 78 percent on average of what men made. Yet according to the same data, single women without children earned 96.1 percent of what their male counterparts did. Already, simply eliminating the effect of settling down and having a family closes almost the entire wage gap. Some of the remaining 3.9 percent may be attributable to sporadic discrimination, but certainly the majority of it is likely the result of the mentioned differences in career preferences between men and women.
The fact is that the observable difference in pay between men and women on average is nothing more than the innocent byproduct of societal norms. Claiming, as Senator Warren does, that women are discriminated against at a level that would register in a 23 percent difference in pay between men and women across the population, is an inexcusably naïve assessment of the economy and society.
Senator Warren has an equally naïve view on an area where she ought to have more clarity, given her career prior to entering the Senate: higher education. This will be discussed in Part III of this series.