• Milton Friedman Society

Gender Pay Gap from an Empirical Point of View

By Inês Dias Ferreira



The latest years have been characterized with a rise of social turmoil as well as an increase in awareness of various social justice movements. The exposure to the latter can be across multiple media and agents: celebrities invocating the current unbearable employer gender discrimination present in most industries; movement leaders marching against race discrimination as they consider it the main (sometimes, only) cause to all racial income inequality; national debate on government measures adoption to diversify corporate and academic racial and gender representation, and so on.


Income gender inequality has been popularly pointed as a result of employer discrimination which may seem a reasonable justification when one is daily bombarded with generalized statistics on the subject, such as that in 2020 women made on average 81 cents for every dollar a man made, or that in 2018 in the EU, women on average earned less 14.1% per hour than men. These values are indeed factual, however they are measures based on medium salaries for both genders, so how can we make inductions and withdraw causalities from simplistic statistical results of such heterogeneous groups? Shouldn’t the level of education, occupation, industry’s innovational rate, age, marital status, parental decisions and other variables be taken into consideration?


The key point lies even a bit before any effort of justification or resolution, but rather on the existence of a problem it-self. If these are such flawed statistical results perhaps, they are not good indicators of any gender pay gap anomaly in the first place. Rigorous data analysis needs to be conducted and most importantly, it needs to be transparent and stripped of any prevalent ideology before stating an oversimplifying conclusion to any apparent significant differences between women and men in their employment, pay or promotion.



Comparison


A study in Britain found that on average women earned less 17% per hour than men at full-time job positions however, when both genders were broken down by age, young British women’s incomes were 91% of that of British men while after they became mothers their incomes were just of 67% of that of men who were equally fathers. Economist Thomas Sowell, Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution, at Stanford University has extensively written and talked about the subject. “Mother’s incomes declined as a percentage of male’s income more or less steadily until about a dozen years after giving birth, when it began to rise again” (Sowell, 2007), although never reaching the pre-natal level. Many other studies in varied western nations indicate the same tendency, including studies done on part-time occupations as well.



Moreover, Sowell has pointed out that the term “single” may include never-married women/men but also not currently married women/men that possibly already were on the past. In the name of accuracy, gender comparisons should be made between “never married” men and women rather than in single men and women given that the yearly income of currently single women in their 50’s, but that were, for instance, once married in the past with a career interruption of several years (or part-time job undertaken) will greatly differ from never married women, without any full-time job interruption. When comparing never married men and women, past their child-bearing years, both working full-time, the result is that women earn actually more than men do. In addition, data in the United States shows that women who had worked continuously since high school were earning more than men in the same category, in 1971, before any major government intervention to advance women.


Another aspect to take into consideration is that not all jobs are the same, namely they differ on working hours, generally classified as part-time and full-time jobs. According to OECD, in 2018, female part-time employment accounted for 37% of total female employment in the UK, and more interestingly, two of Europe’s most prosperous countries, Switzerland and The Netherlands, were top scorers with 45% and 58%, respectively, while male part-time employment shortly accounted around 10% and 15% of total male employment. Needless to say, that yearly incomes from part-time jobs are substantially lower than full-time ones, and in addition, not all industries allow for part-time job. The former is prevalent in more temporary and lower value-added jobs than highly valued ones. Fewer working hours and different gender distribution among jobs play an important part on why women on average earn less than men, not because they are paid less than men for the same job. Furthermore, different working decisions may even imply not working at all. According to what the New York Times as written in 2005, only 56% of female Yale graduates worked while in comparison to 90% of men did (Story, 2005).


In order to control for part-time and full-time employment as well as for paternity, a study revealed that the gender pay gap for part-time workers age 21-35 without children is 5%, under 3% for full-time workers within the same age interval without children and that “there is no pay gap for full-time workers age 21-35 living alone” (Hattiangadi & Habib, 2000). It is important to mention that the existing pay gaps may be due to discrimination but also to any other factors, such as that men take on more physically demanding jobs. For that reason, it is extremely hard to account employer discrimination for significant income differences in generalized statistics when in reality its accountability is far less or non-existent.



Results


The presented arguments show a negative correlation between marriage and childbearing and women’s career advancement given that women who were married and had children lagged furthest behind men in career advancement and income in the same category. Furthermore, this will have implications on the acceptance of women in jobs that require excellent career advancements and accumulated knowledge and productiveness such as administrative board jobs, for instance CEO job positions. Nevertheless, to a uniformed eye this may seem as a result of employer discrimination or as a glass-ceiling effect where patriarchal forces don’t allow women’s progressions.


In addition, these variables not only have a negative impact on women’s careers but can also have opposite effects on women and men, in other words, marriage and parenthood reduce women’s incomes, job continuity and working hours as well as it may be a factor of increase in men’s working hours, labor force participation, career longevity and upscaling, resulting in a bigger gap of male-female earnings in later career years.


The step that follows is to then question why these variables have such negative effects on women’s careers. First and foremost, women are (still) the only gender able to reproduce and carry the future human generation with obvious physical implications during the gestation period and on its following months. Secondly, another reason can be societal expectation on women to take on the burden of domestic responsibilities as their male partner takes the professional ones. The latter can imply the rejection of work progression events, as it was already mentioned, but also the internalization of future parental decisions when choosing a career in the first place. In an increasingly developed world, the practical way to carry on with life relies on each couple’s free decisions, and both genders must have equal opportunities in each of their decisions, but given some of the variables presented, one cannot expect equal outcome.


Finally, employer discrimination is popularly and simplistically shown as one of the most important causes to an existing gender pay gap and may be erroneously used to justify corporate and governmental intervention. However, when one does look closer the residual difference of gender income that can be accounted for discrimination is small and sometimes even zero. The most evident causal variables are the ones that arise from free choices regarding family well-being, paternity and marital status.





REFERENCES


PayScale (2020). The State of the Gender Pay Gap 2020. Retrieved from https://www.payscale.com/data/gender-pay-gap


European Commission (2018). The gender pay gap situation in the EU. Retrieved from

https://ec.europa.eu/info/policies/justice-and-fundamental-rights/gender-equality/equal-pay/gender-pay-gap-situation-eu_en


Sowell, T. (2007), Male-Female Facts and Fallacies. (second ed.), Economic Facts and Fallacies (p. 59-90). Basic Books.


Story, L. (2005, September 20). Many women at Elite Colleges Set Career Path to Motherhood. New York Times, p.A18.


OECD (2019). LMF1.6: Gender differences in employment, https://www.oecd.org/els/LMF_1_6_Gender_differences_in_employment_outcomes.pdf


Hattiangadi, A. U., & Habib, A. M. (2000). A Closer Look at Comparable Worth, Employment Policy Foundation.


(April 15, 2006). A Guide to Womenomics. The Economist. https://www.economist.com/finance-and-economics/2006/04/12/a-guide-to-womenomics



(March 4, 2006). A Hand that Rocks the Candle, The Economist. https://www.economist.com/britain/2006/03/02/the-hand-that-rocks-the-cradle


Leonhardt, D. (December 24, 2006). Scant Progress on Closing the Gap in Women’s Pay, New York Times.



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