Last month, President Obama repeated an often-recited line that women “make 77 cents for every dollar a man earns” and that “a woman deserves equal pay for equal work.” This isn’t a new argument; politicians and others have used these types of statements for years to vilify big businesses as anti-women. Over a decade ago when she was a senator, Hillary Clinton attempted to pass the “paycheck protection act,” claiming it was un-American for firms to discriminate against women.
But this is misleading. The statistic Obama cites is only the average difference between men and women, across all jobs. It doesn’t control for the types of job, the number of hours worked or for time taken off (to raise children, for example).
If you insist that the gender wage gap is a result of discrimination against women, here are a few other claims that must be equally true. By the same logic, young men are discriminated against in favor of young women. Women in their 20s without children out-earn men by as much as $1.08 to every dollar, according to some estimates. It must also be true that white men are discriminated against in favor of Asian-American men, who earn over 5 percent more than white men. To claim either of these as discrimination would be ridiculous, though, right? There are differences in job types, education levels, hours worked, and other factors that lead to these wage differentials. But these factors are just as responsible for the overall difference in wages between men and women.
Once you control for factors such as college major, time off of the labor force to raise children, and hours worked per week, the gender wage gap essentially disappears. A big part of the difference in pay is due to the choice of jobs: women choose to enter career fields that pay less than those that men choose. Women are still more likely to be Kindergarten teachers while men are more likely to work in finance. In short, firms aren’t discriminating against women. The reality remains that women, on average, do earn less than men. But to blame it on discrimination is misguided.
Solutions to the gender wage gap aren’t simple. Taking time off from a job, or working fewer hours, will reduce one’s earning potential, but many people (rightly) relish the opportunity to take time off to raise children. There are no easy policy recommendations to deal with the loss of earning power for those who take time off to raise children. But there is one thing we can do that would decrease the gender wage gap with no negative consequences: ensure that women are encouraged to pursue work in high-paying industries.