Is There Really a Gender Wage Gap?

A number of readers have responded to the A&Q I wrote on the gender wage gap, including the following reader, who says the disparity is largely due to different career choices:

ANSWER

The often-quoted salary difference between men and women is based on the median numbers provided by the Bureau of Labor Statistics. The word “median” means midpoint; 50 percent of people are above and 50 percent are below. It does not mean “average.” And there is a lot more to understanding salaries in the U.S. than meets the eye.

Pointing out that men and women are paid different salaries tells us that men and women are doing different jobs within the same job classification. For the most part, research has identified a relatively small difference in salaries when comparing large groups of male and female lawyers, accountants, or engineers with similar education and years of experience. Looking more carefully at the data, one will see that the so-called “pay gap” of 21 cents per $ is largely due to different career choices between men and women.

QUESTION

Is using salary averages really the right way to go about this?

While I concur that there’s more to evaluating salaries than just comparing the median salaries of men and women, statisticians use that measure for a reason: It is much more representative of what a typical American worker (male or female) in an industry makes than the average, precisely because it’s well-known that salary data is not evenly distributed, with a very long tail at the higher end.

But let’s say you compare the averages instead. What would you find?

Not a smaller gap: Very high earnings are predominantly male, whereas low earnings are predominantly female. Women disproportionately hold lower paying jobs in the U.S. and they are rare at the very top: Only eight of the 100 most well-paid CEOs in America are women. The median isn’t affected by extreme numbers on either end, and so while it’s not the mean, the median actually gives a much better picture of the earnings of a typical worker.

It’s certainly not impossible that men and women are doing slightly different work within the same job classification—but given that this is aggregate data, it’s worth asking whether it’s a coincidence that women across the board for every profession where there is a pay gap are doing different tasks than their male colleagues under the same title. That seems pretty unlikely. Moreover, researchers have concluded that only 10 percent of the gender gap is explained by the differences in hours worked. (And it’s worth noting that men may not be working as much as they say.)

As for comparing men and women with the same education and years of experience—the apples-to-apples approach so to speak—that research is still lacking. A new report from Glassdoor shows that there’s still a gap when the data is controlled for these factors, albeit a much smaller one at 5.4 percent. The report’s chief economist said that the 33 percent unadjusted pay gap is still “unexplained.” But this is pretty thin: We have to keep in mind that online salary sites like Glassdoor’s consists mostly of professionals. Additionally, this is not a peer-reviewed study and the data is not comprehensive or random.

Another recent study challenges the validity of the job-choice theory, as pay in fields that become dominated by women drops often by double digit percentages. Job choice isn’t going to solve the issue if the jobs women choose just happen to always be the ones that pay less, in part because it’s women who choose them.