Wednesday, September 2, 2009

Mothers Gap

The factoid, or better a collection of a similar factoids, that explains the wage gap in one sentence. I spoiled it in the titel, but the wage gap is in reality more of a mothers gap. As usual I´ll let others do the talking.
The Pay Gap: 'If It's About Discrimination, Why Are Young Urban Women Earning More?'
The New York Times front page headline recently tells us that "For Young Earners in Big City, Gap Shifts in Women's Favor." The big surprise? New York City women between 21 and 30 working full-time made 117% of men's wages. Everyone is wondering why. Here's why, for starters...
When I did the research for Why Men Earn More in 2005, I discovered that nationwide never-married women who had never had children earned 117% of the wages of never married men who had never had children. Manhattan women in their twenties are less likely to have married or had children than women in their twenties who live in suburban and rural areas. The overall pay gap with men earning more is not about discrimination; it is mostly about the division of labor once children arrive.
The usual men-earn-more pay gap is also about trade-offs. The road to high pay is a toll road. On average, men are more willing to pay the tolls of the more hazardous jobs (accounting for 94% of workplace deaths), to work on commissions, relocate overseas, travel overnight and travel weekends (approximately 90% of the most frequent flyers are men), work late nights and night shifts, work weekends, intensify their work commitment during child-raising years, work in engineering, computer sciences, technology and the hard sciences where the supply doesn't match the demand, and do all of the twenty-five most important trade-offs that on average lead to men earning more.
The good news is that any woman can learn to out earn men should she be willing to make more of the twenty-five trade-offs than the average man makes. - from here
But it is not only Farell.
A more accurate picture comes from a 2007 report prepared for the U.S. Department of Labor by the CONSAD Research Corp.

Although women do not lead as many Fortune 500 companies (only 3 percent, according to Obama), they account for 51 percent of all workers in the high-paying management, professional and related occupations, according to the study. Women outnumber men, for example, as financial managers, human resource managers, education administrators, medical and health services managers, and accountants and auditors.

Otherwise, wage differences can be explained by "observable differences in the attributes of men and women," including, among many, the fact that a greater percentage of women than men take leave for childbirth and child care, which tends to lead to lower wages. Also, women may place more value on "family-friendly" workplace policies and prefer non-wage compensation, such as health insurance or flexibility.

The statistical analysis, which included these and other variables, produced an adjusted gender wage gap between 4.8 percent and 7.1 percent. The gap shrinks to almost nothing when men and women of equal backgrounds and tenure are compared, according to another study of young, childless men and women.

While no one would argue that women shouldn't be compensated as well as men for the same work, it isn't quite accurate to suggest a widespread problem of wage discrimination.

Or, as the Labor Department labor study warns against, to justify policy-level correctives.

Whatever imbalances remain should be self-correcting as women and men achieve educational parity, but that's if boys get some help. Indeed, men and women reached educational parity with college graduation rates in 1982. Today, women receive 58 percent of bachelor's degrees and represent half of graduates in medical and law school.

Boys, meanwhile, are the ones dropping out of school or being expelled. They're the ones failing, abusing drugs and committing suicide. What kind of men do we expect them to become, assuming they survive? - from here
And another one...
For example, in a 2005 NBER working paper "What Do Wage Differentials Tell Us about Labor Market Discrimination?" by June O'Neill (Professor of economics at Baruch College CUNY, and former Director of the Congressional Budget Office), she conducts an empirical investigation using Census data and concludes that:
"There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics.
This observation is an important one because it suggests that the factors underlying the gender gap in pay primarily reflect choices made by men and women given their different societal roles, rather than labor market discrimination against women due to their sex." - from here
And even back in the days there was no huge difference
In fact, most Americans would be shocked to learn that even in the 1950s, the pay gap between men and never-married women (i.e., those women who were unlikely to have temporarily left the work force in order to raise children) was less than 2 percent. Never-married white women actually earned 6 percent more than never-married white men a half-century ago. - from here
What is true for the USA seems to be true for the UK as well.
The mothers' pay gap

It's not being a woman but having children that creates pay inequality and should be compensated for – hang on, it already is


There is no gender pay gap in the UK, there is only a mothers' pay gap.

The basic figures that everyone is working from can be found here (pdf), from the Office of National Statistics. No one is disagreeing with the raw data, the only differences are over which figures we should cherry-pick, how we should combine the various pieces. You'll not be all that surprised to find that those such as Harman, who think that women are hard done by in our society, tend to pick numbers showing the gap to be rather higher than others do. I of course am cherry-picking with the best of them but this table is instructive, drawn from the same data.

As you can see, it is marriage and more especially the having of children that leads to what everyone refers to as the gender pay gap and what should therefore more properly be referred to as the mothers' pay gap. Now that we've correctly identified the reason for differential pay on average, we can decide what, if anything, we'd like to do about it. For if it is indeed motherhood that is causing the gap then all of the current recommendations in the equalities bill are really a little odd. Equal pay audits at companies aren't going to do much about the way that parturition affects income now, are they?

What might be much simpler is to just directly compensate women for the income they forgo by having children. After all, we're pretty sure (some nutters aside) that we want the species and the country to continue into the future, and since biology has made only one of the sexes able to ensure this (with minor assistance from the other needed, to be sure) then the rest of us should just suck up the cost for the public good.

What would that cost be? Rather than argue about median household, or median or mean individual income, just to keep things simple let's peg the average income that will be affected by having children at £20,000 a year. A nice round number (and we'll stick with rounding numbers). Thus we expect a woman who has one child to be forgoing about £2,500 a year or £50 a week. With three children it's £70 a week. So if we were to subsidise mothers by this much (and other appropriate sums for other numbers of children) then we would have abolished the mothers' pay gap. Something that at least some of us devoutly desire.

Where this becomes really interesting is that of course we do already subsidise mothers. The combination of child benefit and the child tax credit is, at least for those on that average income, rather more than the effect on earnings of that mothers' pay gap.

Which leads to, at least to me, a fascinating conclusion. We don't have a gender pay gap in the UK, we have a mothers' pay gap. That mothers' pay gap has already been sorted out by the direct subsidies that we give to women with children. Which leads on to an even more fascinating question.

Why are we faffing about in parliament with an equalities bill to deal with something we've already solved? - from here
And more from the UK.
Pay gap between men and women is not due to discrimination but to their lifestyle choice, says study

[...] Professor John Shackleton, of the University of East London, said that in reality the pay gap hardly existed for workers under 30.

He said men work longer hours in more dangerous jobs and face a greater risk of being sacked, while women who take career breaks outnumber their male equivalents by more than five to one.

In a paper for the Institute of Economic Affairs, he pointed out that single, widowed or divorced women earn more than their male counterparts, but the pay gap between men and women in families with three children was 19 per cent. - from here
And finally we get psychological.
Want equal pay?

The psychologist Susan Pinker asked, in a book titled The Sexual Paradox, and plainly designed to tease, “why females are biologically driven to nurture their young rather than climb the corporate ladder”. Why indeed? But it's a perfectly valid choice if some decide that the rat race isn't for them.

The really interesting comparison isn't between women and men but between single, childless women and men. If you compare women who aren't married or cohabiting with men who aren't married or cohabiting, you know what? The pay gap goes the other way. Hourly pay for the women is £8.82; for men £8.72. The moral is that if women want equal pay, they should give up men and children. Any takers? - from here
In conclusion this is all very simple and logical. In a team of two, the one who takes more care of the kids earns less than the one who simply works more. Women do this more often than men. One on one, women fare off a bit better, probably because of better education. So in short, wage gap = mothers gap.

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