Every year, the Bureau of Labor Statistics (BLS) releases a report on the “Highlights of Women’s Earnings.” Here’s the opening paragraph from the most recent BLS report on women’s earnings in 2011:
In 2011, women who were full-time wage and salary workers (working 35 or more hours per week) had median weekly earnings of $684, or 82.2% of median earnings for male full-time wage and salary workers ($832). In 1979, the first year for which comparable earnings data are available, women earned 62% of what men earned.
How do we explain the fact that women working full-time earned 82.2 cents for every one dollar men earned in 2011 (and the 17.8% pay gap)? Here’s how the National Committee on Pay Equity explains it:
The wage gap exists, in part, because many women and people of color are still segregated into a few low-paying occupations. More than half of all women workers hold sales, clerical and service jobs. Studies show that the more an occupation is dominated by women or people of color, the less it pays. Part of the wage gap results from differences in education, experience or time in the workforce. But a significant portion cannot be explained by any of those factors; it is attributable to discrimination. In other words, certain jobs pay less because they are held by women and people of color.
Let’s investigate the claim that the gender pay gap is a result of discrimination by looking at some of the wage data in the BLS report:
1. “Among full-time workers (those working 35 hours or more per week in a job), men are more likely than women to have a longer workweek. Twenty-five percent of men, compared with 14 percent of women, worked 41 or more hours per week, in 2011. Women were more likely than men to work 35 to 39 hours per week: 13 percent as opposed to 5 percent. A large majority of both male and female full-time workers had a 40-hour workweek; among these workers, women earned 88 percent as much as men earned.”
Comment: Some of the raw wage gap automatically disappears just by simply controlling for hours worked per week, something not mentioned by the National Committee on Pay Equity. In fact, for the group of full-time workers who work 35-39 hours per week, women earned 109.9% of what their male counterparts earned in 2011. For workers who worked 45-48 hours per week in 2011, women earned 91.1% of their male counterparts. For that group, about 50% of the 17.8% raw wage gap disappeared when only one variable, among many other variables that would affect earnings, was controlled for: hours worked per week.
2. The BLS reports that for single workers who have never married, women earned 96.9% of men’s earnings in 2011, which is a wage gap of only 3.1% (see Table 1). For that group, more than 82% of the unadjusted 17.8% wage gap is explained by just one variable (among many): marital status.
3. Also from Table 1 in the BLS report, we find that for married workers with a spouse present, women earned only 76.6% of what married men with a spouse present earned in 2011. Therefore, BLS data show that marriage has a significant and negative effect on women’s earnings relative to men’s, but we can assume that marriage is a voluntary lifestyle decision, and it’s that choice, not labor market discrimination, that contributes to much of the gender wage gap for married workers.
4. Also in Table 1, the BLS reports that for young workers ages 20-24 years and 25-34 years, women earn 93.2% and 92.3% of their male counterparts, respectively. Once again, controlling for only one variable – age – we find that almost two-thirds of the unadjusted raw wage gap disappears for young workers.
5. If we look at median hourly earnings, instead of median weekly earnings, the BLS reports in Table 9 that women earned 86.8% of what men earned in 2011, which accounts for more than 25% of the raw gender earnings gap when measured by weekly earnings. And when we look at young workers, women ages 16 to 19 years earned 97.5% of their male counterparts in 2011, and for the 20-24 year old group, women earned 92.5% of what men earned. For unmarried hourly workers of all ages, women earned 93.7% of their male counterparts in 2011, which explains almost 50% of the unadjusted gender difference in hourly earnings.
6. In Table 8, the BLS reports that for single workers with no children under 18 years old at home (single workers includes never married, divorced, separated and widowed), women’s median weekly earnings were 96.0% of their male counterparts. For this group, once you control for marital status only, you automatically explain 78% of the gender earnings differential.
7. Also in Table 9, the BLS reports that married women working full-time with children under 18 years at home earned 77.5% of what married men earned working full-time with children under 18 years. Once again, we find that marriage and motherhood have a significantly negative effect on women’s earnings; but those lower earnings don’t necessarily result from labor market discrimination, they more likely result from personal choices about careers, workplace flexibility, and hours worked, etc.
Bottom Line: When the BLS reports that women working full-time in 2011 earned 82.2% of what men earned working full-time, that is very much different than saying that women earned 82.2% of what men earned for doing exactly the same work while working the exact same hours, with exactly the same educational background and exactly the same years of continuous, uninterrupted work experience. As shown above, once we start controlling individually for the many relevant factors that affect earnings, e.g. hours worked, age, and marital status, most of the raw earnings differential disappears. In a more comprehensive study that controlled for all of the relevant variables simultaneously, we would likely find that those variables would account for almost 100% of the unadjusted, raw earnings differential of 17.8% lower earnings for women reported by the BLS. Discrimination, to the extent that it does exist, would likely account for a very small portion of the raw gender pay gap.
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.
To claim that a significant portion of the raw wage gap can only be explained by discrimination is intellectually dishonest and completely unsupported by the empirical evidence. And yet we hear all the time from groups like the National Committee on Pay Equity, the American Association of University Women, the Institute for Women’s Policy Research, and even President Obama that women “are paid 77 cents for every dollar paid to men.” And in most cases when that claim is made, there is almost no attention paid to the reality that almost all of the raw, unadjusted pay differentials can be explained by everything except discrimination – hours worked, age, marital status, children, years of continuous experience, workplace conditions, etc. In other words, once you impose the important ceteris paribus condition of “all other things being equal or held constant,” the gender pay gap that we hear so much about doesn’t really exist.