Carpe Diem

Persistent pay gap could result from greater male risk tolerance, higher pay for male athletes, professional musicians

In a post last week Matt Yglesias pointed to a recent statistical analysis of the gender wage gap by Evan Soltas, whose findings are summarized here:

My estimate of the gender pay gap is that women were paid about 7.7 percent per hour less than men on average in 2013, holding everything else equal. The gap was 14.3 percent in 1990. Depending on my regression specification, I was able to push the gender pay gap coefficients around only somewhat — I think the range of reasonable estimates of the 2013 adjusted gender pay gap is probably 4 percent to 10 percent.

Matt comments:

Conservative pundits often seem more upset by the fact that 4.5 percent is less than 23 percent than by the fact that 4.5 percent is more than zero percent. But I’d be pretty pissed if someone cut my pay 4.5 percent. And I’d be really pissed if they did it because I’m a man rather than because of something related to my job performance.

MP: So let’s assume that there’s a pay gap of 4-10% after controlling for all of the available relevant variables that affect earnings, and that some of that pay gap is the result of gender discrimination in the labor market – the kind that gets Matt and lots of women really pissed. But what if gender discrimination could be completely eliminated, would there still be a gender wage gap for reasons not related to discrimination against women by employers? I would argue the answer is clearly Yes, and here are three reasons (among possibly many others) why:

1. Risk Tolerance: Men have a much, much higher tolerance/attraction towards high risk behavior than women, and that means that there will always be more men than women in high-risk, high-paying jobs/industries like coal mining, roofing, farming, construction, commercial fishing, oil and natural gas extraction, firefighting, correctional officers, logging, etc.  As my AEI colleague Andrew Biggs pointed out recently:

As far as I know, most statistical analyses of the gender pay gap don’t account for the physical risk of jobs. So, if you include the physical riskiness of an occupation into a wage regression, the unexplained pay difference between men and women — which we’re so eager to attribute to gender discrimination — will shrink further.

How we know that men have a greater risk tolerance/attraction than women?

Workplace fatalities: In 2012 (most recent year available) 4,045 men died on the job (92.3% of the total) compared to only 338 women (7.7% of the total). Almost 12 men died on the job for every woman who died while working in 2012  because a disproportionate number of men work in higher-risk, but higher-paid occupations like coal mining and oil and gas roustabouts (almost 100 % male), fire fighters (96.5% male), police officers (86.6% male), correctional officers (72.8% male), farming, fishing, and forestry (78.3% male), roofers (99.3% male) and construction (97.4% male); BLS data here for 2013. On the other hand, a disproportionate number of women work in relatively low-risk industries, often with lower pay to partially compensate for the safer, more comfortable indoor office environments in occupations like office and administrative support (77.3% female), education, training, and library occupations (73.8% female), and healthcare practitioners (74.4% female). The higher concentrations of men in riskier occupations with greater occurrences of workplace injuries and fatalities suggest that more men than women are willing to expose themselves to work-related injury or death in exchange for higher wages. In contrast, women more than men prefer lower risk occupations with greater workplace safety, and are frequently willing to accept lower wages for the reduced probability of work-related injury or death.

Q: What about the claim that women want to work in high-risk, high-paying occupational sectors like getting jobs as oil roustabouts, coal miners, loggers or roofers, but they aren’t given enough opportunities in the labor market to demonstrate a female risk tolerance/attraction that is equal to men?

A: We have empirical data that overwhelming reveal that women demonstrate a much, much lower risk tolerance/attraction than men, outside the labor market. For example, 91% of motorcyclists killed in 2012 were males (data here) and 93.4% of federal prisoners are men (data here). If women really were willing to accept higher pay for higher occupational risk, why doesn’t that show up in the data for risky behavior outside of the labor market? Probably, because they really don’t have an equivalent risk tolerance/attraction as men, and that will contribute to a gender wage gap that will never shrink to 0.

2. Professional sports are male-dominated, and professional athletes earn a lot of money.  Of the 100 world’s highest-paid athletes, there are only three women on the most current Forbes list. Average salaries for America’s most popular professional sports are $5.15 million for the NBA, $3.2 million for MLB and $2.4 million for the NHL, and $1.4 million for the NFL. In contrast, the average salary for women in the WNBA is about $72,000 (and “Equal Pay Year” would occur in the year 2086 – that’s how long the average player in the WNBA would have to continue to play to earn the same as the average NBA player earned this year).  As long as male sports have disproportionately greater fan interest, higher attendance and ticket prices, there will be a huge gender pay gap in professional sports, which will continue to contribute to an overall gender pay gap for the US that has nothing to do with labor market discrimination.

3. Men outnumber women among the highest paid musicians. Of the world’s 26 highest paid musicians in 2013 according to Forbes, men outnumbered women by more than two-to-one, or 18 men or male bands to 8 female artists (whose bands are probably predominantly men). Of the top 25 highest grossing musical acts in 2013 according to Billboard, male artists and bands outnumbered female artists by a factor of 3:1, or 18 male artists/bands to 6 female artists (whose bands may be predominately men). As long as highly paid male artists and bands outnumber highly paid female artists in the music industry, there will be a gender pay gaps in both the music industry for the labor market as a whole, neither of which is the result of employer discrimination against women.

Bottom Line: Even with perfect pay parity by gender in most occupations in the labor market, wouldn’t the three factors above (among many possible other ones) contribute to persistent gender pay gaps when comparing salaries nationwide by gender that have nothing to do with employer-based discrimination against women?

Carpe Diem

More on Obama’s paycheck poppycock, deceptive crusade, ignoble lie, equal-pay canard/calamity/demagoguery/hype

Take your pick, all of those phrases above have been used this week to describe the ‘Discriminator-in-Chief’s’ hypocrisy and demagoguery about the gender wage gap, here are a few more recent commentaries:

Columbus Dispatch staff editorial: “Exploiting women: Obama hopes that hyping pay issue will buy votes in November“:

These causes of male-female pay disparities long have been recognized. Obama hopes that demagoguery will attract enough female votes to offset the expected backlash against Obamacare in the November election.

The only real-world result from the administration’s push to find wrongdoing, aside from added bureaucracy, is that it could, as Biggs and Perry noted, create “a disincentive for firms to hire women,” for fear of subsequent litigation over pay. That would be a sad, ironic outcome of this deceptive crusade.

Rich Lowry of National Review writes about the “Equal-Pay Canard“:

When asked in an MSNBC interview about the reliability of the pay-gap number, White House economist Betsey Stevenson confessed: “I agree that the 77 cents on the dollar is not all due to discrimination. No one is trying to say that it is. But you have to point to some number in order for people to understand the facts.”

There you have it: For people to understand the facts, you have to give them an easily misunderstood statistic, usually without necessary context and spun in the most inflammatory fashion possible. Enter President Barack Obama. He wrings every bit of dishonesty he can out of the number.

Hillary Clinton, whose prospective presidential campaign will be predicated on every feminist cliché her supporters can muster, tweeted on Equal Pay Day, “20 years ago, women made 72 cents on the dollar to men. Today it’s still just 77 cents. More work to do.” Yes, never tire or relent. The flogging of the bogus statistic can never end.


Carpe Diem

On the economics of diamonds, the biggest marketing scam in history orchestrated by the most successful cartel ever

diamond1From the Priceonomics blog post “Diamonds Are Bullshit” by Rohin Dahr (emphasis added):

Americans exchange diamond rings as part of the engagement process, because in 1938 De Beers decided that they would like us to. Prior to a stunningly successful marketing campaign 1938, Americans occasionally exchanged engagement rings, but wasn’t a pervasive occurrence. Not only is the demand for diamonds a marketing invention, but diamonds aren’t actually that rare. Only by carefully restricting the supply has De Beers kept the price of a diamond high.

Countless American dudes will attest that the societal obligation to furnish a diamond engagement ring is both stressful and expensive. But here’s the thing – this obligation only exists because the company that stands to profit from it willed it into existence.

So here is a modest proposal: Let’s agree that diamonds are bullshit and reject their role in the marriage process. Let’s admit that as a society we got tricked for about a century into coveting sparkling pieces of carbon, but it’s time to end the nonsense.

A diamond is a depreciating asset masquerading as an investment. There is a common misconception that jewelry and precious metals are assets that can store value, appreciate, and hedge against inflation. That’s not wholly untrue. Diamonds, however, are not an investment. The market for them is neither liquid nor are they fungible.

The next time you look at a diamond, consider this. Nearly every American marriage begins with a diamond because a bunch of rich white men in the 1940s convinced everyone that its size determines your self-worth. They created this convention – that unless a man purchases (an intrinsically useless) diamond, his life is a failure – while sitting in a room, racking their brains on how to sell diamonds that no one wanted.

We covet diamonds in America for a simple reason: the company that stands to profit from diamond sales decided that we should. De Beers’ marketing campaign single-handedly made diamond rings the measure of one’s success in America. Despite its complete lack of inherent value, the company manufactured an image of diamonds as a status symbol. And to keep the price of diamonds high, despite the abundance of new diamond finds, De Beers executed the most effective monopoly of the 20th century. Okay, we get it De Beers, you guys are really good at business!

Diamonds are not actually scarce, make a terrible investment, and are purely valuable as a status symbol. Diamonds, to put it delicately, are bullshit.

MP:As I wrote back in 2006, in the early days of Carpe Diem:

The diamond industry has to be one of the biggest marketing scams in the history of the world:

Step #1: Take a relatively common mineral of compressed carbon, artificially restrict the supply and distribution of that mineral by means of a powerful cartel, and charge consumers an artificially high price, way above the true market price.

Step #2: Pursue an aggressive worldwide marketing campaign to deceive people into believing the myth that diamonds are somehow “special and scarce,” when that specialness and scarceness has been completely man-made and artificial, carefully created and orchestrated by the De Beers diamond cartel.

Think about the advertising slogan “Diamonds are forever.” Well, wouldn’t a rock or a penny or a piece of steel be forever, too? I have sharks’ teeth that are 50 million years old, so I think sharks’ teeth are probably forever, too. And wouldn’t a ruby or an emerald or a bar of gold be forever too? And why pay a lot of money for something that will last for a million years when you’ll only be able to use it for maybe 50 years? Seems irrational.

What is the current biggest threat to the market manipulation of the diamond industry, and why is it possible that “cartels aren’t forever?” Cultured, laboratory-grown diamonds, produced in diamond growth chambers by companies like Gemesis that have the same physical, chemical and optical characteristics as a mined diamond.

Bottom Line: If you buy diamonds, you are supporting the unethical, anti-consumer market manipulation of the diamond industry by the most successful cartel in history. Don’t buy into the myth and marketing hokum of “false scarcity” and pay artificially inflated prices for diamonds. If you do buy diamonds, consider buying conflict-free, eco-friendly laboratory diamonds! Americans have been duped for a century by the diamond cartel, and it’s time to end the nonsense.

(Note: This post is from the Carpe Diem archives, originally posted June 11, 2013.)

Carpe Diem

Quotation of the day on President Obama’s embrace of ‘ignoble lies’ to feed the populace whatever he’s selling

…. is from Christian Schneider writing in the Milwaukee Journal Sentinel (emphasis added):

Plato argued that feeding the masses such a fable helps keep them happy where they are and would short-circuit any big ideas they get about staging a revolution to gain a better life. He argued that the people generally weren’t bright enough to handle their own affairs and, as a result, society should be ruled by a handful of enlightened leaders.

America’s enlightened leader of today, President Barack Obama, appears to embrace the “noble lie” construct in order to feed the populace whatever he may be selling. Obama keeps reeling off the howlers, one by one, hoping that even though what he says isn’t true, the public will side with him because it should be true.

We saw this last week with the “celebration” of Equal Pay Day, a quasi-holiday based on a fictional statistic. We might as well have a holiday celebrating Spider-Man’s birthday. The idea that women make 77 cents for every dollar a man makes, a “fact” trotted out by Obama in his State of the Union address, takes into account none of the factors why the illusionary disparity exists.

While politicians typically stretch the facts to their liking, most of Obama’s fabrications were never true from the time he uttered them. And while he may believe his ends more than justify his means, it is time we recognize his lies as simply ignoble.

Carpe Diem

Summary of some of the latest fallout on the White House gender pay gap hypocrisy

obamawhitehousenewNot a good week for the White House as the “Discriminator-in-Chief” and Team Obama struggle to explain and defend the 12% gender pay gap for White House staffers (see left chart above), which is more than twice the average gender pay gap for the Washington, DC area (see right chart above). Below are just some of the dozens of news reports and blog posts about Obama’s phony wage gap myth that women make 23% less than men for doing the same work, which has now morphed into a politically-motivated outright fabrication. And if you don’t believe that Obama is still trying to make a case that women are paid 23% less than men for doing the exact same work, see this White House release on Wednesday titled “Kay Morrison Made the Same Wage as Her Male Counterpart in 1943. There’s No Excuse for a Pay Gap in 2014.”

1. Washington Post: “White House’s phony wage gap figures spur a backlash” by Jennifer Rubin, who wrote on Wednesday:

Day 2 of the president’s equal pay calamity continued today. The big mistake the Dems made was using a statistic virtually everyone knew was phony. That allowed media and Republicans to have a field day. The White House looks pretty dishonest, which is just punishment for its transparent effort to enrage women.

Jennifer also reports that five Democrats running for re-election in battleground states have their own problems when it comes to equal pay. Specifically, Senators Udall (D-CO), Landrieu (D-LA), Begich (D-AK), Warner (D-VA), and Rep. Peters (D-MI) have gender wage gaps for their staffs of 15%, 12%, 18%, 25% and 33% respectively. On average, female staffers make only 79 cent for every dollar a male staffer earns working for these five members of Congress.

I think we can expect this kind of gender gap hypocrisy to be a recurring theme in the mid-term elections. As Steve Hayward asks in a related post titled “Dems’ Wage-Gap Hypocrisy” – How long until November?

2. American Spectator: Ralph Reiman writes in article titled “Paycheck Poppycock: All is not fairness in cheap political war“:

Understandably, what was missing at this White House pep rally, designed more to get votes than to fix the economy, was any hint that the 77 cents scenario of “full-time” vs. “full-time” unequal pay stubs is totally built on a comparison of apples to oranges.

3. US News and World Report: My AEI colleague writes in article “A War on Women in the White House? The White House seems to have a wage gap problem all its own“:

The current Leader of the Opposition, my esteemed colleague Mark Perry, ruined White House Press Secretary Jay Carney’s day on Tuesday by pointing out that women in the White House are paid 12 percent less than men in the White House. Tuesday was, of course, Equal Pay Day, a day on which Democrats celebrate the War on Women by making claims that even their allies in the media proclaim to be false. The story is that men and women deserve equal pay for equal work, a laudable objective, and then something about how women earn 77 cents for every dollar a man earns, a laughable statistic.

4. Washington Times: In an article titled “Harry Reid’s hypocrisy on ‘Equal Pay Day’: All Senate Democrat leaders top aides are men,” Emily Miller points out that:

Democratic Conference Vice Chairman Chuck Mr. Schumer, Senate Majority leader Mr. Reid and the others in the Senate Democratic leadership — Majority Whip Dick Durbin and Conference Secretary Patty Murray — are hypocritical in saying they want women to have equal seniority and pay. Not one of them has a female chief of staff or communications director.

Ms. Murray is the only woman on either side in leadership, but she’s also in the lowest-ranking position. The Washington Democrat tweeted Monday: “50+ yrs since JFK signed #EqualPay Act women still earn just 77¢ to every $1 men make.” Yet her top adviser and the communicator for this message are men.

One female Senate Republican aide told me that, “It’s a bit ironic that the male-dominated Senate Democrat leadership communications staff is trying to tell American women what they need to get ahead in the workplace.”

In contrast, Senate GOP leaders demonstrate gender equality in the workplace. The top two leaders have female chiefs of staff — Sharon Soderstrom for Minority Leader Mitch McConnell and Beth Jafari for Minority Whip John Cornyn. These women are also the highest-paid chiefs of staff in leadership. Four of the five leaders — Mr. Cornyn, Conference Chairman John Thune, Policy Committee Chairman John Barrasso and Conference Vice Chairman Roy Blunt — have female communications directors. Furthermore, these women are paid an average salary of $124,000, which is about $18,000 a year more than Democrats pay men doing the same job.

6. In a blog post titled “White House Says Wage Gender Gap Stats Are Misleading…When Applied to the White House,” Elizabeth Nolan Brown points out that:

White House Press Secretary Jay Carney doesn’t like when you apply the same logic governing wages in private businesses to his employer’s own payroll. As President Obama prepares to sign an executive order addressing the gender gap in federal contractors’ wages, critics have pointed out that female White House staffers make an average of 88 cents for every dollar male staffers earn.

7. Here are a few other stories whose headlines highlight the White House hypocrisy that was exposed this week: “Dems’ ‘War on Women’ tactic backfires” and “White House equal pay push faces awkward pushback” and “How the White House and Democrats stepped on their own equal pay message.”

MP: I think Obama’s gender wage gap hypocrisy that was exposed this week has caused some permanent damage to Obama’s and the Democrat’s credibility about a serious issue that would be much better advanced by telling the truth than by spreading politically-motivated lies, falsehoods, and exaggerations. The press and media are now keenly aware of the gender pay gap at the White House, and among the Senate Democrats in leadership positions, and will bring this issue up every time Team Obama and Democrats lecture us about gender equity, equal pay, paycheck fairness, discrimination against women in the labor market, etc. It’s been a good week for statistical and economic sanity, and a bad week for those who have perpetuated a myth about the gender wage gap that is intellectually dishonest and unsupported by the evidence.

Carpe Diem

The college degree gap: women earned a majority of degrees at all levels in 2012, and the degree gap for blacks is stunning

collegeclass2012The table above (click to enlarge) shows college graduation data for the Class of 2012 (most recent year available) by race/ethnicity and sex from the Department of Education for four degree levels separately (Associate’s, Bachelor’s, Master,’s and Doctor’s) and for all degree levels combined. The number of college degrees earned by females per 100 men is displayed above, as well as the female percentage share of college degrees for each category. Here are a few observations:

1. For all four degree levels and for all four race/ethnicity groups, women earned a majority of college degrees in 2012. Overall in 2012, women earned 59% of all college degrees, which also means that 142 women received a college degree at some level for every 100 men.

2. By degree level, the female share of Associate’s degrees was the highest at 62%, followed by a 60% share of Master’s degrees, a 57% share of Bachelor’s degrees and a 51% share of Doctor’s degrees (includes Ph.D., Ed.D., and comparable degrees at the doctoral level, as well as M.D., D.D.S., and law degrees that were formerly classified as “first-professional degrees”).

3. By ethnic group, the “college degree gap” favoring women was highest in 2012 for blacks (205 black women received a college degree in 2012 for every 100 black men, for a female-male ratio of more than 2:1 and a percentage share of 67%) and lowest for Asians (124 women earned a college degree for every 100 men, which is a percentage share of 55%). Black women outnumber black men earning college degrees by a ratio of about 2:1 for all four degree levels, and earn such a disproportionate share of Master’s degrees that there were 239 black women earning Master’s degrees in 2012 for every 100 black men! 

While the overall large and gradually increasing gender imbalance in higher education favoring women should be an issue of national concern, the huge gender imbalance and “college degree gap” favoring women in the black community is stunning. It represents a serious challenge that you would think would attract some attention, but it seems to have gone largely ignored.

When there were gender imbalances in college sports favoring men it was addressed with federal legislation – Title IX legislation. When there are perceived gender wage gaps, it’s addressed with federal legislation and executive orders. Where’s the concern today about the growing academic gender disparities in higher education favoring women, especially for black Americans?

A Google search is one way to compare the differences in public awareness and media coverage for different gender imbalances. If you do a Google search for the term “gender pay gap” and you’ll get more than 23 million results; then do a Google search for “gender college degree gap” and you’ll get about 4,000 results, mostly to posts on Carpe Diem! The terms “college degree gap” and “gender degree gap” gets a few more results (11,600 and 8,400), again mostly links to CD posts. As mentioned many times before here, the concern about gender imbalances remains extremely selective.

Carpe Diem

In premiere episode of ‘Factual Feminist’ Christina Sommers explains how gender wage gap is based on bogus statistics

The gender wage gap came into focus this week, but not in the way the White House wanted. At Monday’s White House Press Briefing, a reporter asked about AEI’s study showing that Obama administration female staffers make only 88% of their male counterparts:

And just a quick question on the issue of equal pay.  The President has cited a figure of women making 77 cents on the dollar compared to men. There was an American Enterprise Institute study that said the median salaries in the White House, women make 88 percent of what men make. How do you explain what appears to be a wage gap here at the White House?

Christina Hoff Sommers examines spokesman Jay Carney’s response to that question in this premiere episode of her video blog, “Factual Feminist.”

Carpe Diem

Tax deadline is approaching next Tuesday: Bring us back to 1913 (or better yet, bring us back to pre-income tax 1912)

irsThere will probably be millions of Americans, including me, who will be working on their taxes this weekend before next Tuesday’s deadline on April 15. So it’s time for my annual post at tax time to help put things in perspective.

In a recent report to Congress, the National Taxpayer Advocate estimated that American taxpayers will spend 6.1 billion hours this year complying with the income tax code, based on IRS estimates of how much time taxpayers (both individual and businesses) spend collecting data for, and filling out tax forms. That amount of time spent for income tax compliance – 6.1 billion hours – would be the equivalent of more than 3 million Americans working full-time, year-round (or 2.2% of total US payrolls of 138 million). By way of comparison, the federal government currently employs 2.7 million full-time workers, and Wal-Mart, the world’s largest private employer, currently employs 2.2 million workers worldwide and 1.4 million workers in the US (both full-time and part-time).

“In the beginning” when the US federal income tax was first introduced in 1913, it used to be a lot, lot simpler and a lot easier to file taxes; so easy in fact that it was basically like filling out your federal tax return on a postcard.

For example, page 1 of the original IRS 1040 income tax form from 1913 appears above. There were only four pages in the original 1040 form, including: two pages of worksheets, the actual one-page 1040 form above, and only one page of instructions, view all four pages here. In contrast, just the current 1040 instructions for 2013, without any forms, runs 207 pages.

Individual income tax rates started at 1% in 1913, and the maximum marginal income tax rate was only 7% on incomes above $500,000 ($11.85 million in today’s dollars). The personal exemption in 1913 was $3,000 for individuals ($71,145 in today’s dollars) and $4,000 for married couples (almost $95,000 in today’s dollars), meaning that very few Americans had to pay federal income tax since the average income in 1913 was only about $750. The Tax Foundation has historical federal income tax rates for every year between 1913 and 2013 here for tax brackets expressed in both nominal dollars and inflation-adjusted dollars.