When it comes to the average wages of men and women, belief that irrational discrimination by employers causes a large pay gap is now entirely mainstream. This should be shocking, as the only way to justify this view is by relying on some extreme and often economically illiterate assumptions.*
It requires one to believe that not only do most employers prefer to pay more for men when they can get away with hiring women of equal skill for less, but that so few employers have making profit as their primary objective that competition does not punish those who do discriminate.
It means believing that equality of opportunity means equality of outcome. Almost everyone now accepts that if you give individuals a relatively level playing field on which to compete, they will achieve very different results. So why is it that when one finds a 'disproportionate' number of men in a certain profession, this is supposed to prove the opposite of a level playing field? Equality of opportunity and of outcomes are not synonymous - they are antonyms.
It means believing that if you get something noticeably different from equality of outcome, such as twice as many men in a particular job, that is de facto proof of discrimination. There are striking parallels with the way anti-Semites will seek out professions in which Jews are 'over-represented' to prove their own conspiracy theories: "x per cent of company directors are Jews! x per cent! That can't be based on merit - it must be some kind of old boy network"! The usual Kissingerian rules about the sex war never truly heating up because there is too much fraternisation with the enemy apply, and do mean we should continue to view the anti-Semite more worriedly, but the logic is the same.
It means believing that there are no differences between men and women in interests, motivations and in what ways they channel their ambitions.
It also means denying the evidence of study after study which finds that differences in educational choices, in choice of career, in time taken away from work, in experience, in willingness to work overtime and so many such factors identifiably account for the vast bulk of the difference between the pay of men and women. The Equal Opportunities Commission couldn't help but find that when you take account of these issues, the average gap in pay of 17% drops to less than 5%. Of course, the mere fact that the EOC cannot find other reasons than discrimination to account for this residual sub-5% does not mean no others exist.
J R Shackleton's new paper for the IEA 'Should We Mind The Gap?' is a valuable contribution to this debate (admittedly, I haven't read it in full yet). Amongst his findings:
- When attitudes and preferences, as well as objective characteristics such as work experience and qualifications, are brought into the picture most of the pay gap can be explained without reference to discrimination.
- The pay gap may partly reflect compensating differentials: men’s jobs may typically have disadvantages that are reflected in higher pay. Women report greater job satisfaction than men.
- There is a larger gender pay gap for women working part time. These women tend to work in a narrow range of occupations; when this is taken into account the ‘part-time penalty’ shrinks to small proportions.
- The difference in average pay in perhaps the most traditional and 'patriarchal' part of the country - Northern Ireland - is just 2.8%. The difference in the South East of England is 15.9%.
- The pay gap is below 1% for under-30s - suggesting it is differences in choices between men and women later in life that widens the gap.
- Single women earn on average as much as single men, and indeed women in the middle age groups who remain single earn more than middle-aged single males.
- Interestingly, single men earn less than partnered men. As Shackleton notes, "this suggests that what we might call the ‘partnered pay gap’ is more likely to be caused by unobserved characteristics and attitudes of the different groups. Partnered men, with successes in the mating game, may be more confident and go-getting individuals. Or it may be that they attach more importance to building their careers if they have or intend to have a family. This is our first lesson: that pay gaps between groups are not necessarily the result of discrimination."
- "It is rarely discussed in the debate over the pay gap, but part of the explanation for men’s higher average pay could well be that there is a compensating differential for less attractive working conditions. Men are more likely to work outside in all weathers. They are more likely to work unsocial hours. Thirty-six per cent of male managers work more than 48 hours a week; the figure for women managers is only 18 per cent. Men suffer much higher rates of industrial injury. Looking at the economy as a whole, we see that women’s jobs are less at risk: in the three months from November 2007 to January 2008, there were 3.4 redundancies per thousand female employees; the figure for men was 5.3. Women are more likely to get employer-provided training: 13.6 per cent of females had received job-related training in the last four weeks in the third quarter of 2007, as against 11.3 per cent of males. They have a shorter commuting time to work (Women and Work Commission, 2006) and take more time off work. No wonder, perhaps, that they report greater job satisfaction than men (Booth and van Ours, 2008)."
As far as I am concerned, women who choose to put job satisfaction, their passions and interests and their families before pay should be commended. I have no doubt they are doing the right thing for their situation and their loved ones. The idea that irrational discrimination by profit-blind employers better explains the pay gap goes not just against the empirical data but against common sense, basic economics and normal human experience.
* Philip Booth puts it this way in the Foreword: "As Alfred Marshall noted, price is determined by supply and demand together – in the same way as both blades of a pair of scissors cut the paper. To suggest that wages are determined by demand only is as fatuous as suggesting that only the top blade of a pair of scissors does the cutting. Yet those who suggest that the gap between the pay of men and women is caused only by employer discrimination are indeed suggesting that the wages of men and women are determined only by demand."
