The Gender-Pay Gap: How Much Progress from Sixty Cents on the Dollar? Is Legal Reform Needed?

I remember the early 70s, when one of the “women’s lib” battle cries was that a woman earned only 60 cents for every dollar a man earned. Since then, news stories on this pay gap have periodically surfaced, tending to emphasize the “bad news” side of the story — the continuing gap — rather than the “good news” — the gap’s continual and marked narrowing.

So is the glass half empty or half full?  The answer depends, in part, on how much of the continuing gap is due to unlawful discrimination rather than other factors, such as different occupational and lifestyle choices. Some pay differences are likely explained by the impact of many women’s choice to be primary caregivers for their children, which leads them to work fewer hours and/or temporarily remove themselves from the workforce. Occupational choices are also a likely explanation, with many women choosing work in lower-paid fields.
AAUW Study
Last week, a press release once again drew media attention to the remaining gender-pay gap. On April 23, 2007, the American Association of University Women Educational Foundation announced a new study, Behind the Pay Gap
The AAUW study opens by stating that women’s “remarkable gains in education during the past three decades . . . have resulted in only modest improvements in pay equity.” It looks at college graduates one and ten years after graduation, and individually analyzes the impact of various factors on pay.
A key finding is that the gap sets in quickly following college graduation and worsens thereafter, with women’s pay dropping from 80 percent to 69 percent of men’s between one and ten years after graduation.
Probably the most significant aspect of this study is that it uses regression analysis to control for hours, occupation, parenthood, and other factors normally associated with pay, and finds that college-educated women still earn less than their male peers. This analysis results in an unexplained pay gap of about 5percent one year after graduation, widening to 12percent 10 years after graduation. The authors conclude, with some plausibility, that the most likely explanation is sex discrimination.
This conclusion is not without doubt, particularly since the study did not appear to control for another very important factor not attributable to discrimination — gender differences in the willingness to negotiate over salary. “Men are more than four times more likely than women to negotiate a salary, which typically translates to more money in their pockets.”ABC News: Take Control: How to Negotiate Your Salary.
Further complicating matters is a fact conveniently not mentioned by the AAUW — there are many job classifications in which women make substantially more than men (in 39 jobs the gender-pay gap favors women by 5 percent-43 percent).
Hopefully, others much more qualified than I am will peer-review the AAUW study. There are some voices challenging conventional wisdom on the gender pay gap, so I suspect there will be further analysis and debate.
Maintaining the visibility of competing viewpoints and scholarly studies on this issue is important. Failure of the public and elected representatives to understand the significance and limitations of these statistics as evidence of a social problem can lead to poor policy choices.
Playing Politics with Wages
The release of the AAUW study was timed to coincide with “Equal Pay Day,” supposedly “the day the average woman must work to in 2007 in order to have her wages match the average man’s 2006 paycheck.”
The mainstream media were not the only ones listening; so were Democratic presidential hopefuls. The Clinton campaign issued a press release highlighting legislation Senator Clinton introduced last month called the Paycheck Fairness Act.  The Edwards and Obama campaigns also issued Equal Pay Day statements.
In contrast, Republican presidential hopefuls ignored Equal Pay Day, as did the White House, according to one mainstream media source. Are Republicans just insensitive male chauvinist pigs with no interest in courting women’s votes, or do they see past the rhetoric and statistical manipulation associated with this issue? Perhaps a bit of both. Perhaps they also have more confidence that the business community and labor markets generally pay people what they are worth because not doing so is simply not good business. Businesses have good reasons — besides the Equal Pay Act (“EPA”) — for ensuring their pay practices are nondiscriminatory and fair.
Legislative Proposals
Does our success — or lack of success — in reducing the pay gap justify a call for new legislation? We’ve had the EPA since 1963, and it seems reasonably directed at this problem, generally prohibiting gender discrimination in pay “for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” Sounds fair enough to me.
Yet many argue more legislation is needed, because the EPA hasn’t succeeded in completely eliminating the gender gap. Congress is considering two bills, The Paycheck Fairness Act, intended to strengthen the enforcement of the Equal Pay Act, and the Fair Pay Act.
Paycheck Fairness Act
Provisions of the proposed Paycheck Fairness Act include allowing compensatory and punitive damages for EPA violations, making class actions easier, improving collection of pay information by the Equal Employment Opportunity Commission (EEOC), precluding defenses based on factors such as a male worker’s stronger salary negotiation skills or higher previous salaries, and allowing pay comparisons between employees at different physical locations.
These are not minor modifications to the EPA. They will result in more huge class action lawsuits; create substantial inflationary pressures, as employers feel obligated to set uniform pay at all geographic locations at levels appropriate for locations with the highest cost of living; and force employers to either take a pass on tough negotiators or raise everyone else when they sweeten the pot to hire them.
Fair Pay Act
The Fair Pay Act prohibits wage discrimination based on sex, race, or national origin among employees for work in “equivalent jobs,” defined in terms of “value” rather than duties. Somehow courts are to divine the “value” of functionally dissimilar jobs so as to proclaim them “equivalent.”
According to the National Committee on Pay Equity, very different jobs would be compared. For example, in an elementary school, head secretaries would be found of equal value to audiovisual technicians; in a hospital, registered nursing assistants equal to plumbers; in a retail food chain, cashiers, meat wrappers, and stock clerks all equal.
Forgive me for not finding those comparisons self-evident. Maybe we’re all of equal worth and should be paid equally. I think I’ve heard that somewhere before. Wasn’t it called Communism? It sounds trite, but we can’t repeal the laws of supply and demand, which set the price of labor in a free society. Maybe more people would like to work as registered nursing assistants than as plumbers, a fact affecting the relative pay scales of these occupational groups.
Finally, a great quote from a woman who is a Harvard professor of economics:

Is equality of income what we really want?” asked
Claudia Goldin, . . . who has written about the revolution in women‚Äôs work over the last generation. “Do we want everyone to have an equal chance to work 80 hours in their prime reproductive years? Yes, but we don‚Äôt expect them to take that chance equally often.”

To the extent such lifestyle choices affect the gender-pay gap — which is a significant extent — the gap should not be considered a problem. To the extent the gap reflects discrimination — a belief that women should be paid less because they are women — it is a problem, but one the present discrimination laws and EPA adequately address.

George L. Lenard
Editor of George’s Employment Blawg
http://www.employmentblawg.com
This article is courtesy of Recruiting Blogswap at http://www.recruitingblogswap.com , a content exchange service sponsored by CollegeRecruiter.com at https://www.collegerecruiter.com/, a leading site for college students looking for internships and recent graduates searching entry level jobs and other career opportunities.