The ‘Wage Gap’ Myth That Won’t Die

You have to ignore many variables to think women are paid less than men. California is happy to try.

 By Sarah Ketterer, WSJ. Ms. Ketterer is the co-founder and chief executive officer of Causeway Capital Management.

"But a closer look reveals a different picture. The Bureau of Labor Statistics (BLS) notes that its analysis of wages by gender does “not control for many factors that can be significant in explaining earnings differences.”

What factors? Start with hours worked. Full-time employment is technically defined as more than 35 hours. This raises an obvious problem: A simple side-by-side comparison of all men and all women includes people who work 35 hours a week, and others who work 45. Men are significantly more likely than women to work longer hours, according to the BLS. And if we compare only people who work 40 hours a week, BLS data show that women then earn on average 90 cents for every dollar earned by men.

Career choice is another factor. Research in 2013 by Anthony Carnevale, a Georgetown University economist, shows that women flock to college majors that lead to lower-paying careers. Of the 10 lowest-paying majors—such as “drama and theater arts” and “counseling psychology”—only one, “theology and religious vocations,” is majority male.

Conversely, of the 10 highest-paying majors—including “mathematics and computer science” and “petroleum engineering”—only one, “pharmacy sciences and administration,” is majority female. Eight of the remaining nine are more than 70% male.

Other factors that account for earnings differences include marriage and children, both of which cause many women to leave the workforce for years. June O’Neill, former director of the Congressional Budget Office, concluded in a 2005 study that “there is no gender gap in wages among men and women with similar family roles.” Time magazine reported in 2010 that in 98% of America’s largest 150 cities, including my hometown of Los Angeles, single women under 30 actually earned, on average, 8% more than their male counterparts."

"once all these factors are taken into account, very little of the pay differential between men and women is due to actual discrimination, which is “unlikely to account for a differential of more than 5 percent but may not be present at all.”"(Ms. O’Neill)

"What California’s Fair Pay Act will do, however, is make the state, already notorious for regulation and red tape, a more difficult place to do business. Companies must now ensure that every penny of wage differential between the men and women they employ is attributable to bona-fide differences in education, training, experience, quantity or quality of work, and so on."

"Harvard economist Claudia Goldin has said “it’s not checkable.”"

"Some of these factors—quality of work, for instance—are inevitably subjective"

"Ms. Goldin has even suggested that women’s employment could decline."