President Obama’s persistent ’77-cent’ claim on the wage gap gets a new Pinocchio rating

By Glenn Kessler of The Washington Post.

"“Today, the average full-time working woman earns just 77 cents for every dollar a man earns…in 2014, that’s an embarrassment. It is wrong.”
 
–President Obama, remarks on equal pay for equal work, April 8, 2014

In 2012, during another election season, The Fact Checker took a deep dive in the statistics behind this factoid and found it wanting. We awarded the president only a Pinoochio, largely because he is citing Census Bureau data, but have wondered since then if we were too generous.

We also called out the president when he used this fact in the 2013 State of the Union address. And in the 2014 State of the Union address. And yet he keeps using it, as do many other Democrats. So now it’s time for a reassessment.

The Truth Teller video above also goes through the details.

The Facts

Few experts dispute that there is a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make simple comparisons.

The president is relying on a simple calculation from the Census Bureau: a ratio of the difference between women’s median earnings and men’s median earnings. (The median is the middle value, with an equal number of full-time workers earning more and earning less.) That leaves a pay gap of 23 cents.

But the Labor Department’s Bureau of Labor Statistics shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.
It is worth noting that the gap can go in the other direction as well. Heidi Hartman, president of the Institute for Women’s Policy Research, noted that the gap widens to 27.6 cents if part-time workers were included. She also said that in a 2004 survey, IWPR calculated that across 15 years, prime age women earned just 38 percent of what prime age men earned–an apparent wage gap of 62 percent.

Since women in general work fewer hours than men in a year, the statistics used by the White House may be less reliable for examining the key focus of the proposed Paycheck Fairness Act — wage discrimination. For instance, annual wage figures do not take into account the fact that teachers — many of whom are women — have a primary job that fills nine months out of the year.  The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories. June O’Neill, a former director of the Congressional Budget Office who has been a critic of the 77-cent statistic, has noted that the wage gap is affected by a number of factors, including that the average woman has less work experience than the average man and that more of the weeks worked by women are part-time rather than full-time. Women also tend to leave the work force for periods in order to raise children, seek jobs that may have more flexible hours but lower pay and choose careers that tend to have lower pay.

Indeed, BLS data show that women who do not get married have virtually no wage gap; they earn 96 cents for every dollar a man makes.

In 2011, economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.” They noted that women may prefer to accept jobs with lower wages but greater benefits (more flexible parental leave) so excluding such fringe benefits from the calculations will exaggerate the wage disparity. They also cited one survey, prepared for the Labor Department during the George W. Bush administration, which concluded that when such differences are accounted for, much of the hourly wage gap dwindled, to about 5 cents on the dollar.

A 2013 article in the Daily Beast, citing a Georgetown University survey on the economic value of different college majors, showed how nine of the 10 most remunerative majors were dominated by men:

1.   Petroleum Engineering: 87% male
2.   Pharmacy Pharmaceutical Sciences and Administration: 48% male
3.   Mathematics and Computer Science: 67% male
4.   Aerospace Engineering: 88% male
5.   Chemical Engineering: 72% male
6.   Electrical Engineering: 89% male
7.   Naval Architecture and Marine Engineering: 97% male
8.   Mechanical Engineering: 90% male
9.   Metallurgical Engineering: 83% male
10. Mining and Mineral Engineering: 90% male

Meanwhile, nine of the 10 least remunerative majors were dominated by women:

1.  Counseling Psychology: 74% female
2.  Early Childhood Education: 97% female
3.  Theology and Religious Vocations: 34% female
4.  Human Services and Community Organization: 81% female
5.  Social Work: 88% female
6.  Drama and Theater Arts: 60% female
7.   Studio Arts: 66% female
8.   Communication Disorders Sciences and Services: 94% female
9.   Visual and Performing Arts: 77% female
10. Health and Medical Preparatory Programs: 55% female

We do not want to suggest there is no pay gap. A report by the American Association of University Women found that, after accounting for a variety of factors, including college major and occupation, there was an unexplained seven percent gap one year after graduation. The gap then grew to 12 percent after ten years. But that’s still nearly half the gap touted by the president.

The White House discovered that broad calculations of wages can yield unsatisfactory results. McClatchy newspapers did the math and reported that when the same standards that generated the 77-cent figure were applied to White House salaries, women overall at the White House make 91 cents for every dollar men make. White House spokesman Jay Carney protested that the review “looked at the aggregate of everyone on staff, and that includes from the most junior levels to the most senior.” But that’s exactly what the Census Department does.

Betsey Stevenson, a member of the White House Council of Economic Advisers, acknowledged to reporters that the 77-cent figure did not reflect equal pay for equal work. “Seventy-seven cents captures the annual earnings of full-time, full-year women divided by the annual earnings of full-time, full-year men,” she said. “There are a lot of things that go into that 77-cents figure, there are a lot of things that contribute and no one’s trying to say that it’s all about discrimination, but I don’t think there’s a better figure.”

Carney noted that the White House wage gap was narrower than the national average, but the White House actually lags the District average calculated by the BLS: 95 cents.

The Pinocchio Test

From a political perspective, the Census Bureau’s 77-cent figure is golden. Unless women stop getting married and having children, and start abandoning careers in childhood education for naval architecture, this huge gap in wages will almost certainly persist. Democrats thus can keep bringing it up every two years.

There appears to be some sort of wage gap and closing it is certainly a worthy goal. But it’s a bit rich for the president to repeatedly cite this statistic as an “embarrassment.” (His line in the April 8 speech was almost word for word what he said in the 2014 State of the Union address.) The president must begin to acknowledge that “77 cents” does not begin to capture what is actually happening in the work force and society.

Thus we are boosting the rating on this factoid to Two Pinocchios. We were tempted to go one step further to Three Pinocchios, but the president is relying on an official government statistic–and there are problems and limitations with the other calculations as well.

(Update, April 12: In his weekly radio address, President Obama highlighted the equal pay issue but dropped any mention of the “77-cent” figure. This is a good start and we hope other Democrats follow his example.)

Two Pinocchios"