Briefly, how is the “pay gap” a myth?
There’s a perception that – because the average female worker earns only 77 percent as much as the average male worker – that women are paid only “77 cents on the dollar.” But those are two entirely different ideas. Once you control for differences in factors that affect pay – say, the number of hours the person works, the number of years of work experience the person has, what the person majored in during college, the physical or financial risk of the job – then this “pay gap” shrinks considerably. In some cases, economists can fully account for pay differences by controlling for these factors, which means that the true “pay gap” is very, very small.
Why is the Obama Administration harping on a disparity that doesn’t really exist?
It’s election time and the Democrats need to turn out their base, and this is an easy issue to generate some buzz. The press does a terrible job of pushing back on this bogus statistic and so the White House feels free to pursue it. Interestingly, though, the “pay gap” is smallest among single, childless women, who generally vote Democratic. It’s once women get married and have kids that pay differences start to appear, because women take time out of the workforce or look for jobs with flexible hours, which hurts their earnings. Married women with kids, by contrast, usually vote Republican. So it’s politics at its root, but sometimes rather confused politics.
What are more urgent social issues the administration could and should be focusing on instead?
That would be a very long list. But the biggest pay problem we see is people who can’t find a job, and that includes men and women. The social costs of high and protracted unemployment are extremely high. We’ll be paying the price for the Great Recession a decade from now, because once people are unemployed for a long period their future earnings prospects are hurt. The more we can do to get Americans back on the job, the better.