• The Invisible Hand

The Real Gender Pay Gap

For once this article will look at the facts of this debate instead of getting lost in the rhetoric.

The gender pay gap is one of the biggest problems in our modern economy; or is it? Increasingly intellectuals and organisations are fighting back against the lack of statistical knowledge among feminists about this topic which politicians have accepted so willingly. There is zero evidence of discrimination creating any gender pay gap. Instead, in our society there are some inevitable factors in society and culture which will lead to such a gap.

There are a few reasons why it is understandable statistics neophytes have been unnervingly selective in choosing the data which they use. Most data does not distinguish between full-time and part-time work. Women dominate part-time work while men dominate full-time work, therefore, it is inevitable that men will earn more because if anybody works less they will receive less per year- obviously. This is no fault of the employers, instead it is a conscious decision taken by the women. For full-time workers, the gap is only 8.6% while women are actually paid 4.4% more on average for part-time work. They actually get paid more per hour for part time work according to the ONS, which suggests there is no evidence of discrimination for women, otherwise they would not be paid more.

Furthermore, feminists don’t understand the difference between mean and median pay. This highly inflated the pay gap to around 20% when according to the ONS it is still around 8.6%, much less significant. This is because a mean is much more affected by extreme values, such as what full-time men get compared to part-time men. Men also tend to occupy higher paid position such as pilots rather than air stewards. A mean does not account for people holding similar jobs, while a median better compares jobs like for like. This is the same mistake that the BBC makes with their commentary on their pay gap. You must compare jobs like-for like; Huw Edwards has a different level of experience and popularity to somebody like Alex Jones, therefore they are naturally paid less. The BBC actually only has a pay gap of 7.6% per hour worked.

Standard economic theory shows the logic of this. The pay gap between similar workers can’t apply in reality, because if it did every firm would just hire women and lower their costs of production by 20%. Would discrimination really be so great that all employers would not choose to reduce their costs of labour by 20%?

There is still a gap, but it much smaller and is not caused by sexism (ONS)

Mandatory company reporting on their gender gap is actually unfair on companies, which seems ironic given it is intended to improve fairness with gender. This is because it can destroy the reputation of companies which display no discrimination to women. For example, EasyJet has been accused of having a 45% pay gap, which in mean terms is correct. However, this only reflects the fact that more women tend to be stewardesses rather than pilots therefore on average women will earn less. Nearly 90% of the top bracket pay goes to men because they occupy higher paid jobs, mostly due to cultural reasons making pilots more popular among men. Whether it is merely stupidity on behalf of media outlets which report this in a context of gender discrimination or perhaps they have an agenda to cave in to feminist movements, it is simply wrong and misleading. It hurts these companies by damaging their reputation but it can also hurt women, because companies are actually encouraged to hire more men at the bottom of the pay scale to lower the gap.

Nevertheless there is an 8.6% gap so what causes this and does sexism play any part. Factors to consider are motherhood, cultural factors and part of it is women’s choice. None of these factors include sexism. First, women inevitably have to take more time off work due to motherhood. Women overwhelmingly choose maternity leave over paternity leave in 90% of cases. Only a few months off work can lead to a loss of career momentum as those men who keep work inevitably gain more experience. The effect of this in the data can be clearly seen as the pay gap get larger for women above 30, once many of them have had a child. Second, women in general tend to prefer more flexible working with shorter hours. Attitude surveys show that women prefer convenience in a job while men prefer status and career progression opportunities. Therefore, it is inevitable that women will favour more flexible, but less well paid work. Third, women are culturally not encouraged into certain roles such as pilot, engineers and even economists. These are often high earning careers which can make the gap worse, however, there is no way that women are discriminated within each sector and there is no evidence women receive less money for equal work. It has actually been illegal to pay women less than men for equal work since 1970 so it seems unlikely this practice is happening on a large scale.

When one thinks carefully about it seems silly that in this modern world there are people so sexist that they will refuse to pay women 20% less than men. Surely at that point business instincts take over and businesses hire tons of women and save tons of money. Challenge these assertions in the media and be fortunate that there is one less problem in our society to worry about. Women should not insult themselves by suggesting that they can't earn a higher pay and need extra support to reach 'the level' of men.

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