The idea in a nutshell

  • There is a gender pay gap but it’s nothing like the 25%-30% that is claimed in the media (if you are really trying to understand how much each gender gets paid).
  • It is typically very small – of the order of 5% or less.
  • That is, when you compare the earnings of men and women who do the same job, the difference in their pay is between 1 and 5%.
  • This is called the adjusted rate – the fairest measure to use in comparisons, payment per hour for identical work.
  • There are examples of both men and women being systematically underpaid in some industries. Of course, there are situations in which Gender Pay Gaps do exist (for example, within a company) and those should be addressed where they are found.
  • However, in my view, talking about the Gender Pay Gap in purely economic terms misses the point.
  • Work is part of a life which has non-economic considerations: One goal in life, for many, is the pursuit of happiness and staying around to enjoy it. Since women lead longer, happier lives, focusing on a tiny, real wage gap ignores the broader truth.

The gender Pay Gap exists, but it’s smaller than most people think

The media pushes a pretty consistent message concerning the gender pay gap. In my view, what they present is, misleading.

Daily report press

To be fair to the press, the information they are presented with, from which they generate these headlines, is this sort of thing. It’s not hard to see why the press report it the way they do.

Causes of the gender pay gap – WGEA
Pay gap information is often presented this way. It’s not hard to see why the press get confused. Source.

The problem is those stats about the Gender Pay Gap are misleading. The stats compare the average take home pay of women across the economy, alongside the average pay of men. They ignore the fact that men and women do different jobs and that men typically work longer hours.

When you compare the hourly wage of a man and a woman doing the same job, the gap shrinks to almost nothing.

The adjusted wage gap in the UK, France and Germany.
The economist estimates that, in the UK, the (adjusted) gender pay gap is 0.8%. Source.

This is not a controversial standpoint. I am not the first to say it.

The Economist Discusses The Non Existent Gender Pay Gap

And the American Enterprise Institute

Other reasons why it’s perfectly clear that there is no gap (when figures are ‘adjusted’):

  • Who earns money is not who spends it:
    Most couples split the bills in a relationship and the higher income earner often pays a higher proportion of the bills than the lower or non earner. Just because one person earns the money does not mean they decide how to spend it. Quite the contrary, in fact – women are the decision makers in 83% of consumer spending.
  • By law, women have the right to equal pay for equal work already:
    In every Western country (not every country – notably, Saudi Arabia) there are existing laws – which have been around for 30 years – that allow people to sue if they are not being paid equally for the same work. Companies that underpay women by 25% are breaking the law 25% and are taken to court.
  • If women were this much cheaper, employers would only hire them:
    I run my own small business with a roughly even split of female/male employees. I can tell you right now, if women were 25% cheaper for the same work, I would ONLY hire women. It would give me a competitive advantage over my “sexist” competitors!

And anyway, discussion of the Gender Wage Gap misses the point

Money is only one part of life. There are other things that people value. The ability, for example, to determine your own course in life – agency; the right to a long and healthy life; the right to the pursuit of happiness.

Assume we made some change to the world eliminating all Gender Pay Gaps of any sort (even an unadjusted one). To ensure they earn the same on average, women are now put in to jobs (presumably by the government) which are identical to men. As a result, on average, across the economy, they now earn the same unadjusted average wage. In this example, those women have gained some money but they have lost out in other areas.

  • They have lost their agency:
    Women simply choose other careers – the most important point. It has been pointed out that, in countries known for having made the most progress combating gender stereotypes, the gaps in the occupations chosen by women is larger than in other countries. It appears that, when left to their own devices, women systematically choose different careers than men. Jordan Peterson has some views.
  • They have lost the ‘non economic’ aspects of the job:
    Some workers perform tasks which receive ‘non financial’ benefits – i.e., a ‘meaningful’ job. Firemen (and women), police officers, teachers, nurses and other caregivers, etc. all contribute to society and, in my view at least, receive the gratitude and respect of the community. The benefits (utility) of that are non-trivial. In one piece of Harvard University research, the non financial aspects of a job were valued at up to 23% of the total income and 9 out of 10 people would accept lower pay for more meaningful work. In my view, women are people. Many women would have to leave these jobs and move to areas that pay more but offer fewer ‘non-economic’ benefits.
  • They may well be less happy:
    Despite the gender pay gap, women in the West are generally happier than men, over the entirety of their life. Rearranging their lives to center more around work could negatively affect this. If work is considered an important part of her life, by the woman herself, she may be a lot less happy when forced to work in a way she did not choose herself.

Source. UK Office Of National Statistics

Interestingly, a similar piece of research from Princeton highlights that women are becoming less happy over time – and attributed part of the reason to, “Women’s achievements in recent decades. With more prospects outside of the home, many women are experiencing difficulty balancing a career and a family, which saps happiness.”

Women live longer, happier lives and earn the same as men

In summary, the research appears to show that with the career decisions they are making at the moment, women are earning the same as men for the same work. In addition, they are also leading longer, happier lives, performing more meaningful roles than men, and are in jobs they think matter – such as teachers and nurses. To the degree women have become more like men in the workplace, some research suggests that it’s made them less happy.

I actually don’t think the subject has to be broken down on grounds of gender at all. People who do the same job (and, I assume, achieve the same results) should, on average, be paid the same, irrespective of any other factor – including gender.

However, if one individual (of either gender) chooses to trade some of their income for a job which will give their life more meaning, or fits their lifestyle or interests or just on a whim, they should, in my view, be allowed to pursue that. If their decision creates an (unadjusted) pay gap, but increases happiness in some people through their career’s contributions to their community, I can’t for the life of me see the problem with that.