mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Gender Matters
Study: Career Choices Driving Wage Gap

It’s a statistic that’s tossed around with abandon by Democratic politicians: “A woman makes 77 cents for every dollar a man makes.” The clear implication is that this disparity is entirely nefarious, the result of Mad Men-style workplace sexism. But as a new NBER study shows, it’s not that simple—at least, not anymore. In fact, the gender pay gap can increasingly be explained by the differences in men and women’s voluntary career choices. Brookings summarizes the NBER results on its blog:

Francine Blau and Lawrence Kahn analyzed data from the Panel Study of Income Dynamics to investigate the gender pay gap in 1980 and 2010. In 1980, the gap was shrouded in statistical mystery, with almost half accounted for by the “unexplained residual.” Women offered an explanation for the “unexplained”: straightforward discrimination. By 2010, however, the “unexplained” element had shrunk. Much of the gap can now be explained by observable differences between men and women—in particular, their occupation and the industries they work in.

To be sure, the NBER study found that a significant portion—almost 40 percent—of the gender wage gap remains “unexplained.” And though other experts have found this portion to be smaller, and though the “unexplained” category need not indicate straightforward discrimination—there is evidence women are less likely to ask employers for raises, for example—sexism, conscious or unconscious, is likely in the mix.

But the study’s most striking finding is that the proportion of the gap attributable to entirely legitimate factors, like choice of occupation and industry, has risen dramatically over the last generation. Many feminists would conclude that women’s tendency to choose lower-paying industries, and lower paying careers within those industries, is itself the result of sexist cultural norms. Not only has this claim not been substantiated, it’s hard to see how it could be: Women who go to medical school are more likely to become primary care doctors than surgeons, and working class women are more likely to work in office administration than in natural resource extraction. Is this because of subtle cultural sexism, or because women, on average, place a higher premium on flexibility and are more averse to physical risk?

Regardless of whether you think that gender disparities in career choice are driven by the patriarchy or by healthy personal preferences, the fact is that such choices can account for more and more of the pay gap. And that means that the types of workplace anti-discrimination and liability measures that some progressives are pushing for to combat it, both at the federal and state level, will probably deliver diminishing returns.

Features Icon
Features
show comments
  • FriendlyGoat

    Feminists would do much better to soft-pedal the talk about a male-female wage gap and concentrate their efforts on the high-low wage gap. Here is an article from Forbes yesterday which is illustrative of a 21st-century problem:

    http://www.forbes.com/sites/eriksherman/2016/03/08/wall-street-bonuses-are-more-than-all-minimum-wage-worker-earnings/#6775aa255d1a

    If feminists can help solve THIS, the gender factor will take care of itself.

    • Beauceron

      I…I…am in full agreement with something FriendlyGoat posted.

      I need to go lie down for a bit.

      • FriendlyGoat

        Sorry to hear you’re feeling queasy, but I’ll hope and bet you’ll feel better in the morning.

    • CapitalHawk

      Completely agree. The feminism of old was focused on eliminating discrimination against women and open access to allow them to enter fields that had previously been prohibited to them. More recently feminism seems to have morphed into a believe that women have no agency and even more, they are essentially nothing more than children, because they essentially just do what men tell them to do. For example, if a woman takes a job that pays less than a man it is not because she wants flexibility or likes working in that field, it is because the “patriarchy” programmed her to want the job. This is idiocy.

      • FriendlyGoat

        Well, I love to hear agreement. (But, ah, what the heck. I think I’ll ruin it.)

        I don’t want the feminists to shut up. I want them to rise up and have an absolute fit about the wealth divide. I want them to just focus it on high-low, not male-female. I want them to draw their sisters who don’t even call themselves “feminists”—-AND their brothers—-into it.

        • CapitalHawk

          Well, we agree again. BUT (you knew that was coming, right?) I think that, as with Islam, you are asking feminists to become non-feminists if they follow your wishes. I’d like them to follow your advice, I just don’t think they will because that is not what they are about anymore. The feminism of the 60s and 70s and 80s that was interested in opening access to women seems to be gone and is now replaced with a cadre of fairly explicitly anti-male feminists. As a man, I object.

          • FriendlyGoat

            Well, as a man, I object to being presumed a Neanderthal too. But there are hopeful voices in feminism asking for change and improvement from what you are talking about. Here is a piece on that subject appearing just a couple of days ago, by famous singer Alanis Morissette:

            http://time.com/4215897/alanis-morissette-feminism/

  • Blackbeard

    The point of the “wage gap” is not to actually achieve pay parity for men and women. The point is to convince women that they are suffering from discrimination and that only Democrats can protect them hence they should vote Democratic. To actually “solve” the problem would ruin the whole scam.

  • Evan Seitchik

    It’s mind boggling to me that TAI can write “there is evidence women are less likely to ask employers for raises, for example” as an example of how pay differences are not driven by sexism. Why is it, exactly, that women are less likely to ask for a raise if not because of a work environment that is more hostile to them than to men? Perhaps we are lead to believe that it’s a result of their soft, feminine nature instead.

    The same thinking appears again in the discussion of women’s career choices. Women have incentives to choose flexible options since studies show they are expected to do more than half of the labor of running the household even when they make more money than their partners. They face enormous obstacles even from their own partners if they want to prioritize their careers over child rearing, again even if they are the primary wage earners.

    In my mind, we can either conclude some sexist nonsense about women’s supposedly innate desire to conform to traditional gender roles, or we can accept that sexism plays a large part in the “wage gap,” if often indirectly. I’m afraid I don’t see a “via media” here.

    • Rodney

      Have you ever read any works by Deborah Tannen, a sociolinguist who studies and writes about communication issues? If not, you ought to. Some of their reticence to ask for raises relates to social norms taught and enforced by girls and women as they grow up.

      • FriendlyGoat

        I wonder when we’ll see some works by a man—-for men—-to advise us that any man with the sensitivity of even an armadillo is supposed to make up for this. How? By volunteering the raise, the position, the genuine encouragement when the work is good—-without being asked. A man who waits for the woman to ask for a raise is a game-playing bum.

        It’s fairly simple for any of us to ask ourselves how we’d want our grandma, mom, sister, wife or girlfriend treated in a workplace.

        • CapitalHawk

          FG – I think this is related to your high-low point above. ALL bosses (male and female) will pay their employees as little as they can get away with. This is not a male-female thing, it is a boss-employee thing.

          • FriendlyGoat

            Yes, and no. First of all. I’m of the opinion that the lower the taxes on the business’s net income, the more your statement is true. And the higher the taxes on the business’s net income, the less the pressure to hold people costs down (because most good owners would rather spend on their people than spend on income taxes).

            Secondly, there are differences between the atmospheres of GOOD closely-held companies, where the real owners are the on-site management, and larger public outfits where nobody ever meets the president and everything is run by budgets and regional managers.
            I was privileged to work in one of the former for the first half of my adult life and to be a middle-manager under closely-held owners.

            OF COURSE the owners understood the necessity of keeping the business competitive and the norm of paying in the range of what other local employers paid—-within the local “market”. But we didn’t have to beg for raises—-the whole company was adjusted upward every six months by small amounts done on a percentage reported by a trade association of what other employers in our industry were doing. None of the people I supervised (mostly women) ever asked for a raise or needed to. The owners were not skin-flints and neither were we middle managers. BTW, the time of which I speak fondly was the 1970’s when there were no S-Corps, corporate income tax rates were high, and dividend money paid out to owners was also highly taxed—AGAIN. Oddly enough, those owners never declared themselves dividends, but they did do semi-annual raises as regular as a clock.

          • CapitalHawk

            They had to do semi-annual raised because inflation was out of control. Also, your owners probably didn’t receive a penny in dividends, they just paid themselves a big bonus at the end of the year. There are still C-Corporations out there that are owned by the one or two people who run the business and that is what they do – pay themselves a big salary and a big annual bonus. Magically, the C-Corporation doesn’t make a penny but the owners do. So, with respect to those people, the corporate income tax rate could be 99% and it wouldn’t matter because the entirety of the corporation’s income is transformed into W-2 income for the owners.

          • FriendlyGoat

            Well, because it so happened that my job at that place was as their inside accountant, I was thoroughly familiar with what they did. The owners were working officers and paid themselves quite modest salaries compared with what other similarly-situated people might have done. They lived well, but not ostentatiously at all. They had a lot of pride in employing people and eventually had more than 1,000 of them

            Another interesting tax feature of those days (in addition to a 48% federal income tax rate, plus personal rates which, for them, might have run around 50% on substantial dividends if they had paid any) was the Accumulated Earnings Tax. That was a contingent tax of 50%, as I recall, on earnings simply retained in cash for no particular actual need in the corporation. It was designed to force corporations to either spend their money on expansion or pay taxable dividends.
            This was another reason they invested so much in buildings and equipment. Because we were blessed with adequate orders from new and existing customers (manufacturing), the president used to have a frequent expression: “There’s no place to stop,”

          • CapitalHawk

            The Accumulated Earnings Tax still exists. The rate is now 20%, but it still exists.

            You are an accountant, so you know this, but I think you are making a mistake by focusing on the top line tax rate and thinking that it somehow is what drives the underlying tax owed. It doesn’t. If I offer a tax rate of 15% and a tax rate of 50% which is better? There’s no way to know until you understand what deductions are permitted and how, if at all, those deductions are limited. I need to know both the tax rate and how the taxable income to which that rate is applied before I understand which will result in a higher or lower tax.

            I think it is much more informative to look at what the overall tax collections by the federal government were, as a percentage of GDP. In 1970, individual income taxes were 8.6% of GDP, corporate income tax was 3.1% of GDP and social insurance taxes (Social Security, Medicare, etc.) were 4.2% of GDP. Overall tax receipts in 1970 were 18.4% of GDP. In 1979, the percentages were individual = 8.5%, corporate =2.6%, social insurance = 5.4% and overall was 18.0% of GDP (the reason for the drop in the overall percentage collected was due to a large drop in those 9 years in excise taxes). In 2014 (the most recent I could find), the percentages were individual = 8.1%, corporate = 1.9%, social insurance = 5.9% and overall = 17.5%. Between 1979 and 2014 the high and low tax collection years coincide perfectly with the ups and downs of the overall economy, with 2000 being the highest amount of taxes collected at 20.0% of GDP and 2009 and 2010 being tied for the lowest at 14.6% of GDP.

          • FriendlyGoat

            I am no longer “an accountant”, and would be rusty on many of the exact intricacies of today’s tax laws as they might affect a variety of companies. For instance, accelerated depreciation was constantly changing when I was doing that work more than 20 years ago and has changed a lot since as well. I got a B.S. in accounting, worked inside two companies as such for 25 years (so was never a CPA), then operated a very small independent business that was not accounting, then retired. So, I’m not an expert—-but more “familiar” with business finances than most people who never touch on any of it.

            You are trying to make the case that overall taxation of business just does not matter much. But while a lot of people are making that case, the “divide” between those with astronomical incomes and astronomical accumulated wealth vs. the economic possibilities of high-school-educated people with good work habits is widening catastrophically. I believe that tax cuts make it worse and have been doing so for a long time. We’re told they “create jobs”, but if that were true, we’d have been awash in job creation after 2001 and 2003 and right into the present. Instead, we can barely climb out of a ditch with unprecedented fiscal and monetary stimulus applied to the point of insanity—-zero interest rates with no way to take even baby steps toward normalization.

            But, Wall Street bonuses are as good as ever, pro sports are raking it in better than ever, record numbers are on SNAP (food stamps), Uber is considered a “viable” career option (for lack of anything more stable), young people have to be on Mommy and Daddy’s health insurance for up to eight years after they are supposed to be emancipating.
            This stuff does not make any sense. Everyone from a Trump supporter to a Sanders supporter seems to “know”. The main question is whether we invite ordinary folks who are not so familiar to actually think about what’s going on—-or follow Donald off the cliff.

    • CapitalHawk

      So, is it your belief that men and women are identical, but just happen to have a couple of different body parts? Or, do you think it possible that the brains of men and women, which are constantly bathed in wildly different concoctions of hormones, might work just a bit differently? If you concede that men and women think differently, why do you think it impossible that they might behave differently?

    • CapitalHawk

      Why do you put women’s voluntary choices in the category of “sexism” and not in the category of “a woman exercised her agency and made a choice of her own free will to give up one thing in order to gain more of another thing”? Why do you view a woman choosing to make less money at a job in order to have more time to work in her home as a bad thing? Perhaps you dislike laundry, cleaning house, taking care of children, etc., but that does not mean the average woman does. In fact it is possible that the average woman might find unpaid work in her home to be much more rewarding than working at her paid job. Many surveys have shown that women, especially women with children in the home, would prefer to work part time and this naturally results in her making less money. If a woman chooses to do this, who are you to say that is a bad thing?

  • Beauceron

    The studies that show the “77 cents” meme is false are too numerous to count,

    They don’t matter. The powers pushing that meme, from the Democratic party, to the media complex, to the academe, have so much invested in it that truth no longer matters, if it ever did to them.

  • Frank Natoli

    If, like most Democrats, Liberals, Progressives, Socialists and Marxists, you believe that there is no justification for inequality, none whatsoever, then choosing primary care versus surgery, or office administration versus resource extraction, is same-old, same-old irrelevant.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service