It’s not a gender ‘pay gap’, it’s an earnings difference – and it’s not an issue

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Editor: This definitive rebuttal the so-called “gender pay gap” myth was originally published on July 17, 2016, and we intend to encore it every time the so-called “gender pay gap” myth hits the headlines, as it did this week.

By Bob Page

In our great nation of Australia, men earn – on average – more money than women.

e837b1062ef3093ecd0b470de7444e90fe76e6d311b6124693f0c1_640_Woman-workThis is often incorrectly referred to as a gender ‘pay gap’ by almost everybody who talks about it. No doubt you will have heard that women are supposedly paid less than men for the same work – even though that is illegal – and that this is due to widespread discrimination against female employees. However, the actual ‘gap’ is not in pay, but earnings; it’s also not a gap that needs to be closed, but a natural difference that need not change at all.

The 17.3% difference.

The average Australian man earns $1602.80 a week, while the average Australian woman earns $1325.10. This 17.3% difference in earnings (not pay) is mostly because of the different fields in which men and women work.

For example, men are more likely to do dangerous jobs (95% of all workplace fatalities are men), and as a consequence, are paid more than people with safer jobs. Women predominantly occupy lower-paying fields like healthcare and office administration. These fields are not low paid because women occupy them, but because the supply of workers for them is relatively high due to the few barriers to entry.

It is argued that women are “discouraged” from entering particular fields of work, simply for being female. But women have every opportunity to become a highly-paid doctor or investment banker, as evidenced by the existence of female doctors and investment bankers. In fact, most people – regardless of gender – are discouraged from becoming doctors and investment bankers because the paths to these professions demand many years of hard work and study. This would actually make women prime candidates for these positions, as females perform better academically than males in all subjects.

But a better explanation of the under-representation of females in higher paid professions is that generally, women desire these positions less than men. They may prefer to take some time off work to raise children, which is usually a hindrance to working a 60-hour week in senior management. Or it may be that these stressful roles just don’t appeal to women. Surveys say that the happiest women are full-time mums, and that seems to me the most reasonable thing in the world: kids are heaps of fun!

These facts are generalisations, of course; in some areas women earn more on average than men (but let’s not make a big thing about it). We have to speak in generalisations, though, because the ‘pay gap’ claim itself is one.

The 3.9% difference.

Apart from the choices women make, there are further explanations for the gender earnings difference. Research organisation Glassdoor concedes that much of the 17.3% difference poses no problem and brings the figure down to 3.9%. Even though this number measures men and women with the same job title, much of it can be attributed to the different amount of hours men and women work per week. As far back as the statistics go, men have worked a greater average number of hours per week than women. More hours mean more pay, at least for jobs paid by the hour.

For jobs with salary packages, it is completely legitimate for a higher salary to be offered to an applicant with more experience and qualifications, even for the same job title. If a male applicant has a more impressive resume than a female applicant who has taken time out of the workforce for maternity leave, for example, the male applicant might be able to negotiate a larger salary.

The 1.5% difference.

Adjusted again for these factors, only a 1.5% difference is left. This is Glassdoor’s “unexplained” proportion of the earnings difference. A quick internet search can reveal a number of individual cases of pay discrimination, which are played up by activists; in reality most are ultimately resolved by legal intervention. Neither do these cases have exclusively female victims.

Adjusted again for resolved cases of discrimination, the difference is so small that it could easily be attributed to statistical error. Using different studies could produce figures showing men earning a percentage point less than women.

There’s no problem.

In Australia, the Workplace Gender Equality Act 2012 mandates that men and women are to be paid the same amount for the same work. It is clearly not mandated that they earn the same amount, because they essentially choose not to.

This is my advice to activists who decry the gender ‘pay gap’: if you’re unhappy with your pay, give Fair Work a ring. If you’re unhappy with your earnings, become an engineer.

  • Kevin V Russell

    Utter nonsense. You are creating a totally false dichotomy. Pay and earnings are the very same thing. Thank you

    • Peter Cresswell

      Pay or pay rate is how much you are paid for each hour worked. earnings are what you take home at the end of the pay period. They are not the same thing at all.

      • Bob Page

        Hi Kevin,
        Peter is correct. “Pay” and “earnings” are two distinct terms used by economists in studies and surveys of the labour market.
        To give you an example, say two plumbers are each paid $40/hr. Plumber 1 works 38 hours per week, while Plumber 2 works 45 hours per week. Both plumbers are paid at the same rate, but Plumber 2 earns more because he works more hours.
        Cheers.

    • Ben

      You clearly did not comprehend the rather simple point being made in the article. The author took care to distinguish between pay and earnings. Whether you accept those definitions for your own purposes, or not, is besides the point. The argument he made, relied on the two different definitions as he constructed them. And it is a very valid argument, and is one which cannot be dismissed by arguing over whether or not you accept the definitions used. If you want to rebut the arguments made, try making substantive arguments, rather than arguments as to form. Your failure to do so suggests you are not able to.

      • Patriarchaeologist

        Forgive Kevin, his feminist masters keep him on a VERY tight leash. It tends to cut off the oxygen supply to his brain.

    • WhoTheHell_Cares

      Yes, your comment is utter nonsense.

  • Kevin V Russell

    Oh and fyi all female professionals whether they are accountants lawyers doctors engineers or anything else are routinely paid less for the same work. You would know this if you bothered to do the work.

    • AP

      So, the HR departments at your current and former places of employment have seperate position descriptions and salaries for men and women, for the same role? You know that’s illegal, don’t you? And if that’s not the case, then your assertion is b/s. I’ve hired plenty of people and I have never paid a woman a lower salary just because she is a woman. The salary goes with the position.

    • Peter Cresswell

      In my experience over many years in professional positions, very few are willing to share details of their salary. The exceptions are Public Servants and Academics, both heavily unionised occupations and subject by those unions to compulsory disclosure.

    • Ben

      That is not correct. The author used independent statistics to demonstrate that men work work more, which explains higher earnings. It is unclear why you did not address this part of the article. Rather, you have simply made an unsupported broad generalisation without offering any evidence to reinforce your argument. Again, your failure to do so simply suggests that you have no real substantive argument in response.

      Let me make it easy for you. You specify doctors in your response. Doctors, ‘if you bothered to do the work’ are usually not employees, but consultants who set their own rates of ‘pay’. They ‘earn’ less because they either set lower rates of pay for themselves or do less work. How would you respond to this? For example, would you agree that the female doctors could simply increase their rates, or work more. If not, could you please explain what effect, in statistical terms, these factors have. Or is it your argument that working less and setting lower rates for themselves is not related to the fact women doctors receive less pay. If that is your position, then you clearly do not understand simple economics in which case your argument will be dismissed out of hand. Again, that’s the reason I’m guessing that you have failed to make any proper arguments.

    • Malcolm Smith

      Which makes me wonder why they employ men at all, if they can get a woman to do the same job for less.

      • Olaf Koenders

        Reminds me of a place I used to work, originally staffed by mainly white caucasians. After a part-Samoan became production manager, in a few short years the place is literally crawling with guess what – brown people. Probably not because they’ll work for less, but a preference for his own kind.

    • Bob Page

      Hi Kevin,

      The average female doctor earns less than the average male doctor. This would be mostly due to the different average hours they work:

      “Male doctors were much more likely to work long hours, with 17% of male GPs and a quarter (25%) of male specialists working 60 hours or more prior to the 2011 Census week. In comparison, 9% of female GPs and 12% of female specialists worked more than 60 hours.”

      Source: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20April+2013

      If you have a particular study that provides evidence for your claim, please post it.

      Cheers.

    • Patriarchaeologist

      You know this isn’t TheMarySue or The Guardian, right? People won’t blindly agree with your false echo chamber logic.

  • Peter Cresswell

    In all of the companies that I have worked in as a staff member, rather than hourly paid, each job description tended to be rather generic. In my case, it was at times Industrial Engineer, Planning Engineer, Planning Superintendent and more recently IT Consultant (Engineering Systems). Within those positions, there have always been some who were paid more than others for the same hours of work. This was in part a function of experience, but also of capability and performance. The periodic performance appraisal was the means, by which a person of ability rose up the pay scale, often at the expense of those with less ability or commitment. I saw many women rise up the scales and the promotion ladder faster than men, but in every case it was on merit, rather than the result of filling a quota. I have worked with and for male and female managers. and as a mere male, I can say that the women were the more deserving of their positions.

  • Bikinis not Burkas

    I can remember when my oldest sister was an Industrial Chemist for a large steel company in Newcastle, the males were classed as Industrial Chemists and the females of the same qualifications were classed as Laboratory assistants and quess what?

    • AP

      That must have been a long time ago. How old are you exactly?

      • Bikinis not Burkas

        58

    • Sasha

      ICI (now owned by AkzoNobel) manufactured sulphur-based chemicals, which women are stongly advised not to work with if pregnant or an age where pregnancy is possible.

      During the 1960s and 70s around 300 (all male) employers were regularly exposed to these, and other chemicals, and contracted conditions such as Asbestosis.

      Much of the financial compensation was paid out to the men shortly before death or afterwards to their widows.

      So in the great scheme of things women either benefited from a pay-out, or avoided a lingering and agonising death, so winners of a kind either-way.

  • Dennis

    I will start giving a shit about women’s pay when men start getting equal rights in family courts.

    • Olaf Koenders

      Very good point. Been there, done that.

  • Malcolm Smith

    There is a further matter which never gets mentioned, but which I brought up in my own blog:
    http://malcolmsmiscellany.blogspot.com.au/2015/07/what-does-woman-want-with-career-anyway.html

    Where do these people get the idea that men and women live separate lives? The tend to live together and share expenses. As one Australian humourist pointed out, where money is concerned, women have the better deal. Sure, we all know that men earn more. But we also know that the real fun of money lies not in working hard to earn it, but in spending it, and there women do just as well as men.
    Occasionally two high fliers tie the knot, then continue the way they were, after first handing over the child(ren) to the care of a nanny who earns less in a week than the mother makes in a day, perhaps using one of those companies who will fly her breast milk home when the mother is on a business trip. (There really are such businesses.) But that’s not how the average Joe and Josephine choose to live. On the planet most of us inhabit, the better a husband is as a provider, the less likely is his wife to work full time, or at all. And, as a recent study showed, once the first baby is born both parents become more traditional in their views on sex roles.
    We often hear it said that women are at a disadvantage in developing superannuation capital because of their absences from work due to child rearing. Wrong! Couples with children are at a disadvantage compared to those who are childless, and that is how the problem should be defined. It is not as if Darby and Joan live separate lives once they retire.

  • Jim

    If women want equal pay, they need to do equal work. Go to any university and notice who is studying what. Men are studying engineering, accounting, biochemistry, and management. Women are studying “gender studies” (whatever that is), English, and literature. Then they complain about the pay gap.

  • Larry

    In 1975 Australian universities graduated more women than me. They have done so every year since. Given that the average age of starting university is 18, and a medical degree takes six years, those medical graduates would have been 24. 41 years later they are coming up on the big 65.

    So, we should have more women doctors than male doctors? One would think so. Instead women doctors make up about 30% of all working doctors. And those women doctors, on average, only work 80% of the hours of male doctors. So in fact, after 40+ years of training and graduating women doctors at a higher rate than men doctors, they only account for just under 25% of all hours worked by doctors across the nation.

  • Olaf Koenders

    Reminds me of the inaccuracies in the car insurance business, where statistically men are worse drivers because they have more accidents. In reality, men’s jobs keep them on the road more often and women tend to drive a car insured under hubby. However, I doubt men are all to blame when it comes to the scrapes on service station pump bollards and benders in shopping centre car parks.

  • Deano

    Since 1972 it has been illegal in Australia to calculate pay rates based on gender. Easily proved and prosecuted when it occurs. And even ‘our ABC’ had to admit that recently.

  • Chris

    Good reading. Three female academics from Harvard drew the same conclusion:
    Gino F, Wilmuth C and Brooks A (2015), ‘Compared to men, women view professional
    advancement as equally attainable, but less desirable’, PNAS, vol.112(40), p.12354–12359.
    http://www.pnas.org/content/112/40/12354.full

  • Bucky Redux

    I usually only concern myself with the “box gap” where these matters are concerned.

  • Jai_Normosone

    Except for tradies…. For some reason, a great number of these bludgers are of the opinion that they can operate a mobile phone and a ute at the same time. Being able to drive a nail doesn’t qualify someone to drive a ute.

  • Jai_Normosone

    His what?

  • Jai_Normosone

    Sounds like Kevin is oblivious to the simple difference between pay and earnings.
    The mark of someone who has never done a solid day of work in their life.