Gender Pay Differences

"You're the first woman I've seen at one of these things that dresses like a woman--not like a woman thinks a man would dress if he was a woman."
--Jack Trainer (Working Girl)

Pandering to its voter base, the Obama administration has turned to a well-worn page in the Progressive playbook--the one claiming that women are victims of workplace discrimination because they are paid less than men. Such a tactic appeals particularly well to today's 'War On Women' crowd.

Thomas Sowell cites the work of Diana Furchtgott-Roth of the Manhattan Institute and Prof Claudia Goldin of Harvard as among the research that has demonstrated that when controlled for factors such as occupation, skills, education, hours of works, and years of consecutive work experience, income differences between men and women virtually disappear and in some cases favor women.

Univ of Michigan Prof Mark Perry summarized similar empirical research findings in a recent WSJ piece. He also discusses the issue with Tom Woods here.

Sowell suggests that in his own research on gender pay differences, actual hours worked is often the dominant factor in predicting pay levels--although accurately capturing hours worked statistics can be difficult in professions such as doctors and lawyers.

Beyond the empirical evidence, Progressives also have reasoning issues to overcome. If gender pay bias was real, then employers would be overpaying each time they hired a man to do work that a woman could do equally well. Why would employers be such fools with their own money?

Moreover, bigoted actions are penalized in the marketplace. Should a chauvinist operator underpay female workers relative to their productivity, then rivals can improve their economic position by hiring that female talent away at wages commensurate with worker productivity. Unbigoted rivals become more productive at the bigot's expense.

Because they weaken competitive position, discriminatory pay practices are unlikely to persist.