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Here are the facts behind that ’79 cent’ pay gap factoid

Congressional candidate Kathleen Matthews vows to fight for "pay equity" between men and women in the workplace. (Video: Kathleen Matthews)

“Why does Congress think it is okay that women get paid 20 percent less than a man for doing the same job?”

— Democratic congressional hopeful Kathleen Mathews, in campaign ad

“Today, the typical woman who works full-time earns 79 cents for every dollar that a typical man makes.”

— President Obama, remarks on Equal Pay Day, April 12, 2016

Equal Pay Day” is supposed to symbolize how far a woman must work into the next year to make as much as a man. Every April, Democrats hold events calling attention to a persistent wage gap between men and women, citing the latest number from the Census Bureau. (In 2012, 2013 and 2014, it was 77 cents; in 2015, it was 78 cents; and in 2016, it is now 79 cents.)

And every year since 2012, The Fact Checker has offered an explanation of this figure and why it is misleading. We have updated this account with some new research on the issue.

The Facts

Few experts dispute that there is a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make simple comparisons. That’s what’s so facile about repeatedly citing “79 cents.”

Democrats are relying on a simple calculation from the Census Bureau: a ratio of the difference between women’s median earnings and men’s median earnings. (The median is the middle value, with an equal number of full-time workers earning more and earning less.) That leaves a pay gap of 21 cents.

But the Labor Department’s Bureau of Labor Statistics shows that the gap is 17 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — 15 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.

Annual wage figures do not take into account the fact that teachers — many of whom are women — have a primary job that fills nine months out of the year.  The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories. (Still, we should note that the wage gap likely would increase if part-time workers were included in the statistics, as is done in Canada.)

Critics of the Census statistic have noted that the wage gap is affected by a number of factors, including that the average woman has less work experience than the average man and that more of the weeks worked by women are part-time rather than full-time.

Women also tend to leave the workforce for periods to raise children, seek jobs that may have more flexible hours but lower pay, and choose careers that tend to have lower pay. (BLS data show that women who have never married have virtually no wage gap; they earn nearly 94 cents for every dollar a man makes.)

At the same time, however, women now make up a majority of college graduates and have begun to narrow the gap in managerial expertise – which help explain why the pay gap has declined over time.

In 2011, economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.” They noted that women may prefer to accept jobs with lower wages but greater benefits (more flexible parental leave) so excluding such fringe benefits from the calculations will exaggerate the wage disparity.

For instance, a 2013 article in the Daily Beast, citing a Georgetown University survey on the economic value of different college majors, showed that nine of the 10 most remunerative majors (such as petroleum and aerospace engineering) were dominated by men, while nine of the 10 least remunerative majors (such as social work and early childhood education) were dominated by women.

In 2016, a comprehensive review conducted by Francine D. Blau and Lawrence M. Kahn of  Cornell University found that about 50 percent of the wage gap could be explained by a variety of factors largely in a woman’s control, such as choice of occupation and industry. The level of experience helped explain another 14 percent of the wage gap.

But Blau and Kahn said that 38 percent is “unexplained” and could be the result of discrimination. That adds up to almost an eight-cent differential between men and women, much less than the 21 cents suggested by the raw Census data.

“We conclude that many of the traditional explanations continue to have salience for understanding the gender wage gap and changes in the gap, although some factors have increased and others have decreased in importance,” the authors said. One reason that gender wage gap has narrowed in recent years, they said, is because women now exceed men in educational attainment and have greatly reduced the experience gap. At the same time, some of the highest-paying white-collar jobs are less forgiving of workers who desire more flexible hours, such a women with family responsibilities.

Gender discrimination also reveals itself in other ways. A report by the American Association of University Women found that, after accounting for a variety of factors, including college major and occupation, there was an unexplained 7-percent gap one year after graduation. The gap then grew to 12 percent after 10 years.

Another study, overseen by Paula England of New York University, used Census data from 1950 to 2000 to reveal that as certain occupations became dominated by women, wages began to fall.

Moreover, there is certainly a case to be made that women should be encouraged to enter lucrative fields now dominated by men. That might help mitigating another aspect of a pay gap — the long-term impact of even slightly lower wages. A 2004 study for the Institute for Women’s Policy Research, by Stephen J. Rose and Heidi I. Hartmann, calculated that across 15 years, prime-age women earned just 38 percent of what prime-age men earned – an apparent wage gap of 62 percent.

We do not mean to pick on Mathews, as she is simply echoing a long-stand talking point on behalf of a bill proposed by Democrats called the Paycheck Fairness Act. (Republicans have blocked it on the grounds it would simply result in more litigation, not solve problems. We explored that here.)

“Gender discrimination in pay is a real problem in this country,” said Ethan Susseles, Mathews’s campaign manager. “When women make just 79 cents for every dollar a man makes, it hurts families and it hurts our economy. Congress has had the opportunity to address this problem, but has chosen not to—specifically in refusing to advance and pass the Paycheck Fairness Act.

The Pinocchio Test

From a political perspective, the Census Bureau’s 79-cent figure is golden. Unless women stop getting married and having children, and start abandoning careers in childhood education for aerospace engineering, the gap in wages will almost certainly persist. Democrats thus can keep bringing it up every year.

But Democrats must begin to acknowledge that “79 cents” does not begin to capture what is actually happening in the workforce and society.

Indeed, in a town hall meeting in 2014, President Obama acknowledged some of this nuance: “What folks will tell you sometimes is you can’t really compare the situation, because a lot of women, by choice, end up working less when they have kids, decide to stay home, and so it’s not the same thing.” He went on to note that there are still examples of women getting paid less than men for “doing the exact same job.”

That’s certainly the case, but it does not excuse a broad-brush approach that relies so much on a single factoid. So it’s long past time for politicians to stop repeating the “79 cent” factoid without the proper context — especially if they are giving speeches or airing ads on Equal Pay Day.

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“Today, the typical woman who works full-time earns 79 cents for every dollar that a typical man makes.”
in remarks on Equal Pay Day
Tuesday, April 12, 2016