The ’77 Cents on the Dollar’ Myth About Women’s Pay

In The Wall Street Journal, Mark J. Perry and Andrew G. Biggs write that once education, marital status and occupations are considered, the ‘gender wage gap’ all but disappears.

An important problem with the “equal pay” canard is its simplistic comparison of female versus male wages; as if the sole determinant of compensation were gender. We live in a multivariate world where all sorts of factors jointly determine outcomes.  Economists June and David O’Neill understand this and find, after controlling for various wage determinants such as education, experience, industry, occupation, time spent as an active labor force participant, risk, and so forth (see “The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies”), that labor market discrimination is unlikely to account for more than 5% but may not be present at all.

But then the “equal pay” canard really has nothing to do with economics. It has everything to do with identity politics. Identity politics is a long-time, proven formula for political success. You divide people into groups based upon ethnicity, gender, sexual preference, income, and so forth and then promise to deliver group-specific benefits at the expense of the rest of society. Politicians get away with this because the public at large is innumerate and not able (or lack incentives) to grasp even the basic statistical concepts and principles (such as the idea that there are multiple determinants of wages other than gender differences).