The Wage Gap Is Real, and It's Costing Women $500,000

A new study sets out to debunk every myth about why women workers are paid less than men.

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Oct 25 2016, 7:00pm

Photo by Shikhar Bhattarai via Stocksy

When economist Elise Gould and a colleague published a report on the wage gap back in July—"'Women's work' and the gender pay gap"—the obligatory trolls rose up from the comment section. "We got comments back—and I'm not saying they're high-level comments—sort of denying that it actually exists," Gould told me over the phone.

It's not just random misogynistic trolls who find objections with wage gap statistics, either. It's common party line from conservatives and libertarians who just don't think there needs to be any intervention in the way employers conduct their businesses—and from Republicans in Congress continue who to block the Paycheck Fairness Act. These critics commonly say that women are paid around 80 cents for every dollar men make not because of gender discrimination but because of choice: Women choose to work in lower paying fields, women choose not to ask for raises, and women choose to work shorter hours than men.

Read more: Does the Tech Industry Even Deserve Women?

So Gould set out to debunk these claims once and for all, in a comprehensive paper published by the Economic Policy Institute: "What is the gender pay gap and is it real?" Think of it as a handy primer you can send to any fools in your life.

One of the main objections to the wage gap is in the way studies measure it. The US Census, for example, looks at the pay disparity between full-time workers only, and the results released last month put women's earnings at 80 percent of men's. Contrarians tend to point out that this gauge doesn't take into account that "full-time" isn't really defined beyond "more than 35 hours." The fact that men might work longer hours than deadbeat women who ditch work early to care for their kids could account for the pay difference, they say. (They really do say this.)

To cut this objection off before it starts, Gould analyzed data from the Bureau of Labor Statistics on wages based on earnings per hour and included part-time workers. "With pay-per-hour you can compare how much a man is paid compared to a woman, without the added penalty of women working fewer hours in the year," she said. In other words, it allows for a fair assessment of whether woman are getting equal pay for equal work.

And the data reveal that they're not, both within their occupation and the labor market in general. Because of the gender wage gap, women workers lose at least $530,000 over the course of their lifetime. While significant gains were made to reduce the wage gap between 1979 and 1990, since then it has remained stubbornly persistent. In 1990 the wage gap was at 75 percent and, according to Gould's analysis, women now earn 83 cents for every dollar a man earns. That's not much progress. And, somewhat depressingly, the study notes that 30 percent of the improvements in the wage gap can be attributed to a decline in men's wages.

There's many reasons why the wage gap still persists, but one thing is clear: It's not because of women's choices. In fact, Gould is careful to note that these very "choices" can be the product of gender bias. The burden of childcare still falls primarily on women, so women face a "motherhood penalty" after they have children: They're forced to work less and take more time off. In contrast, Gould's study shows that men actually work more after they become fathers. Occupations where women dominate are systematically lower-paid and, bafflingly, "evidence shows that as women's participation in a particular occupation rises, pay within that occupation falls."

On top of that, the data suggest that women of color face racial bias as well. Black women and Hispanic women make 65.3 percent and 57.6 percent of white men's wages, respectively. "Clearly, women of color are facing an additional penalty," Gould said.

"You can't explain away the pay gap by saying it wouldn't exist if you control for occupation, industry, or education. If you control for all these, there is still a gap, and that gap seems like it's the most narrow form of discrimination," Gould said. Just one example she cited is the fact that, across educational levels, women earn less than men with the same degree. "You really need policy and changing work culture to close the wage gap."

There are a dizzying number of factors that converge on the pay inequality. This means that policy changes would need to impact women across the income spectrum in different ways. Minimum wage laws, for example, insure that there is greater parity between men and women who work low-wage jobs. "You want to keep that wage floor in a place that has meaningful bite to close that wage gap at the bottom [of the income distribution]," Gould said. "An increase in the minimum wage would disproportionately help workers who are women of color because they have a disproportionate share of low-wage jobs." For middle-income jobs, union participation has been shown to decrease the wage gap, and at the highest percentile, where the gap between men and women's salaries is the largest, flexible workplace hours could benefit women.

But to start, it helps if we all acknowledge the pay gap is real.