The Gender Discrimination Fiction: Graduate School Edition

I’m taking graduate classes in economics at a university in the bay area in California. My Labor Economics professor waived our homework assignment for the week, and asked us to review this WSJ article in preparation for a class discussion, which blithely asks “what’s holding women back in the workplace?” This is a vague allusion to the so-called ‘wage gap’ in the labor market, where evil employers discriminate against women by paying them less than men. Below, you’ll find the preemptive comment I left on the online forum for the course.

Since the homework assignment for the week has been waived, I figured a little discussion here online might be timely.

I could choose from many sources to link to here, but this single one does a fairly comprehensive job of including all of the important points that illustrate that there is no such thing as a pay gap between men and women, all other things held equal. Do employers factor in other considerations–beside gender per se–that tend to affect the wage paid to people who happen to be male and to people who happen to be female? Sure.

That laundry list of factors that employers consider when paying a wage include, but are not limited to:

• the relative physicality required for the job
• hours worked per week, per year for a given profession (part time versus full time)
• career goals of the worker
• the physical danger-risk associated with a job
• the educational background of the worker
• the stress level of the job, and the stress-resilience of the worker rates of obsolescence in a given industry -marital status and martial history

Not so shockingly, women happen to:

• work in jobs that are less physically demanding than men (think construction, garbage collection, etc.)
• work part time rather than full time, compared to men
• tend to aim for non-C-suite positions, as the WSJ article indicates
• tend to work in physically safer, less hazardous positions
• tend to go into the ‘soft’ sciences (liberal arts) as opposed to ‘hard’ sciences (physics, engineering, etc.) in their educational training, careers after which in the former field tend to pay less than those in the latter
• avoid more stressful (and therefore, harder) jobs, like executive roles
• work less in industries where there is greater product obsolescence, i.e. industries in which one’s job is at greater risk due to creative destruction get married and have children, a period during which women leave the work force, disproportionately more so than men.

For evidence of these points, please check out the article linked above. Of course, there’s always the economic logic: if it were true that women were paid, say, 30% less than men due to general labor force discrimination against women because of their womanhood (and not because of one or more of the many non-gender related issues above), then competing employers would have a great entrepreneurial opportunity to cut 30% from their labor costs, and hire away all the women! This would drive the wage of women back to the wage of men, punishing discriminating employers along the way.

What we see instead are calculating entrepreneurs who are hiring workers and paying a wage at the forecasted marginal productivity of the worker, accounting for all those things that may affect that marginal productivity, like time away from the job due to family obligations, educational background, etc. This is why, for example, the ‘wage gap’ for men-never-married and females-never-married in the same industries tend to be flipped!–with men earning less than women.

Or, as economist Dr. Murray Rothbard put it in Egalitarianism as a Revolt Against Nature (1974, 2000), p. 159-160, bold added:

The lower average income for women can be explained on several grounds, none of which involve irrational “sexist” discrimination. One is the fact that the overwhelming majority of women work a few years and then take a large chunk of their productive years, to raise children, after which they may or may not decide to return to the labor force. As a result, they tend to enter, or to find, jobs largely in those industries and in that type of work that does not require a long-term commitment to a career. Furthermore, they tend to find jobs in those occupations where the cost of training new people, or of losing old ones, is relatively low. These tend to be lower-paying occupations than those that require a long-term commitment or where costs of training or turnover are high. This general tendency to take out years for child raising also accounts for a good deal of the failure to promote women to higher-ranking and, therefore, higher-paying jobs and hence for the low female “quotas” in these areas. It is easy to hire secretaries who do not intend to make the job their continuing life work; it is not so easy to promote people up the academic or the corporate ladder who do not do so.

I stress that none of the things that cause the expected marginal productivity of some women to be lower than that of males has nothing to do with gender per se. Rather, individuals who happen to take time out of the labor force to care for children, who happen to take on less technical fields of educational training, etc., and who thus happen to have a lower marginal productivity of labor happen to be female more often than men. The wages paid thereafter are only a reflection of these differences, not an indictment of a gender-discriminating labor market.

Criticisms and thoughts in response are welcome!