When in late April, Donald Trump claimed that the only thing former first lady, senator and Secretary of State Hillary Clinton has going for her is the “woman card,” the Twitterverse exploded in response. Among the wittier retorts was, “If I had a dollar for every time I’ve used the #womancard I’d have about 77 cents by now.”
The “77 cents on the dollar” statistic, which purports to quantify wage discrimination against women, has become a full-blown meme. President Obama has cited it several times. In his 2014 State of the Union address, he said that women “still make 77 cents for every dollar a man earns. That is wrong.... A woman deserves equal pay for equal work.”
The Washington Post’s Fact Checker had good reason to give Obama “Two Pinocchios” for his use of the 77 cents statistic. It is wildly misleading to couple that figure with the “equal pay for equal work” mantra, as senior White House officials have done over and over again.
The notion that employers routinely pay women almost 25% less than men for “equal work” seems implausible on its face. If corporations — amoral profit hounds that they are — could get equal work from women at a much lower cost, wouldn’t the vast majority of their hires be women? Would corporations forsake their financial interests for the dubious pleasure of having a bunch of men around?
Of course not. According to a 2011 publication by the St. Louis Federal Reserve Bank, “[r]esearch 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.” The “raw” wage-gap ratio is indeed about 77 cents to the dollar. But that is an aggregate statistic, comparing all female full-time workers to all male full-time workers. It does not even account for variations in profession.
Men and women freely choose different types of jobs. Nine of the 10 most financially promising college majors are male-dominated, by at least two to one. Fewer than 20% of all engineering and computer science students are women.
Once their careers get going, women are much more likely to take extended breaks from work to care for family. Such sacrifices have immense social value. But because they create gaps in work history, they leave many older women with less job-relevant experience than male co-workers of the same age.
The raw 77-cent measure is further limited by its generic definition of “full-time” worker. It gives equal analytic weight to everyone who works at least 35 hours a week. So it does not consider that the average full-time male works 8.4 hours per day, whereas the average full-time female works 7.8.
As a 2009 study prepared for the U.S. Department of Labor put it, “the differences in raw wages may be almost entirely the result of individual choices being made by both male and female workers.” This is borne out by the reverse raw wage gap — 108 cents on the dollar — observed among younger, childless workers. Is this reverse gap, where women are making more than their male counterparts, indicative of an anti-male bias? No. It just reflects the fact that more women than men within that group chose to pursue a college degree. Employers expect college graduates to deliver superior productivity.
To be clear, the explanations above still leave a measureable “residual” — an actual gender wage gap — unaccounted for. So we have not yet fully achieved the goal of equal pay for equal work.
But we are getting pretty close. An expansive sizing of the residual gap comes from the feminist Institute for Women’s Policy Research. The IWPR contends that 25% to 40% of the raw wage gap cannot be accounted for by individual choices. If that is the case, then a raw gap of 77 cents on the dollar translates into an actual gap of between 91 and 94 cents on the dollar. Other studies have calculated an even smaller actual gap, and professor Claudia Goldin of Harvard believes that the gap “might vanish altogether” if firms start allowing for more day-to-day flexibility in work hours.
So, while perhaps mildly interesting from an econometrics standpoint, the 77-cents-on-the-dollar statistic is essentially meaningless. And the Obama White House knows it. In 2014, the McClatchyDC news service found a significant raw wage gap among White House employees. When confronted, then-White House press secretary Jay Carney was quick to the defense. He countered that McClatchyDC’s calculations “looked at the aggregate of everyone on staff, and that includes from the most junior levels to the most senior.”
Apparently, the administration will not abide the use of misleading wage-gap metrics, except when it’s time to rile up their base of support.
Michael Cummins is a Madison-based business analyst.