A Contemporary Economic Myth

James Higgs 2/17/17

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The wage gap is a contemporary economic myth. This so-called wage gap is ever-present in feminist rhetoric yet it simply isn't true, nor does it exist to the amount they claim it does. The claim is regularly shot down and disproved by all economists yet it reappears on a weekly basis. The problem with the wage gap theory, is that people actually do not take into account any meaningful factors. Instead they just surmise a simple comparison between what all men and all women who work full-time make - which isn't actually fairly representative at all. It's not fair to compare a CEO's wage to a sales assistant wage is it?

         There is an infamous story about a young black teen that was stopped by police while running through an affluent neighborhood. The young man was doing his daily exercise routine, but he was stopped and questioned because a robbery had taken place in the vicinity and he looked out of place or suspicious. This anecdote is used to proffer proof of racial discrimination in America. The individual had no connection with the theft, he was minding his own business and inconvenienced on the basis of prejudice. Now I wager a white child running near the scene of a crime might just as well have been suspect. In this scenario it is surmised the officers, because of their race, training, or perhaps life experience stopped an innocent black man and interrogated him on the basis of his race. Do you know what it is to surmise an individual act on account of a collective (occupational, racial, or otherwise)?

         The wage gap fails to take into account factors and variables such as differences in occupation, position, performance based pay, education, job tenure, lifestyle choices, hours worked per week, amount of holidays taken per year, the list goes on. When these factors are taken into account the wage gap simply ceases to exist and vanishes off into the sun set. In the UK and the USA the wage gap barely exists to any degree, if women were truly paid less then why aren't all men unemployed? If women truly are a form of cheap labour surely they are favourable to employers? Yet that isn't the case is it? Wage gap activists simply ignore the all the contributing factors, if they took them into account there wouldn't be any wage gap activists.

         As you can see, here in the UK the salary of doctors does not have a section for male and female wages, there is one base wage. The problem is the way that the wage gap is calculated. It is just the average hourly wage of all men and all women divided. Which gives an unrepresentative average.

         The fact that there is a 23% difference in the average wages of men and women is not discrimination in the labour market, far from it. It is the difference in the decisions that men and women make regarding investment in knowledge, skills, education and experience, that leads them to getting paid a different salary. This a basic theory of economics - the theory of human capital. The theory suggests that an individual person has knowledge, talents, skills, abilities, experience, intelligence, training and judgment that translates into an individual's ability to perform labour and therefore equates into an economic value. Men and women tend to go study different subjects at universities. Men tend to study business, sciences and engineering. Whereas women tend to study education, health and life sciences, which do not pay as well. So even though they both have spent the same time at a university, the choices they make at the start lead to them working in different sectors and getting paid the appropriate amounts.

         My other problem with this is that often activists and feminists say that women's choices in education and careers is not truly free and that education holds them back by some 'mystical male sexist stereotypes'. This again just isn't true is it? Western women are not prohibited to take science and other highly academic studies. To even assume that women and girls in the western world especially the USA and the UK are prohibited and manipulated by their own life choices and education choices is quite simply divorced from reality and demeaning. The facts are that girls and women do better at school than boys, more girls go to university and if a woman and man with the exact same qualifications go for the same job in a STEM related field the woman is three times more likely to get the job. Now you may say that if they are more likely to get the job why aren't they on the board, or in management? This is simple, it's a generational problem. Back in the 1980's, 70's and 60's unfortunately women weren't as well-educated as they are today, and they weren't given any options. So obviously the top jobs which are often held by the over 40's are overwhelmingly male, it's because they are better educated. In the world of work, merit is more important than anything.

         Men and women also have different career path expectations. A woman will more than likely expect that at one point she will need to take time off to raise children - therefore they will take choices and acquire skills differently to men who expect to work full-time for the rest of their lives. Women historically also didn't expect to be working in into their 40's and 50's which led them to make restrictive decisions. If they didn't have children and were still working at 40 they couldn't achieve higher paying positions because they didn't not acquire the relevant skills, whereas men would have. Of course women of my generation and up to the 30 - 39 demographic (which we have to remember makes more money than men on average) are much more likely to work to the age of 40 maybe even beyond, and therefore will invest differently and wiser than their predecessors. Studies have shown that when the variables of education, experience and same job you find that women earn 98% of what men earn so the gender wage gap pretty much disappears, for some jobs women actually make more. To conclude, I personally believe that the difference between men and women's pay is not due to sexism or labour market discrimination. Rather it is a result of the choices that men and women make about the kind of career path they pursue, and the way they want to balance a potential future family with a career before they enter the market.

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