Clark's Scribbles

Pay Inequality

Pay inequality – fact, fiction, or murky reality?

One senator running for the Democratic nomination repeated her stats as a mantra at every opportunity. White women are paid less than men, and black women are paid even less. Payscale.com proclaims: “Women are still paid less in 2019.” (tinyurl.com/Pay-Gap-2019)

The website gives two different gaps. The first, the one touted by the Senator, is 21 cents on the dollar based on the median salary for all men versus the median salary for all women. The second is a more realistic comparison based on men and women in the same job with the same qualifications. That gap is 2 cents on the dollar. At the $50 k/year or $200/day level, that’s $4 per day or about $20 per paycheck before taxes.

The Payscale.com analysis used self-reported data from 1.8 million respondents to an online survey. It took into account a wide variety of factors, including age, gender, race, industry, occupation, and location. That is very impressive.But it only represents one percent of the American workforce.

We live in an imperfect world. Inequality is part of that imperfection. Given all the variables that go into determining how much individuals make, exact salary equality is an unlikely outcome. While some are stuck in low paying jobs, otherschoose careers that offer them rewards other than a high income.

Wage may not be the most important characteristic of a job. A friend of mine with a Masters in Electrical Engineering had a day job, a consulting business, and a teaching gig. When someone convinced him that marketing was a better deal, he dropped those pursuits and took an entry-level marketing job. It paid off in the long run, but there was no guarantee when he took a low paying job so he could change careers.

In some countries, India, for example, people’s career choices are decided by standardized tests. A good friend of mine from India complained about the process. He told me that people who scored the highest on the test became engineers. The next group became lawyers, and the third group doctors. He said if he had scored lower, he could have become a doctor and made a lot more money.

The Payscale.com article points out that women are probably making less on average because they are more likely to be stuck in low paying jobs. There is some truth to that, but women and men choose jobs that give them satisfaction regardless of the pay. People become teachers, social workers, medical professionals, firefighters, and police officers for idealistic reasons.

Many people in low paying jobs are working so that they, their children, and their children’s children can have a better life. Senator Elizabeth Warren touts the story of her climb from poverty. Senator Amy Klobuchar likes to talk about how her grandfather was a miner who managed to put his son through college, giving him a start in journalism.

My father’s grandparents left coal mining in Scotland and England to take up coal mining in Kansas and Colorado. Their sons became coal miners. On the 1930 census, my dad’s father, who was working as a building super in St. Louis, gave his occupation as coal miner.

My father joined the Navy in the 1930s because that was the only job he could get. It didn’t make him rich, but he was able to raise his three kids.

My sister got a scholarship. My brother and I used the GI Bill after Vietnam. That doesn’t work for everybody, but that is the way many people get their start.

I come from an equal opportunity, equal pay environment with policies that promoted diversity and the advancement of women and people of color. Our company, as a federal contractor, was required to implement equal pay policies and procedures. Enforcement was strict. During my last seven years before retirement,all of my supervisors and most of the managers in the building were women.

That did not eliminate the perception of pay inequality. During one meeting, my boss informed me that men are paid more than women. I asked her if I made more than she did. When she didn’t answer, I pointed out that she signed off on my evaluations and recommended my raises. I told her that if she thought I was overpaid, she should stop recommending big raises for me. The topic was never mentioned again, but I continued to get high marks for my performance and generous raises.

One way to get a different perspective on pay inequality is to look at typical people and their job choices instead of crunching lifeless numbers.

Consider a man who has a mother, sister, brother, a wife and an ex, two daughters, and a son-in-law. The man himself makes 80 k per year after thirty years as a senior project engineer. The mother and the sister are both teachers. They make 58 K and 70 K respectively as they approach retirement. Both have Masters degrees and could be making 25% more if they took jobs teaching in college. The brother makes 130 K as a GS15. The wife makes 20 K as a receptionist, and the ex makes 20 K as a typist turned data entry person. One daughter makes 75 K as a GS13. The other daughter makes 75 K as an Army Major. Her husband makes 76 K as a Master Sergeant about ready to retire.

In this example, the average female only makes 56 cents for every dollar the average male makes. But simply averaging the salaries makes no sense because there are factors other than gender that strongly affect what each of these people makes. They have different levels of education. The wife and the ex-wife earn less than half the average salary of the college-educated women. The men make more money, but they also have more seniority.The wages for the people in this example are arrived at in different ways. The military has a pay schedule for enlisted ranks and a pay scale for officers – neither gender nor race is a consideration. Local school boards set teacher’s salaries. The United States Office of Personnel Management determines pay for the General Schedule (GS) grades. The company the man works for sets its own compensation policies, but it has to pay a competitive salary, or he could go to another company offering a better deal.

Pay inequality is not necessarily a bad thing. Salary can be an incentive to get qualified people to take on difficult and challenging jobs. When there are underlying factors that prevent some people or some groups of people from competing for those challenging jobs, those factors should be addressed. But correlation is not the same thing as causality. Averaging together a random bunch of salaries to show that women only make 79 cents for every dollar that men make does not prove anything. In fact, a closer examination of the data shows that women make 98 cents on the dollar.

If the issue exists because women are more likely to choose social work and teaching, the only way to fix the pay inequality problem is to raise the salaries of social workers and teachers.