NCPA - National Center for Policy Analysis

The Disappearing Gender Wage Gap

June 22, 2012

A single, oft-cited statistic is that women make 79 cents for every dollar that men make doing the same work. This disparity has provided justification for outrage in Washington as members of Congress seek to address the gender pay gap with legislation. The proposed Paycheck Fairness Act would seek to force employers to justify such gaps, hoping to eliminate them entirely, says June E. O'Neill, a former director of the Congressional Budget Office, a professor of economics at Baruch College and an adjunct scholar at the American Enterprise Institute.

However, a persistent gender wage gap can exist in the absence of pernicious discrimination on the part of employers. Rather, a number of other factors can contribute to the wage gap that are discrimination-free. Indeed, differences in work experience are a primary driver of the gap.

  • In 2000, the average woman surveyed had about two years less work experience than the average man in military and civilian jobs combined.
  • Moreover, close to 14 percent of the weeks worked by women were part-time compared to 5 percent for men.
  • When this variation in work experience is applied to 2008 wage data, the gender wage gap closes from 79.4 cents to 88.6 cents on the dollar.

Differences in work experience are a perfectly legitimate reason for disparate incomes, and federal legislation to address gaps based on legitimate and legal factors would be unwarranted.

A number of additional factors also exist that can explain the gender wage gap:

  • Schooling level and cognitive skills.
  • Time out of the labor force for child-rearing responsibilities.
  • The type of employer: in general, women are more likely to work for the government or non-profits while men tend to work in the private sector and in for-profit firms.
  • O'Neill finds that when these factors are accounted for, the gender wage gap falls to approximately 97 cents on the dollar.

Further supporting this conclusion, O'Neill finds that single women without children, on average, make 8 percent more than their similarly situated male colleagues. This suggests that it is the social pressures of being a mother and/or wife, and not employer discrimination, that drives down female wages.

Source: June O'Neill, "The Disappearing Gender Wage Gap," National Center for Policy Analysis, June 22, 2012.

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