The Truth About the Pay Gap

The people of the United States have been led to believe that without reason, women are paid significantly lower salaries than men with the same jobs. This is simply not the case. In 2014, President Obama addressed the issue of the pay gap with a speech, and since then has made an effort to fix it. In his speech, he made the claim that, “the average full-time working woman earns just 77 cents for every dollar a man earns.” He called the 77% figure “an embarrassment.”

The public misunderstands the pay gap.

President Obama would be correct; this would be embarrassing, if it were true. It isn’t. When I watched this speech, I thought about the things he said, and one statement stood out to me: “Women make up nearly half of the U.S. labor force.” If women are making 23% less money than men for working the same jobs, women should make up the overwhelming majority of the workforce. Why would any company hire an equal amount of men and women, if by hiring more women they would save 23% on every employee’s salary? They wouldn’t. The point of running a business is to make as much money as possible, and if women were making 23% less money than men for the same jobs, companies could maximize their profit by hiring women, and they would.

When it comes to the wage gap percentage, there’s no single, universally acknowledged number for the amount a woman makes compared to the amount a man makes for the same job. When I tried to find the exact pay gap, I discovered that the number fluctuated anywhere between 64% to 84% depending on where I looked, which doesn’t make any sense because actual statistics are exact, and they aren’t measured in windows. This is when I realized that something more serious was going on, and the real information either doesn’t want to be found or is being hidden. It was time to investigate.

In the official White House address on the issue by President Obama, the 77% number was highlighted. President Obama didn’t just choose a random number somewhere in the range of all the numbers used to describe the gap. Which assumptions were made to find this number? I found that the method the White House used in determining this 77% number was by comparing the annual salaries of all men to the annual salaries of all women. That’s like taking the annual salary of an employee at a Ralph Lauren flagship branch and the annual salary of Ralph Lauren himself, averaging those three and saying the average Ralph Lauren employee makes $875k a year. It’s basically comparing the salaries of a male surgeon and a female nurse and using that as the basis of comparison between male and female wages. The US Department of Labor found that when you take into account the salaries of men and women with the same variables like job type and several others, comparing like to like, the pay gap shrinks to about 93-95%. Even a study conducted by the American Association of University Women, using a control for all the same variables, resulted in the same number found by the US Department of Labor: 93%. In fact, in a 63- page report, the number was only mentioned once. The American Association of University Women then tried to obfuscate this number by saying, “just over one third of the pay gap cannot be explained.” This makes it sound like as if the gap is one third, but what they were referring to is a third of the misleading 23% number. That’s not the clearest way to say, “7%”.

So, if the wage gap is actually about 5-7%, then there’s still an unexplainable difference in pay, right? Well, not exactly. While the percentage difference is undeniable, it’s fully explainable. The explanation for the smaller, more accurate difference lies in job satisfaction and negotiation for contracts. In a study published in Journal of Personality and Social Psychology entitle, “Who goes to the bargaining table?: The influence of gender and framing on the initiation of negotiation”, four researchers did a thorough test on salary negotiations by gender. They found that when women are informed that they can “ask” for more rather than “negotiate” for more, not only does the negotiation gap disappear, but women are actually 4% more likely than men to negotiate for higher salaries with 73% of females versus 69% male doing so. This is significant, because without the “ask” control, men are 25% more likely to ask for more money: 83% male to 58% female. A study conducted by PayScale showed that the average woman who is very satisfied with her job makes about as much as the average man who is unsatisfied with his job. According to PayScale, a possible reason for this is that more women tend to work in professions that are altruistic in nature: helping others rather than themselves.  And in my opinion, another explanation could be that most women are misled by those who talk about this 77% figure and go into the workforce expecting lower paying jobs, which results in them being more satisfied with their jobs.

The simple truth is that the 77% wage gap is a misleading piece of information, and is a major part of the problem which makes women believe that they are purposely being held down for no reason. This couldn’t be farther from the truth. When society tells women that, in the end, they’re going to be paid less than their male coworkers, they might be less likely to expect expect equal wages, thus feeding the fire and furthering the cycle.

Ladies, you can negotiate for higher wages, and nobody is stopping you. If we tell the truth about the actual wage gap and encourage women to do something about it other than raising lawsuits against companies that aren’t at fault, the wage gap between men and women wouldn’t be lowered, it would be eliminated.

One thought on “The Truth About the Pay Gap

  1. I applaud Jared for keeping an analytical and mature tone throughout the article– which could have very easily spiraled into something loud and controversial. This piece has spurred my interest in the topic and I will be doing some research of my own now!

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