The Real Pay Gap

COMMENTARY Poverty and Inequality

The Real Pay Gap

Apr 10th, 2014 3 min read
Stephen Moore

Distinguished Visiting Fellow

Stephen Moore is the Distinguished Visiting Fellow for Project for Economic Growth at The Heritage Foundation.

The Equal Pay Act, sponsored by Senator Barbara Mikulski (D., Md.), is a laughably bad idea — almost a parody of liberal interventionism in the market. Under the law, there is federal funding for girls’ negotiation training and grant awards for reducing gender discrimination. It bestows on disgruntled employees yet more grounds on which to sue their employers for alleged discrimination – when, in most cases, the malcontents are just sub-par employees.


But that’s not even the major flaw of this latest Democratic measure against gender discrimination. The crisis in America today isn’t about women’s wages; it’s about men’s wages. Men are still the chief breadwinners in most families, and their wages are not moving much at all. If we look at Census Bureau data, we find that while men’s wages have risen by about 6 percent in real terms since 1980, women’s wages have risen by about 60 percent. Any gap in pay — real or imagined — is rapidly shrinking.

President Obama uses the figure of 77 cents earned by a woman for every dollar earned by a man. But that is a comparison of all women with all men (and even Mr. Obama’s own economists say a woman earns 81 cents for every dollar earned by her male counterpart). In fact, a 2009 Labor Department study found that, when we control for work experience and education, the gap is only about 5 percent. And when we account for the fact that men are more likely to be injured or suffer an accident on the job, and do riskier work and often more unpleasant jobs than women, the gap virtually disappears. My friend Mark Perry, an economist who runs the Carpe Diem blog at the American Enterprise Institute, has documented all this.

Furthermore, the latest surveys of college graduates find virtually no pay discrepancy between men and women, so for this generation the 77-cents mantra is as outdated as bell-bottom jeans.

The real wage crisis has to do with men. The latest education statistics show that women are about 53 percent of college enrollees and almost 60 percent of those pursuing advanced degrees. Pay rises with educational attainment. There is almost no gender gap for the latest generation entering the workforce; if the current educational trends continue, it is quite possible that women will start having higher earnings than men, and this will be especially true of women who do not have children.

What are the implications of a society in which women earn more than men? We don’t really know, but it could be disruptive to family stability. If men aren’t the breadwinners, will women regard them as economically expendable? We saw what happened to family structure in low-income and black households when a welfare check took the place of a father’s paycheck. Divorce rates go up when men lose their jobs.

The problem here is especially acute with respect to black families. Black women have been on a 30-year trend of outpacing black men in terms of education and thus earnings. Men are becoming financially expendable. It is also true that the decline in men’s wages is necessitating women to work to supplement family income. Sometimes this is by the woman’s choice, but in this rough economy it is less a matter of free will than of economic necessity.

Gender gaps in pay are also a distraction from the other real financial problem, which is declining pay for almost all groups. Between 2009 and 2012, every racial group and both genders have done worse. Actually, women’s paychecks have fallen slightly more than men’s in this phony recovery — and that is despite the fact that one of Mr. Obama’s first acts as president was to sign the Lilly Ledbetter paycheck-equality act. So much for the government’s being able to equalize incomes through edict.

Since more and more families have two earners — the husband and the wife — women are hardly going to cheer if the gender gap falls only because their husbands are earning less. But that is the way Mr. Obama has pursued equality — by devising policies that make us all a little poorer.

Income, race, and gender inequality have been clever distractions for the president. The gap that matters most he chooses to ignore: the gap between what middle-class people should be earning and what they are in fact taking home. Wages are falling for nearly everyone, Mr. President: for men, women, blacks, whites, the poor, and the middle class.

The $1,800 decline in middle-class incomes since the recovery began is the issue that matters to most Americans, and this is what Republicans should be shouting from the rooftops.

 - Stephen Moore is chief economist at the Heritage Foundation.

Originally appeared in the National Review