Other Thoughts on the “Gender Pay Gap”
David Henderson beat me to this topic, but let me add a few other considerations. A reminder of the facts: the economy-wide “gender pay gap” is said to be 17%, that is, the median employed woman earns 83% of what the median employed man earns. But the corresponding gender pay gap among White House political employees is 20%. (See “The White House’s Gender Pay Gap,” Wall Street Journal, August 7, 2023.)
The underlying data come from a July 1 official report to Congress on the jobs and salaries of the 269 women and 179 men who work as political employees in the Biden White House. (They don’t include the “detailees” from other federal departments or agencies.) Mark Perry, an economist at the American Enterprise Institute, combined these data with web research to determine the sex of the employees whose first names are ambiguous, from which he calculated the 20% gender pay gap.
Are we going to say that there is more discrimination against women in the White House than in the economy in general, dominated as it is by “greedy” employers? Not necessarily, of course, because women and men don’t choose jobs that require the same time commitments, don’t come to their jobs with the same number of years of working experience, don’t work in the exact same occupations, or did not take the same university courses.
In their recent book, The Myth of American Inequality: How Government Biases Policy Debate (Rowman & Littlefield, 2022), economists Phil Gramm, Robert Ekelund, and John Early use government data and a number of academic studies to estimate where the 17% “gender pay gap” comes from. They find that it is nearly all explained by factors stemming from personal preferences, circumstances, and choices: more hours worked by men on average (this explains 4.0 percentage points of the gap); longer vacations of school teachers, the vast majority of whom are women (1.3); women’s fewer years of average work experience (5.4); women’s frequent choice of occupations that are not paid as much (3.3), and their selection of university courses related to these lower-paying occupations (1.5). Together, these factors explain 15.5 percentage points of the 17% pay gap. Women who have not married show a much reduced 9% pay gap. (See pp. 76-78 of Gramm et al. for rounded numbers; the non-rounded ones above were provided to me by John Early.)
Many of these factors have converged between men and women, which explains the reduction of the gender gap by 60% since 1967. The latest Census Bureau data shows a 16.3% pay gap.
It is not surprising that discrimination is rarely a factor in the so-called gender pay gap. Employers don’t leave money on the table (which is why they are criticized as “greedy”) and are happy to hire less expensive but equally productive employees if they can find them. This way, employers gradually bid up their salaries and abolish any pay gap not resulting from an equivalent productivity gap (except for any remaining “taste for discrimination” that an employer may have and is willing to pay for).
But other factors are at play in politics, which have little to do with maximizing profits in a business sense. The data analyzed by Mark Perry show that twice as many men as women work in the 33 top-paying White House jobs ($168,000 to $183,100), while twice as many women as men are in the lowest-paying 67 jobs ($51,500 to $55,000). So perhaps there is a political pay gap there.
Mark Perry underlines the following paragraph in the White House’s 2021 National Strategy on Gender Equity and Equality (in which “gender parity” is mentioned 19 times and “gender equity” 48 times”):
Improving gender parity in representation and leadership is integral to achieving all other strategic priorities outlined in this strategy. Supporting women’s full participation in leadership roles and ensuring they are well-represented at the tables where decisions are made—at every level—will enable us to meet our objectives across sectors, from the financial sector to the arts. We will advance diversity, equity, inclusion, and accessibility in the federal workforce; increase gender parity and diversity in leadership roles; ensure diversity and commitment to gender equality in justice sector roles; ensure diverse and inclusive participation and representation in decision-making; and support women- and girl-led organizations and movements.
Students of public-choice economics, who assume that politicians are as self-interested as ordinary individuals but in a different institutional setup, will not be surprised to observe an imperfect correspondence between reality and political propaganda. In the American economy, men make up 53% of employed persons, and women 47%. In the White House’s political personnel, the proportion is quite different at 40% men and 60% women. A White House document claims:
We also focus on the President’s commitment to build an Administration that looks like America by recruiting and placing appointees who reflect the rich diversity of our nation.