October 31, 2012

NEWS YOU CAN USE: The Gender Pay Gap Is A Media Myth.

Last week, the American Association of University Women (AAUW) released a study on the gender pay gap, the claim that women are paid less than equally-qualified men. The AAUW study limited itself to new college graduates, hoping to show that a pay gap exists even before women marry and bear children, which most academic studies find to be the main drivers of gender pay differences. The AAUW study generated the headline result – the only one that really matters – that new female college grads are paid only 82 cents for each dollar of male earnings.

To its credit, AAUW went further by factoring in male/female differences in college major, hours worked, etc. Having done that, the pay gap shrinks to less than 7 percent. This indicates that, at most, discrimination lowers female wages by 7 percent.

But in preparing for an NPR program discussing the study, I ran some quick numbers using data from the Census Bureau’s American Community Survey. I limited myself to full-year private sector workers with a bachelors degree who were ages 21 to 26 in 2009-2010. Within this group I controlled for age, race, Hispanic and immigrant status, detailed geographic location, weekly work hours, college major and occupation. Controlling for college major accounts for the fact that men tend to choose majors that lead to higher earnings later in life. Controlling for occupation captures “compensating wage differentials” for positive or negative aspects of the job. For instance, dangerous or unpleasant jobs may pay more, while jobs offering flexible hours or more generous benefits might pay less. Including all these controls, the gender pay gap for young college grads drops to around 1 percent.

Even then, do my results mean that discrimination reduces pay by 1 percent? Hardly.

Well, that hardly fits the narrative.