President Repeats False “Equal Pay” Statistic Claiming Women Earn 77 Percent of What Men Do

President Obama repeated a myth about equal pay and pay discrimination, as the economist Diana Furchtgott-Roth notes at RealClearMarkets:

Last week in the Rose Garden, at an event celebrating the Equal Pay Act, he once again repeated the myth that women earn 77 cents on a man's dollar.

“The day that the bill was signed into law, women earned 59 cents for every dollar a man earned on average. Today, it's about 77 cents,” the president said. "Over the course of her career, a working woman with a college degree will earn on average hundreds of thousands of dollars less than a man who does the same work.”

Nonsense. The 77 percent figure is bogus because it averages all full-time women, no matter what education and profession, with all full-time men. Even with such averaging, the latest Labor Department figures show that women working full-time make 81 percent of full-time men's wages. For men and women who work 40 hours weekly, the ratio is 88 percent.

One reason women earn less than men on average is that women work fewer hours on average than men even when they work full-time. As Washington Post fact-checker Glenn Kessler noted in February, government data shows women work fewer hours than men, which explains much of the apparent pay gap: “since women in general work fewer hours than men in a year, the statistics [such as this one] used by the White House [to push for passage of the proposed Paycheck Fairness Act, discussed at this link] may be less reliable for examining the key focus of the legislation — wage discrimination.” As Ramesh Ponnuru noted at Bloomberg News, the gap gap between men and women “reflects the fact that women, on average, work fewer hours than men.” Family responsibilities also play a role. Diana Furchtgott-Roth cites a 2005 study which found that "There is no gender gap in wages among men and women with similar family roles.” In addition to being more likely to seek part-time work, women are also more likely to have gaps in their employment history and to enter lower-paying fields, she notes, and “a 2009 report for the Labor Department, found that these factors account for most of the pay gap.”

In any event, it's just obvious that employers dont pay women 23 percent less for the exact same work. If they did, employers could (and some would) crush their competitors just by hiring only women, who cost less to employ, to reap a huge cost advantage. But no major employer has ever done so. As one commenter notes, if this massive pay disparity actually existed, “why wouldn't any company seeking to enhance its competitive position (i.e., all of them)  simply hire only women? After all, such a company could offer, say, 90 cents and attract untold numbers of female applicants for employment and still have a distinct advantage in the cost of its labor.” The supposed 23 percent pay disparity is vastly bigger than the profit margin of most major companies.

Misconceptions about the wage gap between men and women are driving support for the Paycheck Fairness Act, which would require equal pay for unequal work in some cases. In 2009, an unnecessary law called the Lilly Ledbetter Fair Pay Act was enacted based on false claims about the facts and ruling contained in a Supreme Court decision dealing with pay discrimination (the Ledbetter Act altered the statute of limitations under one of the existing laws banning pay discrimination, Title VII of the Civil Rights Act of 1964).

As former House Speaker Nancy Pelosi (D-Calif.), a supporter of the Paycheck Fairness Act, noted, under the Equal Pay Act that is currently in force, “Courts have allowed employers to use any factor other than sex to justify a pay disparity between men and women.” By contrast, she said, “Under the Paycheck Fairness Act, an employer would have to show that the disparity . . . is job-related, and is consistent with business necessity.” In her view, the fact an employer relied on a “factor other than sex” to set pay, and was not motivated by sexism in setting pay, should not be a legal defense. The Society for Human Resource Management, which disagrees with Pelosi, contends that the Paycheck Fairness Act “would effectively prohibit employers from using many legitimate factors to compensate their employees, including professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization.”

Many supporters of the Paycheck Fairness Act assume that all pay disparities are the result of gender bias. But many disparities reflect the fact that men and women often choose very different lines of work, with men disproportionately represented in some of the nastiest and most dangerous jobs. According to the federal Bureau of Labor Statistics, 92 percent of all workers who die on the job are men. As Steve Tobak noted at CBS News,

Men are far more likely to choose careers that are more dangerous, so they naturally pay more. Top 10 most dangerous jobs (from the U.S. Bureau of Labor Statistics): Fishers, loggers, aircraft pilots, farmers and ranchers, roofers, iron and steel workers, refuse and recyclable material collectors, industrial machinery installation and repair, truck drivers, construction laborers. They’re all male-dominated jobs. . .Men are far more likely to take work in uncomfortable, isolated and undesirable locations that pay more. Men work longer hours than women do. The average fulltime working man works six hours per week or 15 percent longer than the average full-time working woman.