News Story

If Greedy Employers Discriminate by Paying Women Less, Why Don't They Hire a Lot More of Them?

All things considered, women make as much as men

The claim that women make less than men is one of those claims that is true but not in the way that people want you to believe. The true part is that women earn less than men. The untrue part, and this is the piece union leaders would like you to believe, is that women with the same work history, the same educations, and working in the same fields as men earn less than men. The earnings data is quite clear that this is simply not true.

What does all this mean? It means that the (very real) male-female wage difference isn't due to gender discrimination in the workplace. At worst, it might be due to gender discrimination in schools where boys may be encouraged to go into more technical fields while girls may be encouraged to go into more social fields. But there isn't compelling evidence of discrimination there either. The evidence suggests that the reason for earnings differences is most likely personal choice. Women (on average) tend to enjoy studying and working in fields that involve human care and interaction, like social work, nursing, and elementary education. Men (on average) tend to enjoy studying and working in fields that involve mathematics and abstract reasoning, like engineering and statistics. Because jobs that involve mathematics and abstract reasoning tend to pay more than jobs that involve human interaction, you find men earning more. The reason isn't gender discrimination. The reason is differences in preferences for work and fields of study.

When a couple has children, women (on average) tend to be the ones who suspend their careers to care for the home and children. While the woman's career is in hiatus, the man is accumulating work experience. Consequently, the man often ends up earning more than the woman — again, not because of gender discrimination but because of life choices the couple makes in keeping a home and raising a family. There are many other life choices that the genders make differently that also contribute to differences in wages. For example, men (on average) tend to dislike dangerous work, like logging and deep-sea fishing, less than do women. Of course, dangerous work pays more. But this isn't because dangerous work involves men. It's because dangerous work involves danger.

All of these facts are true on average. And that's the important point. There are many women who, for varied reasons, earn more than men. Carly Fiorina, the former CEO of Hewlett-Packard, and Meg Whitman, the current CEO, are good examples. So too are Hillary Clinton, Condoleezza Rice, and Christy Walton. There are also many men who, for varied reasons, earn more than women. To answer the important question of whether employers discriminate against women, we have to compare women and men with the same educations, work histories, and fields of work. When we do that, we find that women and men earn the same.

In the end, union leaders contradict themselves. Union leaders are quick to say that greedy corporations will do whatever they can to pay employees less. This is why unions claim to support the minimum wage and employer-paid vacations. But if it is true that women earn less than men because of gender discrimination, then by the unions' own argument, we should observe these same greedy employers employing only women because women are cheaper. That they aren't should tell us that there is more to the story than union leaders would have us believe.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Commentary

Open Letter to Steve Inskeep of National Public Radio

National Public Radio wrong about Mackinac Center study

Editor’s Note: The author made several attempts to contact Steve Inskeep and to request a follow-up story that might provide a fairer treatment of the Mackinac Center’s right-to-work study. We received no response.

April 6, 2015

Mr. Steve Inskeep

In a March 27 on-air exchange with David Wessel of the Brookings Institution on the impact of right-to-work laws, you focused on a “single phrase that was mentioned in a news story earlier this week” (transcript here). This phrase was sourced in the NPR story to a 2013 study coauthored by Dr. Michael Hicks and myself.

Unfortunately, your conversation proceeded to completely mischaracterize this study.

The “single phrase” was this: “Actually, since World War II, income and job growth have increased faster in right-to-work states.”

Wessel initially confirmed this observation with his own look at the data over the last two years. But he then falsely insinuated that our study simplistically asserted causal relationships between RTW and economic outcomes with no effort to control for other factors that may drive economic growth.

David Wessel: “But those correlations do not prove that right-to-work laws are the reason or even a reason that some states added more jobs than others.”

No kidding!

Wessel inferred that several bulleted observations in our opening discussion (see page four) amounted to us claiming conclusive evidence of causation. But even a casual look at our study would reveal these observations as part of the narrative introducing the RTW impact questions the study’s statistical model sought to test.

To be explicit, we sought to test these questions while controlling for “the other things going on,” in Wessel’s words.

Yet the idea that other factors may explain all or part of these economic phenomena was presented by Wessel as if this is a new concept and criticism. Perhaps he skimmed past the section of our study called “The Research Challenges of Right-to-Work,” where among other things we wrote:

A study which examines the role of right-to-work absent such issues as tax policy, weather and other variables that may impact a state’s aggregate economic performance will be unable to tease out the influence of right-to-work laws specifically.

Nevertheless, neither Mr. Wessel nor yourself bothered to mention any of this, much less the carefully constructed model we designed specifically to control for those other variables.

Adding insult to injury you asked Mr. Wessel if there is any “impartial scholarship” on right-to-work laws, as if Dr. Hicks and I had failed to produce as much. This offense was compounded by his throwing the misleading “conservative” label at us.

In answering that question Wessel pointed to two other studies — but neglected to mention both were highlighted in our study’s literature review.

In addition, our empirical research was peer reviewed twice. The second review was done by economists for an academic journal in which our model and its findings are soon to be published.

One would hope that an NPR interview of a Brookings scholar about (alleged) omitted variables would not actually omit important variables itself.

I am disappointed in your coverage and treatment of our right-to-work study. It deserved better and so did your listeners.

Sincerely,

Michael LaFaive
Director
Morey Fiscal Policy Initiative

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.