Obama Takes New Steps to Fix Gender Pay Gap: Why That's Still a Mistake

Still relying on a misleading statistic.



On Friday, President Obama added some muscle to his previous executive order aimed at fixing the purported pay gap: He will require companies to submit information to the federal government about employees' salaries. The information will be supplied on a form that already tallies employees' ethnic and gender makeups.

According to The New York Times:

The requirement would expand on an executive order Mr. Obama issued nearly two years ago that called for federal contractors to submit salary information for women and men. Ms. Yang said the rules would be completed in September, with the first reports due a year later.

"Bridging the stubborn pay gap between men and women in the work force has proven to be very challenging," said Valerie Jarrett, a senior adviser to Mr. Obama, noting that the median wage for women amounts to 79 percent of that for men. "We have seen progress, but it isn't enough."

White House officials said that the requirement was intended to bolster the government's ability to penalize companies that engage in discriminatory pay practices and to encourage businesses to police themselves better and correct such disparities.

Obama using executive orders to impose annoying regulations on companies is one problem. The faulty assumption this action relies upon is another. The oft-cited statistic—that women earn between 20 and 23 cents on the dollar less than men—is highly misleading, because it makes an apples to oranges comparison. A lot of women choose to go into careers that pay less money, and a lot of women choose to work fewer hours than men. When one controls for these variables, they pay gap mostly—though not entirely—disappears.

As Ashe Schow at The Washington Examiner wrote in a recent piece:

I've written extensively on how the gender wage gap would be more accurately referred to as the "gender earnings gap," because the gap is due mostly to choices women make and not discrimination.

But now you don't have to take my word for it, you can listen to Claudia Goldin, an economics professor at Harvard University. Goldin spoke to Stephen Dubner, the journalist behind the popular podcast "Freakanomics," in a segment about what really causes the gap.

As one can imagine, Goldin comes to the same conclusion that I and many others have: That the gap is due mostly to choices men and women make in their careers and not discrimination.

"Does that mean that women are receiving lower pay for equal work?" Goldin asked after listening to clips of President Obama and comedienne Sarah Silverman claim that women earn 77 cents to the dollar that men earn. "That is possibly the case in certain places, but by and large it's not that, it's something else."

That "something else," is choice — in the careers that women take, the hours they work and the time off they take. Dubner asked her about evidence that discrimination plays a role in the gap, to which Goldin responded that such a "smoking gun" no longer exists.

The government ought to respect women's choices, not try to correct them via coercive legislation and executive orders.

Related: White House Says Wage Gender Gap Stats Are Misleading…When Applied to the White House