MIND THE GAP
In the last few weeks the media has been full of reports about the gender pay gap. Now, this issue has always bothered me, for its obvious injustice but also because it just doesn’t make any damn sense. I’ve been hearing about this issue for as long as I’ve been conscious and am reminded of it a couple times a year when a new article or report comes out. The gender pay gap appears to be something we all agree is happening, we all agree is ridiculous, and we all want to see end. And yet it persists.
Clearly nobody benefits when women are paid less. I mean, if you know someone is getting paid more for the same work and same skill-set and experience, you have an undeniable case of discrimination there. And nobody wants to be on any side of that equation: your boss doesn’t want that, your co-workers don’t want that, and, of course, you don’t want that (nor does your family or your loved ones.) And there are plenty of incentives (social, political, and economic) helping everyone avoid this discriminatory situation – and yet it persists! So what the hell is going on?
A headline that caught my attention in the Globe and Mail the other day read: “Gender pay gap in Canada more than twice global average, study shows.” Eager to hear all the gruesome details, and hopefully learn something new, I read through the article. The data on offer was put together by Catalyst Canada, a Toronto-based research and consulting firm aimed at improving opportunities for women. Unfortunately, contrary to the title of the piece, no, the study did not show.
The key piece of new data Catalyst wanted us to come away with was that “the global pay gap was about $4,000 on average between men and women, and the Canadian pay gap was just over $8,000”. Provocative for sure, but there was no relevant context and no information about where these numbers came from. To these numbers they added mention of a report that was yet to be published. (Interesting, but useless.) And, unfortunately, despite being an electronic article, there were no links to any of their cited work. In fact, there were no links at all. So I really have no idea how they arrived at their numbers or, therefore, if I should believe them.
Despite the general absence of useful information, one key point (apparently intended as a supporting argument) explained that “a week ago, female faculty at McMaster University got a raise after a two-year study showed they earned on average $3,515 less than their male counterparts in 2012 and 2013, even after seniority, tenure, faculty and age were taken into account.” Now this is a very interesting anecdote and something we can look into.
“$3,515 less than their male counterparts” is not only less than the global average they cite, 12% less, as well as being less than half, 56% less, than the Canadian average they shared, but it’s also a small fraction of the other figures we typically hear in the media. The statistic I most commonly come across is that “women earn just 75 cents for every dollar a man earns” (Or something close to that. Sometimes it’s 70 cents, other times 80.) But the above isn’t anywhere near that. With the help of the Public Sector Salary Disclosure Act I found out that there are a thousand professors, assistant professors, lecturers, and directors at McMaster University, all earning more than $100,000 annually (some of them, many men no doubt, making $200k, $300k, and even $400k.) So to which salary would you like to measure $3,515 against? How about the average, $150k? Well, if my math is correct $3,515 is 2.3% of $150,000 – a number not even close to the 25% below or "75 cents to every dollar" we all know. This is "almost 98 cents for every dollar", which is still a discrepancy but feels somewhat different, to me at least. Of course I don’t know what exactly they meant by “faculty at McMaster”, because they didn't say, or the numbers they used, because they didn't share them, so the real number of comparison might be much higher or lower than the $150,000 I assumed. But notice that even if the average salary of all faculty is a fraction of this, and only $50,000, say, which it is very likely not, this difference doesn't move much, only up to 7% and nowhere near the commonly cited discrepancy of 20 to 30%. And, yes, we might be right to note that any difference is problematic – unless of course it isn't. Nobody, certainly not Catalyst, appears to have sought an answer to why the difference emerged. That's curious, isn't it? No one is interested whether or not we're talking about an institutionalized bias or a single grumpy administrator? How does one solve the problem without finding and addressing the cause? There have been several such reviews in recent times and they all claim that their "mandate is to identify discrepancies, not underlying causes." This, to me, seems both bizarre and like the wrong move. The schools and departments I know about, at Langara College and Simon Frasier University for example, are dominated by female faculty and who are responsible for hiring new staff: so it's largely women hiring other women. So what's the situation at McMaster? And what is the cause? Nobody cares?
We may wish to consider the context as well. The women in question are all highly educated, highly empowered, and upper-middle-class. So we wouldn’t expect them to be working under the worst pay discrimination in the country. However, we are consistently told that universities are still today highly sexist men’s clubs harbouring a brutal “culture of rape” and an attendant misogyny. That being so, even a 10% pay discrepancy would seem remarkably low. No? In this, the fat, old, hairy belly of the beast. (And we might wish to ask if a similar pay discrepancy exists in elementary education, pharmacy, or nursing.)
As a result, in my mind, their main supporting evidence for gross discrimination suggests just the opposite of their assertion: virtually no discrimination at all and an institution committed to eliminating this 2% discrepancy as soon as evidence emerged (regardless of cause.) I think it’s fair to say that this situation looks nothing like what we’d expect systemic sexism to look like, nor does it approximate what is commonly heard in the media.
But there's more. Another fact shared in the Catalyst article is that in 2013 women held just 16% of board seats in the top sixty Canadian companies (the S&P/TSX 60). The author goes on to add that in 2014, just a year later, representation of “women on boards was up slightly to 21%”. This was meant as a sign of just how bad things are but it’s hard to see it as such. (Are they even reading their own reporting? And I don’t know what this is supposed to show. It certainly doesn’t suggest that women are getting paid less in these roles, as the title of the article claims. But we’ll just forget about that.) So the argument here is that women are under-represented on boards and this is a clear sign of gender bias at work? Well, what’s the goal? That women make up 50% of board members in these top tier companies? Why? Are women supposed to be at 50% because they make up half the population? Well, it seems to me to be pretty stupid to hire someone only because of the genitals they were born with. We might want to ask if women make up 50% of the folks graduating from business school or being awarded MBAs, no? Do we want people in positions based on their gender and a quota that needs to be met or based on their desire to do the job and what they bring to the role? No, men are not positioned based on merit, and neither are women. Should they be? Probably. I'm sure we'd all be happy if every CEO of every company was female, if they wanted to be there and were successful at it.
From what I can tell, looking at various university and business industry websites, women made up between 17% and 35% of MBA graduating classes in Canada over the last few years. (Schulich Business School at York University has the highest enrollment of women in Canada, with 35%.) And I imagine top firms aren’t hiring 25 year-olds, of any gender, with only a couple of years of business experience to sit as senior administrators and advisers. In this light (with only a very small additional bit of context) the 21% noted by Catalyst is probably pretty consistent with education and experience. No? What do you imagine the percentage of women in your average MBA program was in the 1980s or 1990s? If I were to guess I'd say around 10 or 20%. (It seems unlikely that twenty-five years ago the numbers were far higher than they are today.)
If that’s the case then women occupying around 20% of top board seats is probably pretty close to where it should be, and actually far ahead of where I imagined women to be before I read the article and did my own research. (And I think if you took a poll, given all the dire reports, most people would guess the number was much closer to 2% than 20%.) Furthermore, how is a 5% change in a single year not something to applaud? That’s huge! At this rate, which will undoubtedly increase, women will comprise 50% of the board seats in the largest and most profitable businesses in the land in just a few years. I’m sure that it’s well within my lifetime that there were no women on any of these boards. Which is not to say that the move toward real gender equity within the world of labour has been fast enough, only that Catalyst shows no evidence to suggest that it’s moving unreasonably slow, nevermind in a manner that would make us suspect sexism is at play.
Further still, and most critically, on this same point about the S&P/TSX 60, this is a very curious gauge. This group of companies is made up mostly of financial institutions and resource extraction companies: businesses that only a minority of the already small female business graduate cohort voluntarily head into. This is a well-researched and well-known fact. (And Catalyst certainly knows this.) If you were to look, for instance, at public service, consumer goods, and healthcare you would see very different numbers. Even if Catalyst took a random selection of all boards in Canada their numbers would be far less skewed. (This is like if I was arguing that men were being discriminated against in the world of medicine and education and then only looked at nursing and early childhood ed.)
Without going any further I think it’s generous to say that this was some pretty poor reportage. Neither Catalyst Canada nor the Globe and Mail reporter who put together the piece appear interested in comparing apples to apples, and neither seem concerned about providing transparent accounting of their findings. Given that Catalyst and the Globe and Mail took what is an obviously distorted sample and then misrepresented it and blew it out of proportion I think we can safely disregard their work for being dishonest and even unethical. But is this an anomaly?
* * *
Confused and dissatisfied I thought I’d search for some more details. Further searches yielded a whole lot of news articles citing Catalyst Canada reports. And all the reportage is just as misleading. For instance, there was another piece in the Globe and Mail entitled “Female MBA grads earn less at career outset, struggle to catch up: study”. The lead paragraph stated that “a new report by women’s advocacy group Catalyst shows female MBA graduates in Canada earn $8,167 per year less than their male colleagues in their first jobs after graduation, according to data on 1,574 students who graduated between 1996 and 2007.”
This does appear to be a true statement, but they aren’t looking at men and women doing the same work, men and women in the same industry, or even those with similar experience. (Just read the report! It’s found on the Catalyst website.) Their own research clearly states that:
A) “[High-potential] Canadian MBA graduates were more than twice as likely as their counterparts in other regions of the world to choose a non-corporate path immediately following completion of their MBAs. And within Canada women took this route more than twice as often as men”
B) “The preference for non-corporate settings grows over time, from 11 percent at first post-MBA job to 15 percent at their current position in 2013. The rate of attrition from the corporate sector is much higher among women than men (29% women vs 10% men)”
C) Of high-potential Canadian MBAs, “women were more likely than men to report having no knowledge of international product markets (23% of women vs 9% of men), or international labour markets (21% of women vs 9% of men)”
So when they’re comparing MBA grads they’re comparing apples to kumquats: they’re not comparing those going into the same field, people with the same knowledge or experience, or even folks with similar aspirations. And Catalyst does this while obscuring this deeply problematic inconsistency in their public press releases. Yet all of these factors have got to be essential if you’re attempting to understand or address, in any real way, gender bias. (Which I'm left to suspect Catalyst is not.)
Even I know a few folks with MBAs. The women I know went into healthcare, public service, and the not-for-profit arts world. The men went into finance, to work for a global shipping firm, and for a large multinational construction business. I have no doubt these women are making half or maybe just a fraction of their “male counterparts” with “the same skills and education”. But to make such a comparison is very silly indeed. These women were not pressured into these positions, and weren't pushed out of more lucrative fields because of the chauvinist corporate environment there. Instead, they freely pursued education and employment they were interested in. But it's not just the considerable differences that are important: even small motivational differences among otherwise identical individuals will produce dramatic disparity. Notice that – even if you’re comparing the salaries, benefits, and career progression of two identical twin males, with identical education and work experience, both with management roles at the same company – it matters a great deal whether those being compared both aspire to become CEO or whether one is content to remain a regional manager. Again, this seems obvious.
What is worse, and why I won’t read anything else by Catalyst Canada, is when they acknowledged, only at the end of their publication, that “the study did not attempt to explain why the [gender pay] gap exists, and Catalyst executive director Alex Johnston was reluctant to speculate, saying it’s more important to fix the problem than ask why it exists.” Is that so? As far as I'm concerned, without drilling down to the why and how it's not possible to address the issue – or even to effectively band-aid it. In fact, how do you even know if there is a problem here and not acceptable, non-biased reasons that describes what we're seeing? If it's true, that they don't care about causes, then they appear to me to be engaged in little more than an aimless walk in the dark. And if it doesn't matter, they may as well blame dragons or witches for the phenomena and not gender bias.
* * *
Fed up with these junky news articles I thought I would do a more academic search for some legitimate peer reviewed research. I gathered a spread of articles (published by both men and women over the last two decades) and decided to do my own mini meta-analysis.
First I looked at three reports by the American Association of University Women. (Surely they know what they're talking about, right?) I pulled up their 2015 report “The Simple Truth”, one from 2013 entitled “Graduating to a Pay Gap”, and a paper from 2007 called “Behind the pay gap”. This research states that in their first year after graduation “women working full time earned $35,296 on average, while men working full time earned $42,918”.
Here, like the other research and reporting, the AAUA compares male and female graduates, all of them, not males and females who graduated with the same degree, who have the same skills and experience, or people working the same or even similar jobs. (What, for the love of the scientific method, is the point of doing this?) It gets better though.
Their research goes on to show that:
One year after graduation, the average full-time-employed female social science major earned just 66 percent of what the average full-time-employed female engineering or engineering technology major earned ($31,924 compared with $48,493). Men who majored in a social science field, likewise, earned just 70 percent of what men who majored in engineering or engineering technology earned ($38,634 compared with $55,142)
This sounds significant and like a reasonable comparison but, if you look at the fine print, the researchers here count “social science” as a single category. So doing they group economics majors with sociology majors. they do this knowing, as they must, that economics majors (most of whom are male and go into areas like business management, finance, and insurance) earn an average income of $70,000 while sociology majors (dominantly female and full of people entering international development, social work, and education) earn closer to $40,000. So aren’t we comparing apples and kumquats again? Well, to what end?
It seems worth asking if they’re exposing sexism in the workplace or just their own profoundly confused and biased research? Seems a bit funny to me and a bit more like the later than the former.
But the AAUA isn't just aiming to confuse. Their analysis shows that one year after graduation there tends to be a 5% gap between the average pay of male and female workers, after accounting for obvious explanatory factors. And, they say, there's a gap of 12% ten years after graduation. When they ask why this discrepancy exists, these researchers concede that men and women make different life choices. Importantly, they note that motherhood is not actually associated with lower income, but that leave taken from a career is – and that leaving work for a period of time is far more common among females than among males. (It will shock and confound no one to learn that women, generally of course, are more oriented toward humans and less focused on systems and status – generally, across whole populations.)
So according to this investigation, women aren’t making 20 or 30% less, as other's suggest: it’s likely closer to 5 or 10%. And, far from being horrible discrimination, when they are earning less, particularly later in their career, it may very well be because they made rational, socially acceptable choices – like choosing a career they want in their preferred field, and not just the one with the highest pay bracket, and/or because they've chosen to take time away from work to care for family.
But I looked into this situation a little further. The numbers I found in a recent Pew Research report appear to corroborate the above. According to Pew Research, 40% of women say they’ve taken a “significant amount of time off from work” or reduced their work hours to care for someone else. And almost 30% quit working altogether for family reasons. These numbers contrast sharply with fewer than 25% of men reporting the same. Seems to me this fact alone could explain much of the gender pay gap we see.
Not wanting to rest there I looked at some U.S. Dept of Labor figures. There I found an interesting report concluding, after years of research and mountains of data, that:
Extant economic research has identified numerous factors that contribute to the gender wage gap. Many of the factors relate to differences in the choices and behavior of women and men in balancing their work, personal, and family lives. These factors include, most notably, the occupations and industries in which they work, and their human capital development, work experience, and career interruptions. Other factors are sources of wage adjustments that compensate specific groups of workers for benefits or duties that disproportionately impact them. Such factors for which empirical evidence has been developed include health insurance, other fringe benefits, and overtime work. It is not possible to produce a reliable quantitative estimate of the aggregate portion of the raw gender wage gap for which the explanatory factors that have been identified account. Nevertheless, it can confidently be concluded that, collectively, those factors account for a major portion and, possibly, almost all of the raw gender wage gap.
They go on to explain, “it is not possible now, and doubtless will never be possible, to determine reliably whether any portion of the observed gender wage gap is not attributable to factors that compensate women and men differently on socially acceptable bases, and hence can confidently be attributed to overt discrimination against women”. Interesting.
Another recent study, looking at the U.S. gender pay gap using data from the 1990s, explained that – after accounting for education, marital status, actual experience, occupation, industry, other pertinent personal and employment factors – the wages paid to women were estimated to be 9% lower than those paid to men. (That was the 1990s and the situation undeniably better today, decades later; so I’m still uncertain how people keep suggesting that women only make 75% of what men do. A 25% discrepancy appears unimaginably large by any honest accounting.)
Looking at new hires, a 2006 research paper out of Princeton University concluded that, all other things being equal, the promotion rates of men exceed the promotion rates of women by 2-3%. However, they also note that there was no discernible difference in the growth rate of salaries between genders.
Revisiting the motherhood wage penalty, a 2003 study by Anderson, Binder, and Krause found there to be a wage deficit of 3-5%, after accounting for personal and employment variables. The authors also found that mothers with college educations do not incur wage penalties and, interestingly, that mothers with below average educational attainment incur lower wage penalties than mothers with average educational attainment.
A study found in the Journal of Human Resources analyzed gender pay difference across five industries: banking, computer and data processing, life insurance, plastic production, and non-electrical machinery. When looking for differences between genders – looking at specific occupations, workplaces, and jobs – the research shows men and women working the same job earn the same rate of pay.
So, it appears, from my very brief and likely flawed look into the numbers, that this catastrophic inequality that is continually reported is mostly myth. That if you dare to compare apples to apples there is not a 20 or 30% difference in wages paid to men and women with the same skills, doing the same work, working the same hours, as is virtually always implied. There appears to be, in some cases, a small single digit difference – like that at McMaster – involving countless unmeasured variables that nobody has really pinpointed, nevermind fully understood (and some actually aim to avoid both seeing and trying to understand), and may not have anything at all to do with bias.
I know that arguing “some women earn 99.85% that of their male colleagues, and typically do so voluntarily and for totally rational personal reasons” is not the same as “women earn just seventy cents for every dollar a man earns.” But rather than sharing misleading information maybe we can all simply take action by starting to be transparent with one another about our earnings. What about that? In so doing, we would actively design inequality out of the system; rather than passively sitting back hoping employers and institutions are doing the right thing, waiting for government and their policy to sort things out, or relying upon our appalling media...
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