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The Non-existent Wage Gap

The Federal Reserve Bank of St. Louis dug into the gender wage gap a bit more than most.   They show that the raw wage gap has declined from 36.5% in 1979 to 16.5% in 2011:

The Bureau of Labor Statistics reports that in 1979 median weekly earnings of full-time female workers were 63.5 percent of male workers’ earnings, implying a gap of 36.5 percent. The earnings gap dropped to 30 percent in 1989 and to 23.7 percent in 1999. In the second quarter of 2011, the gap reached a low of 16.5 percent.

They also note that women often do not have the same educational background and do not pursue some of the higher paying jobs in the economy:

First, women are likely to work fewer hours than men, which would make a gap in weekly earnings between the two groups substantial even if their hourly wages are the same. For this reason, most economic studies of a gender gap, including all of the studies reviewed in this article, use hourly wages instead of weekly earnings as a measure. Second, many other factors (such as education and labor force attachment) could affect wages. Research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.

Taking the analysis a step further and looking at groups of women without families or children, the gap shrank significantly:

When the analysis was restricted to unmarried, childless women only, the wage gap shrunk to 7 percent for white women, 9 percent for black women and to virtually zero for Asian and Hispanic women.

More importantly, most studies do not look at total compensation that includes all benefits (e.g. employee paid medical care, paid time off).  When taking those factors into account, the touted gap becomes a rounding error:

Economists Eric Solberg and Teresa Laughlin applied an index of total compensation, which accounts for both wages and benefits, to analyze how these benefits would affect the gender gap.7 They found a gender gap in wages of approximately 13 percent. But when they considered total compensation, the gender gap dropped to 3.6 percent.

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