The gender pay gap has been a topic of research and debate for decades. Although the Equal Pay Act of 1963 made it illegal to discriminate against women in the payment of wages, differences persist.

A recent Oscar acceptance speech by actress Patricia Arquette (pictured above giving her Oscars speech) has once again brought public attention to a contentious issue. At the heart of the matter is the oft-quoted statistic that women only earn 77 cents for every dollar men earn. This estimate is based on annual earnings, and there is some closing of the gap (to 81 cents) based on weekly wages.

Ray Perryman
Ray Perryman

The current variation is a marked improvement from the mere 59 cents that women earned per male $1 at the time of the Equal Pay Act, but the numbers nonetheless indicate that there is still improvement needed before wage equality can be reached. Gender wage inequality is a complex issue and one statistic cannot possibly describe the various circumstances of women working in the United States. There are numerous aspects to evaluate in order to understand the entire issue.

Over the past few decades, women have made great strides towards pay equity which include gains in labor force participation, educational attainment, real earnings, and employment growth in higher-paying occupations. As noted, the raw wage gap has been shrinking. Moreover, the aggregate wage disparity is often used in misleading ways without acknowledging the underlying determinants of the wage gap.

An example of the misuse of the aggregate gender wage gap is a CBS News article published after the Academy Awards claiming that statistics from the Census Bureau indicate that women earn 78 cents on the dollar for doing the same job as men. More accurately, the report by the Census Bureau actually presented average aggregate data without mention of the job-to-job wage ratio between genders. Clearly, an average can be misleading in many ways; for example, if men in a particular field tend to have more experience, training, or education, it is to be expected that they earn more.

News organizations and headline statistics tend to omit other factors contributing to the gap, including length of career, educational attainment, and job sectors. Specifically, mothers often take years off of work in order to care for their children; women, particularly in older generations, are often not as educated as their male counterparts; and women also tend toward lower-paying careers than men. Furthermore, women who have children may be willing to trade higher paying jobs for jobs that are more kid-friendly, with regular hours and few travel requirements. Although these factors do not completely explain the wage gap faced by the female workforce, they do substantially reduce it. Studies have shown that when controlling for life choices, income by women is 91% of income by men.

Further, when comparing earnings between recent college graduates, for whom many of these factors have yet to have an effect, the gap was 5%. However, even this figure does not control for college major or choice of jobs. Economist Anthony Carnevale of Georgetown University found that women are overrepresented in majors that do not lead to lucrative careers (such as psychology, art, or literature) rather than high-paying majors such as science, technology, engineering, and mathematics (“STEM”) majors, within which men are overrepresented. Moreover, women who do choose lucrative majors are more likely than their male counterparts to choose jobs that do not pay as well, like teaching, because as a whole they prefer job satisfaction over income.

A 2007 report prepared by CONSAD Research Corporation for the Bureau of Labor Statistics (BLS) found that there are “observable differences in the attributes of men and women that account for most of the wage gap.” These differences explain approximately 65 percent to 76 percent of the raw gender wage inequality, which results in the actual gender wage gap of 4.8 percent to 7.1 percent after adjustments. The report also suggests that some of the remaining wage gap could be attributed to additional variables that were not considered due to data limitations. Other research indicates that “women may value non-wage benefits more than men do, and as a result prefer to take a greater portion of their compensation in the form of health insurance and other fringe benefits.”

Whereas it is clear that there is a disparity in income between genders, it is unclear as to how much of the inequality should be attributed to gender discrimination rather than individual choices and backgrounds. Furthermore, it is evident that the raw wage gap should not serve as the sole basis for any corrective policy related to gender equality. There is work to be done and any discrimination is inappropriate, but a proper perspective helps to better address the remaining issues.

Editor’s Note: Photo credit on Patricia Arquette picture: Matt Petit, AMPAS/European Pressphoto Agency.