Thursday, April 10, 2014

77 Cents Myth

Ugh, can we work on real problems, please?

WSJ Opinion
April 8 is "Equal Pay Day," an annual event to raise awareness regarding the so-called gender wage gap. As President Obama said in the State of the Union address, women "still make 77 cents for every dollar a man earns," a claim echoed by the National Committee on Pay Equity, the American Association of University Women and other progressive groups.

The 23% gap implies that women work an extra 68 days to earn the same pay as a man. Mr. Obama advocates allowing women to sue for wage discrimination, with employers bearing the burden of proving they did not discriminate. But the numbers bandied about to make the claim of widespread discrimination are fundamentally misleading and economically illogical.


These gender-disparity claims are also economically illogical. If women were paid 77 cents on the dollar, a profit-oriented firm could dramatically cut labor costs by replacing male employees with females. Progressives assume that businesses nickel-and-dime suppliers, customers, consultants, anyone with whom they come into contact—yet ignore a great opportunity to reduce wages costs by 23%. They don't ignore the opportunity because it doesn't exist. Women are not in fact paid 77 cents on the dollar for doing the same work as men.

I've worked at 3 large companies (14,000 employees, 11,000 employees, and now ~3,600 employees) and have been very involved in recruiting and hiring. There is not one case of gender wage discrimination that I'm aware of in the ~20 years. It makes no sense... I want to hire the best candidate possible for as little money as possible, male or female. We also worry about every basis point of margin. I'd hire all women as well if I can get a huge margin bump.

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