The 'gender pay gap' is mostly garbage

Young professionalT.J. Kirkpatrick/Getty ImagesLet’s hope she graduated in computer science rather than theatre studies.

The recruitment consultancy Robert Half decided to get some early PR out of International Women’s Day on March 8. It published an “analysis” of salary rates in the UK for men and women which concludes women will earn £298,064 ($422,267) less than men over their lifetimes, a gender pay gap of 24%.

The press release has already been written up by the Evening Standard, the Guardian, and here at Business Insider.

The problem with this statistic is that … it’s rubbish.

The gender pay gap in the UK is just 9.4% and getting smaller every year. And most of the gap “is likely to be connected with the fact that women who have children often take time out of the labour market,” according to the Office for National Statistics, which does an annual survey of men’s and women’s wage rates specifically to monitor discriminatory pay.

And yet, the media persistently reports that women earn 20% or 30% less than men. The BBC made this exact claim as recently as February.

The Robert Half press release is somewhat misleading because it is written as if the company generated its own salary data independently. In fact, Robert Half’s expert only did an “analysis” of existing data, and a footnote at the very bottom of the release says the data came from the ONS.

The ONS’s data is excellent because it answers the central question that plagues the debate on pay: Do women earn less because they are discriminated against? Or are there other factors that make it appear that way?

The data drills down into hourly wages, without counting overtime (men tend to work more OT). Overall, the pay gap is only 9.4%. But the gap varies over your lifetime, and in some periods women actually earn 6.5% more than men.

“For part-time employees separately, women are paid more on average, resulting in a ‘negative’ gender pay gap. Although the trend is more volatile than for full-time employees, there is evidence that the gap has widened in the long-term. It has remained relatively stable in recent years, although it increased from 5.5% in April 2014 to 6.5% in April 2015,” the ONS says.

Here is what that looks like in a chart:

In the chart above, whenever the columns are at zero or dip below it, then men and women are receiving equal pay or women are being paid more. “When looking at the differences for full-time employees, the gap is relatively small up to and including those aged 30 to 39 (with the exception of the 16 to 17 age group). In fact, in the 22 to 29 age group, women are paid on average slightly more than men,” the ONS says.

The obvious trend in the chart is that once you hit your thirties, men start getting paid consistently more than women. “From 40 upwards, the gap is much wider, with men being paid substantially more on average than women. This is likely to be connected with the fact that women who have children often take time out of the labour market,” the ONS says.

It’s not just that having kids hurts your earnings in later life, either. It’s the work you choose to do, the ONS says. “It should be noted that the figures do not show differences in rates of pay for comparable jobs, as they are affected by factors such as the proportion of men and women in different occupations. For example, a higher proportion of women work in occupations such as administration and caring, that tend to offer lower salaries.”

The overall point here is that yes, men do earn more than women. A lot more: Men get an average of £567 per week in Britain compared to £471 for women. That is, actually, a 20% pay gap. But they get that extra money because they don’t work part-time as much, because they work more overtime, because they don’t take time off to have children, and because they tend not to choose lower-paid jobs as much as women do.

Obviously, there is a debate to be had about whether we value child-raising fairly. Only women can get pregnant, and the number of men willing to put their careers on hold while their female partners go back to work is vanishingly small. And the men in some industries — software coding for instance — are objectively hostile to successful women (according to this excellent blind test of programmers).

But the good news is that the pay gap is getting smaller (in 2014 it was the smallest since records began). And the majority of the pay gap is not caused by sexist rates of pay. It’s caused by women choosing to have children, and women going into less-lucrative careers.

That last point ought to be especially important if you’re a woman in your early 20s. Look at the chart above — the career choice you make now is going to be much more financially significant than the 9.4% discrimination penalty, especially when you hit your 40s.

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