The Wage Gap: Pt. 1

The pay gap between men and women in America and beyond is widely recognized, but poorly understood. I count myself among those who don’t really know what the reported stats – or at least I did until I started looking into the data. CBS News reported that “(a)ccording to the Census Bureau, for every dollar a man makes, a woman earns just 78 cents for doing the same job.” [1]. Turns out that’s both incorrect and insufficiently alarmist.

First: “just 78 cents for doing the same job” – that’s completely wrong. That statistic comes from a comparison of the median income across all women vs. the median income across all men.[2] There’s no telling which job that represents for each gender – it includes CEOs, truck drivers, accountants… everyone. But it most certainly isn’t representative of any wage gap between men and women in a specific job. As the graph below shows, income disparity on a per-occupation basis varies wildly – from 60% all the way to 107% (ProTip: women should consider careers in baking over sales)

median_wage_disparity_by_occupation_2013

The US Bureau of Labor and Statistics does provide finer grained comparisons by occupation, but the comparison remains based on median income and doesn’t account for differences across ranks, companies, or geographies.[3] For instance, both an entry-level software developer at a cash-poor start-up and a Distinguished Engineer at highly-profitable tech giant would be grouped into the same category. More on this in future posts, but suffice to say “just 78 cents” is certainly not “for doing the same job”.

Second, measuring the wage gap based on medians for broad categories understates the economic disparity between women and men in the US. The median gives you a narrow slice of wage earners without information about the higher wage earners who, for better or for worse, hold more power in the economy. And unfortunately, when I graphed it out, it’s the worst case scenario:us_income_by_gender_2013

Women’s incomes skew way low, and men are overrepresented in the top half of the spectrum.[4] Coupled with women’s lower workforce participation (44% of the US workforce[3]), women earn only 38% of the dollars earned in the US. That amounts to 61 cents for every dollar men earn – the 78 cents at median is deceptively high.

When we’re earning only 38% of the dollars, it’s no wonder policies on pay equity, reproductive rights and women’s access to capital rarely advance. It’s also a compounding problem: women are poorly represented in the top tiers of business, politics, and culture; to advance takes money in the form of investments and donations, and women have relatively little money to share compared with their male counterparts.

It’s lame. Next, I’ll consider how moving more women into tech-based occupations could impact the women’s economic disparity.

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