Women earn less, but amount is debatable

Posted June 09, 2012, at 9:35 p.m.

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President Barack Obama shares a stage with Lilly Ledbetter last winter, whose story led to a renewed debate about the Fair Labor Standards Act’s protections against pay inequities based on gender.
AP
President Barack Obama shares a stage with Lilly Ledbetter last winter, whose story led to a renewed debate about the Fair Labor Standards Act’s protections against pay inequities based on gender.

“Women still earn just 70 cents for every dollar a man earns. It’s worse for African American women and Latinas.”

— President Obama, Remarks on Equal Pay for Equal Work, June 4, 2011 (The White House later corrected the president’s statement to 77 cents.)

“Women earn only 77 cents for every dollar men earn, with women of color at an even greater disadvantage with 64 cents on the dollar for African American women and 56 cents for Hispanic women.”

— White House Statement of Administration Policy on Paycheck Fairness Act, June 4

The debate over the latest legislation to address the gap in pay between men and women is a great opportunity to explore the various ways these data are collected and often used for political purposes. There is no perfect source of data — the Census Bureau and the Bureau of Labor Statistics come up with different numbers even though they can draw on similar data sets — but often advocates of action will tend to pick the worst possible figure to advance their cause.

We will ignore the president’s misstatement and assume he meant to say 77 cents. We also will probe how Obama and the White House come up with the claim that the gap is “worse” for black and Hispanic women.

We were struck by the disparities in the data when we noticed that a news release by Sen. Barbara A. Mikulski (D-Md.) trumpeted the 77 cent figure, but it included a link to a state-by-state breakdown that gave a different overall figure: 81 cents.

What’s the difference? The 77 cent figure comes from a Census Bureau report, which is based on annual wages. The BLS numbers draw on data that are based on weekly wages. Annual wages is a broader measure — it can include bonuses, retirement pensions, investment income and the like — but it also means that school teachers, who may not work during the summer, would end up with a lower annual wage.

In other words, since women in general work fewer hours than men in a year, the statistics may be less reliable for examining the key focus of the legislation — wage discrimination. Weekly wages is more of an apples-to-apples comparison, but as mentioned, it does not include as many income categories.

The gap is even smaller when you look at hourly wages — it is 86 cents vs. $1 — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.

This brings us to our larger point: Broad comparisons are inherently problematic. As the BLS points out, “Users should note that the comparisons of earnings in this report are on a broad level and do not control for many factors that may be significant in explaining earnings differences.”

Indeed, economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “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.” They cited one survey, prepared for the Labor Department, which concluded that when such differences are accounted for, much of the hourly wage gap dwindled, to about 5 to 7 cents on the dollar.

Similarly, our colleague Suzy Khimm at WonkBlog reports that the gap narrows to 9 cents for every dollar “if you control for life choices.”

Not only did the White House pick the statistic that makes the wage gap look the worst, but then officials further tweaked the numbers to make the situation for African Americans and Hispanics look even more dire.

The BLS, for instance, says the pay gap is relatively small for black and Hispanic women (94 cents and 91 cents, respectively) but the numbers used by the White House compare their wages against the wages of white men. Black and Hispanic men generally earn less than white men, so the White House comparison makes the pay gap even larger, even though the factors for that gap between minority women and white men may have little to do with gender.

Administration officials, who insisted on anonymity and would not allow direct quotes, defended their use of the data. They said the Census figures give a more complete picture of women’s contribution to household finances. They also said it made much more sense to compare black and Hispanic women to white men, because those wages represent the standard that all workers should aspire to.

We are not arguing there is no pay gap — BLS weekly data on individual jobs give countless examples — but that there should be more transparency about what the data mean. With so many choices of data, from legitimate sources, it is no wonder that the White House would choose the data set that best makes its case that the gender gap is large. But the president’s phrasing — “women still earn just 77 cents for every dollar a man earns”— suggests it is much more a straight-line comparison of wages, when in fact the results in the annual data may stem from other factors.

It would have been better for the president to have used a range, or perhaps say “as little as 77 cents.” Moreover, he could have acknowledged that some women make life choices that could reduce their wages over the course of the year.

In addition, the administration should be much more transparent about the fact that it is comparing the wages of female minorities with the wages of white men. It is not apparent in the public statements.

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