Whose Fault Is the Gender Pay Gap?

May 25, 2014 1:07 pm
equal pay

Doesn’t it?

Every so often a new report is published describing how the gender pay gap still exists and how it’s not really getting any smaller. A recent study from the CMI estimates that at the current rate, it will take 75 years for the gap to disappear completely. This seems an incredibly long time – can it possibly be true? Surely as a society we have grown past the point of discriminating sexually?

First of all, let’s start with the easy question – does this pay gap actually exist? It isn’t unreasonable to say that it clearly does. The ever growing list of independent studies describing this gap is surely enough evidence for anyone to accept its existence.

So then the next question is: why? An easy, dismissive answer to this would be to simply say deep down, society is still sexist. We may even have evidence to prove this; a famous study on International Orchestra auditions has shown that subconsciously, we can be sexist. Female applicants were far less successful when the interviewer knew their sex in advance of hearing them play. Perhaps that’s case closed, we’re simply still a sexist society. Well– we probably still are but I’m not convinced that’s actually the cause of the current gender pay gap.

The problem with the study is that music auditions themselves can be very subjective. The women didn’t play any worse when their sex was known, it was just that subconsciously the interviewer thought they were worse. There are however, many other industries and jobs, such as sales related jobs, where performance can be compared empirically. There is nothing subjective at all yet still, in these jobs, women on average get paid less than men. Furthermore, the International Orchestra scene is a pretty closed knit community. It’s not subject to the normal rigours of the job market.

Most industries and businesses these days are extremely competitive. Margins are so small and competition so fierce that even hugely successful businesses are always looking for places to cut costs. Therefore, assuming men and women are equally capable, why are businesses not exploiting this pay differential? Businesses could simply choose to employ women and entice them by paying them slightly more than they are currently on. These pay increases would continue until men and women’s pay were approximately equal. Yet this doesn’t happen – why not? Simply saying that it’s because of sexism is wrong. If it were true, all it would take is a woman to set up a business on her own and she’d suddenly have a huge advantage because she wouldn’t be prone to this subconscious sexism and this would make her an attractive employer for many women. It just doesn’t make sense, something else must be happening.

To find out what, let’s try looking it from the employer’s point of view. An employer’s task is fairly simple. All they require are people to perform x amount of work (utility). They will try to get the best possible value for the business by trying to employ the most skilled available for the least cost. This is basic supply and demand. As far as the employer is concerned, as long as they are equally skilled, they should be paid the same. We can assume they’re equally as likely to take time off or go to a different job, so this shouldn’t be a factor. But still, the pay is different. So again: why? I believe that it can be explained by one small word: babies.

Are babies the reason for the pay gap?

I know this is controversial, but it is hard to deny.  Some women will have babies whilst they’re working whereas men won’t. But how does this affect the gender pay gap? Well ironically, reasons are found in the very bit of legislation designed to stop the gap. Employers are no longer allowed to ask women if they are intending to have a baby. The reason this is important is that maternity leave is expensive for employers. It’s not just the pay itself; it’s the cost of replacing the worker with one as equally skilled and knowledgeable. This can’t cost nothing, as this would infer a worker’s job experience is worthless. So where does this cost go? There’s only one place it can go. The employer has a fixed budget for salaries and the cost of the maternity leave must come out of that. The problem the employer has is that he doesn’t know if his worker will have a baby or not (remember he’s not allowed to ask) so all he can do look at the numbers. He must look at the number of women who do have babies in employment and factor this in as an average. This solution neatly explains why the gap widens with seniority; it’s simply because it’s harder and more expensive to replace more highly skilled, more experienced workers. Conversely, university grads, with roughly the same skills and close to zero experience, would be replaceable at almost zero cost, hence their salaries are the same.

So what does this actually mean? Well, because you can’t tell which women will require maternity leave, all that can be done is to share the cost across every woman. This means that every woman pays a little for everyone else’s maternity leave whether or not they actually take maternity leave themselves. If this was just pennies, I’m sure everyone would be happy to pay this –however, as we’ve seen, the difference gets quite significant the further up the career ladder. Ironically, the more valuable you are to the firm, the bigger the cost becomes.

gender pay

Can we solve the problem? Or will we always have a pay difference?

So can anything be done? Well I have one idea. What if an employer offered its employee a bonus if she signed a document promising not to get pregnant for, say, 2 years? This bonus could be paid at the end of the 2 year period effectively bringing her salary up in line with her male peers.  If she did fall pregnant in those 2 years, she simply wouldn’t get the bonus. Yes, I understand it’s not a perfect solution. For one, will female employees feel obliged to sign the form? Furthermore, would this mean that those who actually do take maternity leave will pay more – is this right? Finally, is it even morally (let alone religiously) right asking someone not to get pregnant?

The bottom line is that although this modern, politically correct society dislikes the idea of gender differences, the inescapable truth is that the sexes are different. Woman can have babies whilst men cannot. To simply ignore this difference and suggest it costs nothing is quite simply wrong.

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