The Gender Pay Gap: Does It Exist?

I hear people talking about the gender pay gap all the time.

There is even a day to celebrate it called, “Equal Pay Day.”

It is said: Pay is unfair, because men are systematically paid more than women.

She says:

Today women make up half of the U.S. workforce, but the average working woman earns 77 percent of what the average working man makes.

This figure is repeated everywhere.

Is that even true?

I mean look at it on its face.

Is it intuitive?

I mean the statement is technically correct, but the big thing that jumps out to me is the word “Average.”

In an intro statistics class, you quickly learn that averages don’t really tell you much of anything.

Put 20 people in a room. And then I tell you: “The average net worth of a person in that room is 3.95 billion dollars.”

Does that tell you anything?

Does it make you think there are 20 people worth nearly 4 billion dollars each in there?

Or, does it make you think there are 19 broke people and Bill Gates in there?

The 3.95 billion dollar figure is essentially useless.

So when someone says women on average earn 77 cents on the dollar to what a man earns, your reaction should not be outrage or disgust.

It should be: “Ok. So. What is the rest of the story?”

There are many differences between people – and averages do not account for any of those variations.

So what does the gender pay gap become when we hold education constant? Age constant? Year’s of experience constant? Profession constant? Etc.

The gender pay gap becomes essentially zero.

It does not exist.

It is a talking point for politicians and people that think the word “average” is descriptive and informative.

I mean good-grief.

If the gender pay gap does exist, and you own or run a business, please – please – email me.

I am available for strategic consulting.

My advice: Fire all the men that work for you, and hire women to replace them.

There.

I just cut your labor costs by 23%.

You are welcome.