Wednesday, 11 April 2018 15:43

A Guide to Good Thinking 3 - The Example of Equal Pay Featured

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A Guide to Good Thinking 3 - The Example of Equal Pay Wikipedia

Sometime in early November each year, the UK ‘celebrates’ equal pay day. Promoted by the Fawcett Society, this is the day each year from which women are effectively working for free, or to put it another way: on average, men earn so much more than women that they could stop working for the rest of the year and still earn the same as their female counterparts.

You will hear a lot about this gender pay gap, but good thinking requires a healthy scepticism about popular band wagons or causes promoted by special interest groups. This does not mean we are wrong to be passionate about these sorts of causes or that we should dismiss everything interest groups and the media tell us.  It means as ‘good thinkers’ we need to check our facts and thinking before we leap in.

 

What is it?

Susan and John both work for the building company Bodgeit and Scarper. They are both brick layers but each week Susan takes home 15% less John. I think we can all agree that this is unjust. Women are worth just as much as men and so Susan should be paid equally for her labours. 

There are a number of assumptions in the example above that a good thinker will want to unpick.

Women are worth just as much as men. However reasonable this may seem, it is an assumption that we must have reasons for accepting. It is undeniable that on average men are physically stronger than women. Most jobs no longer require great degrees of physical strength so this link with male performance is broken. Even in manual jobs there are benefits that diversity brings that may increase productivity for the firm. All this is really to say that it seems fair to consider men and women as of equal worth to an employer. 

Susan has the same experience as John. What I have not told you is that Susan is an apprentice and John is teaching her. This makes the pay gap seem more reasonable. In this idea of a gender pay gap we need to consider experience and role, not just pay cheques. 

Susan works the same hours as John. I have also not told you that Susan works 2 days a week and John 6. Now, rather than Susan looking hard done by, we might be rather more concerned for John. 

We need to be clear what we mean and don’t mean by equal pay, otherwise we will use the wrong figures to measure it and implement the wrong measures to solve it. There is a difference between pay equality (everyone getting the same) and pay equity (everyone getting a fair wage). The term ‘equal pay’ is fine as shorthand, but only if we remember what we really mean is ‘fair pay’ - that men and women of equal ability and experience should get the same money for doing the same job.

 

Do we want it?

Fairness is a subjective judgement. Although most people would agree that the sort of equal pay described above, that has been adjusted for experience etc. would be fair, there are also economic reasons why it is a good plan too. If women are paid less than they are worth, then fewer women will think it worthwhile working or they may work fewer hours. This will mean that more men than women are employed and we will lose out on the skills that women have to offer. In fact, underemployment of the best women would mean employing greater numbers of lower skilled men (the best are already employed) and paying them a higher wage as well.

 

Do we have it?

The answer is a clear ‘no’, but exactly how much less women are paid than men is tricky because there are lots of different ways of measuring it. The highest estimate you will see is around 30% (meaning that women are paid an average of 30% less than men). This ignores the fact that women are far more likely to work part-time and that there are a few very well paid men that make men’s earnings look higher than they are (it uses the mean figure, not the median). The standard measure, used by ONS, government and Fawcett society, looks only at full-time workers, adjusts for the number of hours worked, and uses the median and not the mean. This makes it a better reflection of what most people are paid. By this measure, Full-time women earn 9.4% less than men[1]. Even this is not the full story. The pay gap varies depending on age, profession and other factors.  Part-time women get paid around 5.5% more per hour than their male counterparts. Women aged 50-59 get paid around 17% less than men, whereas women aged 22-39 get paid about 1% more[2]. Full-time women workers in England get paid 10% less than men, whereas women in Northern Ireland get paid 5% more. In general there is quite a large gap between high-paid men and high-paid women and a much smaller gap, if any between low-paid men and women.

As you can see, women are generally paid less than men but most of the figures you hear are carefully selected to reflect the organisation’s viewpoint and there are some areas where the pay gap is reversed.[3]

Pay gap data

 

Why/why not?

Statistics can’t tell us why something happens. Is this because women are more likely to take a career break? Is this their choice or does society force it on them? Is this because there are more women in the lower paid ‘caring professions’ and is this because they want those jobs or because sexism prevents them from entering other areas of work?

The answer is important because if businesses are simply paying women less, then what we need is investigation and prosecution for discrimination. On the other hand, if the problem is really that women are forced to work part-time because of child care, then businesses are doing nothing wrong and we need to create more affordable child care or do more to change the social norm that women are the full-time carers. If it is simply that women are more likely to freely choose lower paid jobs then we don’t need to do anything at all – women are being paid the same as men in the jobs they choose to do.

Unfortunately working out the cause is tricky. It is true that women are more likely to work part-time, more likely to have taken a career break, more likely to work in lower paid professions and more likely to be the second income in a household. Whether this is through choice, lack of opportunity or societal pressure is a complex issue. Some light could be shed by large scale surveys but few of these have been conducted or published.

 

Conclusion

Rather than simply following the lurid headlines, PPE thinking will usually lead you to a more nuanced conclusion. After thinking about the issue more carefully, many conclude that the pay gap is not as large as some organisations will tell you and the cause is not as straightforward as they might suggest, but a significant gap does exist and any pay gap due to discrimination is both morally unacceptable and economically damaging. Claims such as women being paid 30% less than men are equivalent to arguing that Susan was being unfairly paid less than John. She was less experienced and working fewer hours. It would have been unfair, if not unequal, for her to be paid the same. These claims can be highly damaging as they may lead us to look at the wrong solutions or worse, react against poor arguments and assume there is no problem. ‘Good thinking’ will often lead you to this sort of conclusion – there is a problem, it does need fixing but it is not as big as we assumed and the solutions might not be what the headlines suggest.



[1] ONS – ASHE 2014

[2] DCMS - Secondary Analysis of the Gender Pay Gap 2014

[3] ONS – ASHE 2014

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