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Donald Boudreaux

Donald_Boudreaux.jpg

 received a PhD in economics from Auburn University in 1986 with a thesis on “Contracting, Organization, and Monetary Instability: Studies in the Theory of the Firm.” He received a law degree from the University of Virginia School of Law in 1992.[2]

Boudreaux was an Assistant Professor of Economics at George Mason University from 1985 to 1989. He was an Associate Professor of Legal Studies and Economics at Clemson University from 1992 to 1997, and President of the Foundation for Economic Education from 1997 to 2001. He is now Professor of Economics at George Mason University, where he served as chairman of the Economic Department from 2001 to 2009.

During the Spring 1996 semester he was an Olin Visiting Fellow in Law and Economics at the Cornell Law School.[2] Boudreaux is now an adjunct scholar at the Cato Institute, a Washington think tank.[3]

He is the author of the 2007 book Globalization (Greenwood Guides to Business and Economics) and 2012 book Hypocrites and Half-Wits.[4]

He contributes a column twice a month to the Pittsburgh Tribune-Review[5] and blogs at the Cafe Hayek website under the name Don Boudreaux.

http://www.econtalk.org/archives/_featuring/don_boudreaux/

http://cafehayek.com/

Obama proposes new rules to close the gender pay gap even though there’s a 16% gender pay gap in his White House

Posted: 31 Jan 2016 05:58 PM PST

The persistent gender pay gap at the Obama White House has been well-documented on CD. In 2015, the median salary for women working at the White House was $65,650, which is 15.8% and $12,350 less than the median salary of $78,000 for men (see chart above), see CD post here. It’s highly likely that the unadjusted 15.8% difference in aggregate salaries at the White House can be explained by factors other than gender discrimination, and I discuss those reasons here. But it’s also highly likely that the overall national gender pay gap of 17% (according to the most recent BLS report) can also be explained by factors other than gender discrimination: hours worked (men working full-time put in more hours per week on average than women), continuous and uninterrupted work experience (women are more likely than men to take time off from work for family reasons), choice of careers (e.g. more men than women work in higher-risk, higher-paid occupations and experience 92% of workplace fatalities), marital status, number of children, etc.

Despite the fact that most of the raw, unadjusted gender pay gap in aggregate salaries can be explained by personal choices made by men and women, the gender pay gap activists continue to use unadjusted, aggregate gender pay gaps as rallying cries for corrective government action to address a problem that might not even exist.

The latest example of gender pay gap activism is President Obama’s announcement last week that he plans to impose new rules on employers to help “close the 21% gender pay gap”:

Obama on Friday unveiled new rules that would compel companies with more than 100 workers to provide the federal government annual data for how much they pay employees based on gender, race and ethnicity. That information would be used to help public enforcement of equal pay laws while giving more insight into discriminatory pay practices, he said from the White House.

Historically, full-time female workers have only been paid a fraction of their male counterparts: In 2014, it was 79 cents for every dollar, according to the latest White House brief.

Don Boudreaux responded on the Café Hayek blog with a letter to Obama:

Mr. Obama:

In remarks today supporting government regulations designed to close the so-called gender pay gap, you asked rhetorically “What kind of example does paying women less set for our sons and daughters?”

I’m tempted to ask different questions, such as: What kind of example does your abuse of statistics in order to politically grandstand set for our sons and daughters? (Surely you know that this ‘gap’ virtually disappears when the statistics are properly controlled for differences in women’s and men’s career choices.) Or what kind of example does your incurable itch to officiously second guess and to coercively interfere with voluntary contractual arrangements between consenting adults set for our sons and daughters?

But instead I’ll grant, for argument’s sake, the premise of your complaint about the “pay gap” and ask a different question: What kind of example does your own White House – in which, as documented by economist Mark Perry, the median salary of female employees is 16 percent lower than the median salary of male employees – set for your two daughters?

Perhaps you should stop shoving your nose into other people’s affairs and attend to your own.

Sincerely,
Donald J. Boudreaux
Professor of Economics

While pondering the persistence of the gender pay gap myth, especially the implication of gender activists that any “unadjusted pay disparities by gender proves discrimination and requires corrective government action,” I came up with an explanation for the persistence of the pay gap myth that involves a false, but very effective statistical “bait and switch” scheme. Here’s how that statistical fraud takes place:

1. Start with an accurate, but mostly meaningless statistic about gender differences in unadjusted, aggregate salaries for full-time workers. According to the BLS, the current unadjusted national gender pay gap is 17% and according to the White House, “the typical woman working full-time full-year earns 21% less than the typical man.” According to my analysis of 2015 White House salaries, the current unadjusted pay gap at the White House is 15.8% (which is higher than the overall 9.2% gender pay gap in the District of Columbia).

2. Then, using unadjusted, aggregate gender pay gaps in median salaries, extrapolate those gender pay gaps with a statistical “bait-and-switch” technique to claim that women are paid 17% or 21% less than men FOR DOING THE SAME WORK. For example, while running for re-election in 2012, President Obama sponsored an ad claiming that “Women are paid 77 cents on the dollar for doing the same work as men.” And that’s the statistical fraud that perpetuates the gender pay gap myth.

Start with an accurate statistical fact about aggregate differences in pay, but falsely generalize it to the individual level and falsely imply that the aggregate, unadjusted pay gap means that all women are getting paid 17% or 21% less than men not just on average, but more importantly even when they are working side-by-side doing the exact same job at the same company.

3. By using a statistical “bait and switch” scheme to promote a false narrative, the gender pay gap activists are able to convince the general public that the 17% or 21% unadjusted pay gap is caused primarily by gender discrimination and is the norm throughout the labor market. The public now believes that it is standard practice for US companies to have two different pay scales: one for men at full pay and one for women at wages that are 23% less than wages for men.

4. After enough people have accepted the statistical fraud that the unadjusted pay gaps (17% or 21%) are primarily the result of gender discrimination, then of course there will be support among politicians and the public for corrective government action to address the gender pay gap through legislation at the national and state levels.

And that’s what we’re seeing today, with Obama proposing new reporting rules to close the gender pay gap that exists even in his own White House. Further, according to a recent Washington Post article (“Legislators organize blitz of equal-pay legislation in nearly half the states”):

And then there’s the supernova approach. That’s what a coalition of progressive and women’s empowerment groups are trying this week around the issue of equal pay, advancing bills in nearly half the states at once — from Alaska to Kansas — in a bid to elevate solutions to America’s nagging gender pay disparity at a time when little seems likely to happen in Congress.

Bottom Line: As I wrote last summer in my post about the gender pay gap at the White House, President Obama, politicians and the gender pay gap activists can’t have it both ways, either: a) there are gender pay differences throughout the economy and in any organization including at the White House, which can be explained by factors other than gender discrimination including age, years of continuous work experience, education, differences in positions, hours worked, marital status, number of children, workplace environment and safety, industry differences, etc., or b) any gender pay gap in aggregate, unadjusted salaries automatically exposes gender discrimination – including the White House – and Obama needs to explain why he is “waging a war on his own women staffers” by paying them less than men on average.

So either: a) there is a glass ceiling at the White House and Discriminator-in-Chief Obama is guilty himself of paying his female staffers significantly less than men by $12,350 per year on average, or b) Obama is guilty of statistical fraud and deception for continuing to spread misinformation about the alleged discrimination-based gender pay gap at the national level with bogus claims like “Women are paid 77 cents on the dollar for doing the same work as men.”

But realistically Obama’s hypocrisy about the gender pay gap won’t stop Obama from moving forward with onerous government regulations that will burden every company in America that has more than 100 employees with additional paperwork every year to report salaries by gender, race and ethnicity to the EECO that could potentially be used against them. All in an effort to address a problem of gender discrimination that might not even exist. Or to the extent that it does exist, it happens in very isolated cases. Perhaps President Obama should set an example and have his own 16% gender pay gap at the White House be subject to an analysis by the EEOC for gender discrimination before he imposes new burdensome government reporting rules on thousands of private companies?

See related post “Evidence of employers paying women 23% less than men for doing the same work is as elusive as Bigfoot sightings.”

Update/Related: In January 2009, the CONSAD Research Corporation prepared a report for the US Department of Labor – “An Analysis of the Reasons for the Disparity in Wages Between Men and Women.” The findings of that detailed report on gender pay differences didn’t fit the narrative that discrimination is behind the gender pay gap and therefore no longer appears on the Department of Labor website. Here is the main finding of the CONSAD report (emphasis mine):

This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.

The post Obama proposes new rules to close the gender pay gap even though there’s a 16% gender pay gap in his White House appeared first on AEI.