More on the gender pay gap: what’s the problem?

Last week’s International Women’s Day had a theme: Pledge for Parity! The problem is, you see, that women are paid less than men, and the pay gap won’t close until 2133! That’s according to the World Economic Forum. Our own Prime Minister has the cause close to his heart. He wants to ‘end the pay gap in a generation’ and has introduced legislation to make companies with over 250 employees publish the average salaries of men and women on their payroll. The problem is that it is now quite well established that the pay gap is a myth, as we wrote about last week. True, on average women’s lifetime income is lower than men’s, but they tend to give birth much more frequently than men… and make different lifestyle choices. It is a mammoth task to control the figures for these factors, a task certainly too big for the feminist lobby, who is only all too happy peddling misleading statistics that further their cause.

It should be quite obvious that the average pay doesn’t say anything at all about equal pay for equal work. (In fact, evidence points to the correlation being the other way around).

And anyway, the discussion is irrelevant. The fact is, women work. Therefore, they price the effort they put in lower than what their employer is willing to pay for it. The fact that a colleague might be getting more for the same job can certainly be a cause for irritation, and a worker might want to take it up with the boss. That goes for men and women alike. But walking into the boss’ office with a statistics saying that on average women earn less than men is obviously going to be completely irrelevant to the discussion.

Even if it was true, any attempt to regulate pay equality would, like all regulation, have perverse unintended consequences. If firms routinely pay men more than women, they must value men higher. If they were forced to pay the same for a woman, they surely would hire less women. Likewise, gender quotas on executive boards, as tried in many European countries, could load boards with the best women, not the best, full stop and lead to perceptions that successful women are successful because they are women. Problems abound, and that’s without touching the subject that such legislation surely is discrimination against men.

But it gets worse. Apparently women are not only discriminated against in the workplace. They also face bullying when they go shopping, paying more for products such as women’s razors and pens than men pay for their equivalent products. Outrageous discrimination, cries the feminist lobby, unaware of how a market works – if the razor is the same, buy the men’s one and watch the price of the women’s one come down. I might as well complain that a Coke is more expensive than Spar American Cola – it’s pretty much the same product but I prefer Coke… am I being discriminated against?

Women’s Day has gone for 2016, but the new legislation is here to stay. More red tape that will help perpetuate the low productivity plaguing our economy. And that’s not the only problem. The danger is that, on top of wasting resources, initiatives like these help to perpetuate the myth of the gender pay gap.


    • The point we are making is that the gender pay gap, to the extend it exists, is not driven by discrimination and is therefore not a gender pay gap per se. Labour is just one factor of production, and of course companies should always assess if they are using their labour optimally. If for some reason they are not getting maximum value for their female employees – for any reason, including bias – then of course they should evaluate.

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