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There’s only one main reason a wage gap exists. Call it motherhood



Howard Levitt: Research shows there is no gap because of gender, but, rather, a child-bearing penalty

Original posting by Howard Levitt in the Financial Post

Much of our federal and provincial governments’ social engineering has been in an effort to rectify the gender wage gap. Employment equity, pay equity, pay transparency legislation and the uncompetitive equalizing of wages between part-time and full-time workers — all have been justified on that basis.

According to the Canadian Women’s Foundation, Canada has the seventh-highest wage gap among the 38 countries in the OECD, at 25 percent for full-time workers.

The more reliable Statistics Canada has the gap at only 13 percent.

But is there, in fact, a gender wage gap that is a difference in wages based on gender?

Women are graduating from all areas, other than the STEM disciplines, at a much higher rate, and with better marks than their male peers. Are employers actually discriminating against them in hiring or promotions?

In understanding whether discrimination accounts, the only two relevant questions are:

  1. Are equally qualified women having more difficulty obtaining higher paid employment? and
  2. Are women paid less than men, once they obtain employment, based upon their gender as opposed to other factors such as seniority or hours of work?

According to a study just released by Canadian Press, of the top 60 companies in the TSX, not one is headed by a woman and only three have female CFOs. Of the 312 highest compensated positions, with average compensation approximating $5 million, only 25 are women. This superficially supports the existence of a gender pay gap.

With the average worker in Canada making only $50,000, or one percent of this group’s income, the highest earners dramatically skew the average, thereby increasing the gender wage gap.

In reality, the only significant cause of women earning less than men is when they choose to leave the workforce and have children. What the research shows is that there is no gender wage gap but rather a child-bearing penalty. Henrik Kleven, an economist at Princeton University, using data from Denmark, which offers new parents an entire year of paid leave after the birth of a child, concluded that women earned as much as men — until they had a child. He found that, after bearing children, women disproportionately opt for careers that are less time consuming and are also less willing to travel, often a requisite for promotions. Denmark is not anomalous. A 2009 U.S. study led by University of Chicago’s Marianne Bertrand echoes that conclusion. What is notable is that these studies found that women who did not have children ended up financially in the same position as men.

This is hardly surprising. If a man similarly decides to take a year off work, he will miss that year of experience, career opportunities and be viewed as less reliable when promotions are considered. If they take additional years off, equivalent to women who take a year of maternity leave for each child, they fall even further behind.

The different choices men and women make is at the heart of this debate

The gap is also a function of the areas to which women choose to apply. Although more women are entering STEM (science, technology, engineering and math) professions in Canada than before, the incumbents are still predominantly male. What is notable is that men apply disproportionately to STEM vocations even in the most egalitarian societies, such as Scandinavia. And STEM professions are paid more than such professions as clerical work, administrative work or social work that women disproportionately apply to. Why? Because STEM jobs create more value for their businesses.

Another major factor in the purported gender wage gap is that women are attracted to jobs, such as training and social work, that permit interaction with small groups of people, inherently limiting the potential pay. Men, on the other hand, more often apply to jobs with more leverage or scale, such as planning or executive positions, which impact greater numbers of people, jobs which society accordingly awards greater remuneration to.

Men also disproportionately apply to jobs in the trades and in positions of manual labour. When I was in university, I had a summer job at Stelco’s open hearth furnace. We went into the furnaces, hammering and drilling, to clean them before restarting them. We had to wear wooden pieces under our shoes so that our rubber soles would not melt. We could not drink water but only concentrated lemon juice — and in small quantities or we would vomit. The air was constantly filled with multi-colour particles, which we were breathing in. My foreman was dying of silicosis but he could not retire as he had six children. The pay was excellent, it was all male — but I don’t see feminist lobby groups demanding more women being permitted to work in such jobs or my female friends at the time applying to them.

Why do men apply to those sometimes hellish jobs? According to Kim Parker at the Pew Research Center, “men are likely to place a greater emphasis on their role as financial providers.” As result, they are more likely to accept abominable working conditions and work around the clock. The few women who opt for those conditions and hours earn the same. The different choices men and women make is at the heart of this debate.

The government can, and unfortunately does, legislate equal pay for work of equal value and attempts to argue that such jobs are equivalent in value to jobs disproportionately occupied by women, but such legislation only makes us less competitive. Much as the Trudeau government might like a steelworker to be paid the same as an office clerk through employment equity legislation, we can’t price our steel above that of our international competitors.

The Canadian Women’s Foundation predictably recommends eliminating barriers for women entering high-wage occupations, such as in STEM fields. The problem is, there appear to be no barriers at all. The portion of the wage gap not accounted for by the child-bearing penalty appears to be a function of choice.



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