This week the Joint Economic Committee held a hearing on the most recent GAO report on Women in Management. The meeting appeared to be more of a promotional campaign for the Paycheck Fairness Act than a discussion of the main findings. The main findings currently regurgitated by the Media are:

  • In 2007, women who made up 47 percent of the U.S. workforce are disproportionally underrepresented in management positions, at a participation rate of only 40%.       
  • Female managers earn only 81 cents on the dollar compared to male managers.  

What you don’t read about in the coverage by big name news sources, such as the Washington Post, the Wall Street Journal, or ABC News, is that the GAO report also issues caution to jump to pre-mature conclusions.  

Our analysis neither confirms nor refutes the presence of discriminatory practices.Some of the unexplained differences in pay seen here could be explained by factors for which we lacked data or are difficult to measure, such as managerial responsibility, field of study, years of experience, or discriminatory practices, all of which can be found in the research literature as affecting earnings.  

In addition to all these caveats, women’s occupation and life choices need to be taken into consideration. For many women with children, or those who consider having children in the future, pursuing a managerial career in a certain industry depends on how easy it is to combine career and family. Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, who was invited to speak at the hearing, has a good summary and analysis up on the issue at the Hill’s Congress Blog. She points out:  

The [Paycheck Fairness Act] responds to a false problem. When the data are understood correctly – taking account of choice of vocation and on-the-job years – the pay gap largely disappears. 

When differences in hours worked, time in the workforce, education, or choice of vocation are considered, many academic studies show that women make around 94 percent of what men make. The remaining six cents are due to unexplained variables, one of which might be discrimination.

A woman who chooses a part-time job, or one with a flexible schedule, in order to have both family and career time might think of herself as successful. But to feminists, she is a societal problem in need of a solution because she is on a lower earnings path than a man.

There are several industries in which women dominate as managers; for example, women make up 70 percent of managers in health care and social assistance and 57 percent of managers in educational services. These manager positions tend to be lower paid and more accommodating to career-unrelated choices than professional and business services, for example, where women’s share is only 38 percent.

Paycheck Fairness Act proponents argue that women shouldn’t be punished for choosing to spend time raising a family, and that wage discrepancies arousing from this choice are discriminatory. Unfortunately, their “solution” would do more harm than good. Carrie Lukas points to the increasing government interference in business by issuing new reporting requirements on employee’s pay in her blog post earlier this week. Last week, I highlighted the dangers that arise from the ambiguous language in the text, combined with the enormous incentives for trial lawyers, which could hurt women’s opportunities to get hired and promoted. No Paycheck Fairness Act, please!