Supporters cite questionable wage gap data and overlook non-discriminatory factors

Overview

According to a frequently cited report from the American Association of University Women (AAUW), full-time working women in Louisiana earn about 35 percent less than full-time working men, the highest such gender wage gap in the country.

Many assume that this wage gap is the product of discrimination, so it is not surprising that the legislature is considering legislation that would address this issue. SB254 by State Senator J.P. Morrell applies a Louisiana equal pay law to private employers and requires that all employees be paid equally for comparable work.

While preventing pay discrimination is a laudable goal, legislators should consider the various factors contributing to the wage gap and the possible unintended consequences of the law before approving this bill.

Non-Discriminatory Factors Contribute to Wage Gap

First, it is important to recognize that wage gaps can largely be explained by a number of non-discriminatory factors, such as occupation and hours worked. Policy experts have clarified that when gender wage comparisons control for some of these non-discriminatory factors, pay gaps quickly narrow. Some of the key non-discriminatory factors include:

Men and women often have different professional priorities. Payscale analyzed over 120 occupation categories and found that males primarily occupy nine of the ten highest paying jobs, while females primarily occupy nine of the ten lowest paying jobs.

Although some would argue that this is evidence of discrimination, a recent study from the Harvard Business School found that men and women often have different career ambitions. The study concluded that men have a higher percentage of life goals pertaining to professional power and are more likely to take opportunities for professional advancement, while women are more likely to associate high-power positions with negative outcomes.

Another study by Roxana Barbulescu of McGill University and Matthew Bidwell of The Wharton School concluded that women are more likely to pursue jobs that offer a better life-work balance.

Dr. Randy Olson of the University of Pennsylvania Institute for Biomedical Informatics offers further insight on gender-related job preferences. In one analysis, Dr. Olson noted the socially-inclined, nurturing nature of women and connected this to female domination in fields of study that involve people.

In a later analysis, Dr. Olson demonstrated a trend among male-dominated majors, such as Computer Science, Engineering and Physics, being more quantitative in nature, noting:

“These quantitative majors are often employed by large companies to design products, perform data analysis, manage the company, etc., and their salaries are higher to match the responsibilities of the job.”

Full-time females work fewer hours on average than full-time males. A study by the American Sociological Review (ASR) found that men are more likely to spend 50 plus hours a week in the workplace, noting these extra hours are often rewarded with an average 6 percent increase in hourly wages across all industries.

These work patterns seem to be true in Louisiana. The Bureau of Labor Statistics (BLS), reports full-time men work 4.4 hours more per week than full-time women on average in the Pelican State.

A survey conducted by the Pew Charitable Trusts – an independent nonprofit organization – suggests, like job choice, different work hours reflect individual preferences and priorities. Pew found nearly 40 percent of mothers have taken significant time off to care for a child or another family members, while less than 25 percent of fathers, on the other hand, reported doing the same.

In this vein, it is worth noting that single parents are often forced to spend fewer hours in the workplace so they can address childcare needs. According to a 2014 report by Single Mother Guide, 83 percent of single parent families are single mothers while only 17 percent are single father households.

Louisiana has one of the highest percentages of single parent households in the country, which leads to the reasonable conclusion that some of the wage gap is due to this factor rather than discrimination. This conclusion is further buttressed by the fact that in large metropolitan areas, 22-30 year old single, childless, full-time working women earn, on average, 108 percent of the salary of men.

Men tend to negotiate for higher salaries than women. According to a WOP Working Paper from the Ludwig Maximilians University Munich titled Gender Differences in the Propensity to Initiate Negotiations: A Meta-Analysis, men tend to negotiate higher salaries than women. The paper notes:

“…which suggests that gender differences regarding negotiations are a source for the unequal distribution of resources and opportunities in organizations. Our results confirm that women in comparison to men are less prone to initiate negotiations.”

A survey by the British Psychological Society (BPS) could offer some insight as to why women struggle to ask for more money. BPS surveyed 2,000 women and men employed in 20 different fields of work throughout the world and found men were significantly more likely to take risks. Study author Geoff Trickey noted:

“The magnitude of the difference in risk taking between men and women was unexpected…Females were more than twice as likely to be wary and almost twice as likely to be prudent whilst males were more than twice as likely to be adventurous and almost twice as likely to be carefree…From the scale of these findings we concluded that risk taking must be a distinctive feature of gender.”

It is not unreasonable to assume that the inclination of men to take risks gives them an edge in salary negotiations. If women negotiate less effectively for salary requirements than men, this is another factor that contributes to a wage gap.

Potential Consequences of Implementing New Equal Pay Law

Aside from the fact that much of the pay gap can be explained by non-discriminatory factors, legislators should contemplate the possible consequences of implementing this proposed legislation.

Businesses might be deterred from Louisiana. Renee Amar of Louisiana Association of Business and Industry (LABI) explained her organization’s concerns:

“Of course, Louisiana employers believe that men and women should be paid equally but SB254 goes far beyond that. LABI opposes this bill because it goes far beyond equal pay for equal work. It greatly expands the definition of equal work by using the term “comparable” work and puts employers in a constant state of defending their pay practices to attorneys. Determining an employee’s wages depends upon many factors, like education, experience, and the job market at the time of hire. Louisiana employers are in a position right now of desperately needing folks to fill positions regardless of their gender and this legislation either puts employers in a state of chaos or in the court room.”

Workplace flexibility could be diminished. Many people are willing to trade higher wages for flexible schedules or the option to work from home. If employers feel pressured to keep wages equal, it is likely all of their employees will be required to have the same work conditions. Similarly, a younger employee may prefer a higher hourly wage over health insurance. If approved, SB254 could make it harder for employers and employees to enjoy the benefits of such flexibility.

Changes could result in a less productive work environment. Broadening the definition of “equal work” would make it more difficult to link wages to work quality. This presents a challenge to employers who want to reward the more qualified and more dedicated workers and could make it harder for employers to incentivize employees to improve their performance.

Conclusion

Legislators with concerns over the pay gap issue should bear in mind that state and federal law protects Louisiana workers from workplace discrimination.

The editor’s note of the federal Equal Pay Actexplains:

“[The Equal Pay Act] prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions.”

An Overview of Louisiana Unemployment Law by Lemle and Kelleher L.L.P. explainsLa. R.S. 23:302, 23:303, 23:332 et seq., a Louisiana statute:

“Employers that employ more than fifteen employees within the State are prohibited from discriminating against individuals on the basis of an individuals’ race, color, religion, sex, or national origin in regard to hiring, discharging, segregating or classifying, compensation, and terms, conditions and privileges of employment. The statute also makes it unlawful for an employment agency to fail or refuse to refer for employment any individual based on the same protected characteristics.”

All things considered, SB254 may be an attempt to address a wage gap that is not simply the product of discrimination, but instead reflects a host of factors including individual preference. It may also be the case that existing law sufficiently protects victims of discrimination, and does so without unfairly burdening employers.

Legislators should consider the possibility that broadening the definition of “equal work” will put greater financial and legal burdens on employers, diminish workplace flexibility, and lead to less fair treatment of more qualified and productive employees.