Submitted by Shawn Conn on Wed, 09/28/2016 - 19:46

One of my friends on Facebook reminded of a Freakonomics podcast, about gender pay inequality, I'd heard earlier this year. It had crystallized my thoughts on the subject and pretty much confirmed my existing intuitions.

Here are the salient points in the podcast: 

  • Intentional discrimination is hard to discern and seems negligible (there are laws against blatant discrimination).
  • Aggressive competitive bargaining doesn't seem much of a factor when comparing men/women early in their careers.
  • 25% of the gap is can be attributed to self-sorting into higher paying sectors (e.g. a greater percentage of men in finance vs. public education).
  • The most significant factor is due to temporal flexibility, valuing when you do your work. Men are more likely to trade off time flexibility for earnings. The pay gap gets most extreme when you start talking about executive-level employees.

To put it another way, while discrimination probably exists, it's statistically a non-factor. The more significant factor is men are more likely to be drawn toward paths that have higher earnings. In the competition for pay, especially at the top of the corporate structure in high paying sectors of the economy, it's a game of attrition with one's personal time. Women, statistically, do not not like to play that game. 

One my favorite, now defunct, blogs, The Epicurean Dealmaker, had a post about this phenomenon manifesting itself in the world of investment banking.

This pretty much confirms what I have experienced myself. I have friends that have put their career aside for the sake of raising their kids. I know of one friend that explicit walked away from the stock analyst route because she found being a teacher more rewarding. In my own LAMP/Drupal web development consulting business, I've made the choice to pursue higher paying, project-based work vs. the sit-at-a-desk-and-mix-unproductive-and-productive-time oriented work.

While I'm sympathetic to the goals of pay inequality, I think fighting against 70-cents-on-the-dollar pay is a waste of time. It's better spent fighting for parental leave benefits (some that should be incentivized in this country) & doing something about pay inequality overall (a much thornier problem), rather than fighting statistical artifacts that will never reach parity.

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