133. Do Men Really Earn More Money Than Women?

There is a common belief that men earn more than women. But is this really true, or is there more to this story than mainstream economists and politicians would have you believe?

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Here’s a transcript of our conversation:

Brittany: Hi, Connor.

Connor: Hey, Brittany.

Brittany: So today I wanna talk about something that really grinds my gears, so. Yeah. Get ready. So, as a woman, I am constantly being told by feminists, which is a term we could talk about later, and by, media and politicians, that I don’t make as much as a man and that I, you know, the workforce is rigged against me and I should feel like a victim. And I hate that because as someone who’s very proud of my career and, the compensation I’ve been able to make, I, take offense to this, I do not feel belittled or taken advantage of. In fact, my boss is like a very strong woman who’s amazing at her job and makes good money. So, you know why, especially politicians, why do they keep perpetuating this lie that men make more than women?

Connor: You know, I’ve, heard a lot about this too, and there’s usually a statistic thrown around that working women make only 78 cents for every dollar that’s earned by a man. And, you know, there have been like high profile celebrities, and I mean, even President Obama have talked about this statistic and this myth, and, ultimately I think used this to further their own agenda, which is more government control over what people are paid.

Brittany: Exactly. And you know, one of the celebrities is Sarah Silverman, who’s an unfunny and very crude comedian who’s like a millionaire. So I’m like, co Yeah, stop complaining, you are rich. Like you’re, you’re fine. You’re selling out venues. But these wage crusaders, as I like to call them, when we examine the data more, more closely, we find out that there there isn’t a wage gap, you know, the gap that these crusaders are actually wrong. What this is it’s a preference gap, and that exists because personal choice, not gender. Connor, you know, that’s the problem. And I don’t know if you could maybe define and break down what preferences for listeners, we’ve talked about it a little bit in past episodes.

Connor: Yeah. So I’ll use it with an example. my state, Utah, there’s very, you know, large families, strong families, a lot of the women choose to, you know, either be stay-at-home moms or work part-time. because one of their priorities or preferences, as we’re using that word, is motherhood and, is, you know, taking care of, of babies and raising children and having strong, families in homes where those children can thrive. And, so there’s a preference there where a lot of these women, to work and do work, but they prefer, either working fewer hours or they prefer jobs that have more flexibility, rather than a typical nine to five or a nine to eight, or, you know, like working long hours and grueling jobs. Because the preference is there for many of, these women, to have sufficient time and mental energy and, physical energy to, accomplish these other goals that they have. And so there’s other preferences that exist, but I think for women, you know, motherhood, is one of the higher ones up there that impacts their decisions as to how they, you know, want to participate in the workforce. And so they, often will have, lower-paying jobs, or they’ll have very well-paying jobs, but they’re working fewer hours, and so they’re making less money. or they’ll take, they’ll have a, what’s called a trade-off, that’s an economic term, right? Where instead of being in the office and grueling job and high pay, they’ll prefer to trade that for a job that they can do from home that’s a little bit more laid back, but still brings in some money because they have other priorities. And so it’s those preferences that often impact the jobs that women decide to do. Whereas men kind of in your traditional, we’ll call it patriarchal type of society, role, you know, are more comfortable and more able in a lot of cases to do the, you know, high power, hard-charging, long hour, type of jobs that might bring more compensation. But then in the eyes of some, they say, oh, but that’s disparity, that’s a income gap. That’s wrong. What they’re ignoring and avoiding is what you’re pointing out, what we’re talking about Britney, is that there’s different preferences that are there, that lead to that as you point out with maybe your boss. There’s, plenty of women who have the preference to, you know, work very hard and that’s a sole focus, and they’re fine to, make other, you know, sacrifices or not have the other preferences that might require flexibility or some of those other options. And as you point out, I mean, these women are in the workforce and they make a lot of money. And so it’s, we have to pay attention to some of these other factors when it comes to the so-called wage gap because they’re very informative about what’s actually happening and what’s not, what people think is happening.

Brittany: Yeah. And you hit the nail on the head, and I’m gonna address the motherhood thing again in a little bit. But women in large part, like you said, have different preferences. And just to clear one thing up, if we were to add up the salaries of every working man in the country, and then we compare that average to the average of every working woman there, would most certainly be a gap present. But that doesn’t tell the whole story because of exactly what you said. Every single person have different incentives that motivate them. And I hate to speak of that. You have genders in the collective, but sometimes men and women do have different reasons for doing what they do.

Connor: There’s actually an economist named Claudia Golden, and she’s really focused on this issue of this gender wage gap and discovered that in the early years of, you know, career development, there’s basically no wage gap between men and women working in the same field. She, compared male and female colleagues with almost identical, you know, resumes and intellect. And, there was a so-called wage gap of less than 1%. So, basically, nothing that’s a statistical blip. and so basically men, you know, weren’t really earning more than women at all early in their career when, you know, the kind of the, maybe the motherhood and some of the other preferences start to emerge. there’s no wage gap.

Brittany: Exactly. And that’s where kinda the twist comes in. And you’ve already hit on a lot of these points, but the gap in the income did eventually get bigger. But this is when these women decided to marry and have children. And so once they took on more caregiving responsibilities, and I should also mention that women are also tend to be, they have a higher rates of being caregivers for like their parents or a sick relative as well. So it’s not just motherhood, but like you said earlier, flexibility began to outweigh the opportunity to earn higher wages. So their preferences changed instead of seeking a promotion, which meant, you know, more time in the office, they were deciding to work less, maybe take lower positions to be with their kids. But this wasn’t a boss’s decision, right? This wasn’t management saying, you’re a woman, I’m gonna pay you less. It was actually like empowerment. And people don’t think of it that way, but it was women saying, I’m gonna do both. I’m gonna work and I’m gonna be a mother, and I can, you know, maybe I’m gonna sacrifice a little on both ends. So I think it’s actually empowering.

Connor: You actually wrote something for the Mises Institute a few years ago. I was reminded of, and, so here’s the quote, from your article. We’ll link to this, on the show notes page at Tuttletwins.com/podcast, to this article. So here’s this portion. It says, in 2014, there were leaks from Sony, revealed that Hollywood actress, Jennifer Lawrence had made less money than her male co-stars, in this film that she was involved in. Hollywood was outraged and demanded that the government help, you know, bridge the gender wage gap. and so, there was a different actress, Robin Wright. Isn’t she the one from, wasn’t she the princess and princess bride?

Brittany: She was, she’s buttercup.

Connor: Butter. Yeah, that’s right. Okay. So, Robin Wright, sounds think she was in Wonder Woman too. She’s done a bunch of others.

Brittany: Yes, she was.

Connor: So she takes a different approach, to this issue by taking matter into her own hands. How did she accomplish that?

Brittany: Yeah, so this is actually one of my favorite stories. So she was on a show called House of Cards, and she was not the main star, but she was pretty close in there. And right. Went into her contract meeting, prepare to demonstrate her worth. And the problem is, so there’s a personality scale and there’s this thing called agreeableness, and women tend to score lower or, yeah, higher on agreeableness. And that doesn’t mean what it sounds like. What that means is they’re less likely to be proactive about asking for raises, right? But Robin Wright was not doing that. So she came into her contract meeting with all this data showing that her character was actually more popular than the main star, Kevin Spacey, who we don’t really talk about anymore, cuz he turned out to be not, it’s not so great of a person in her life. But once she presented her case and her demands were met because she showed them like, this is my worth, and I wanna be compensated accordingly. And for right, putting up that fight was well worth potentially dragging out the negotiation process where a lot of women would just say, I don’t wanna deal with this. And I hate to say, you know, to characterize every woman, but this is what happened statistically. Hmm. So she wanted the higher wages, and in fact, when Jennifer Lawrence was asked, you know, how she felt about this pay discrepancy, she actually admitted that it was her own fault. She didn’t want to negotiate a higher salary. She was already making millions. She was in, what is it, hunger Game, what was the other, Franch? She was in another X-Men. So she had no desire to drag out negotiations. For her, the preference of getting it over with was more important than extra money. So in short sheet, you know, she valued the convenience over the money. And again, that comes back to preference.

Connor: What I find interesting here is that other people seem to care more about Jennifer Lawrence’s, compensation than she did. In other words, there are other people who see, oh, she’s being paid less, and they feel like that sets a precedent or an example that, they don’t want to apply to other people. So we have to go fight for Jennifer, and we had, we need to make a big stink about it, when in reality for her, it was not a big deal that, you know, it was like, Hey, I’m fine with what you’ve offered me and I’ll go ahead and take that. she had other preferences and so do other people too. It reminds me also of something we’ve discussed in the past, Brittany, that Frederick Bastiat wrote about. you’ll, our listeners will remember that he’s a French economist, and we based the, our law book after his, in one of his writings, he talks about the principle of that which is seen versus that which is not seen. And he says, a bad economist, or, rather even just a person who has thoughts about the economy, which basically every person does, a bad economist, he says, looks at that, which is seen. And, so in this case, and we’ve talked before about other, examples, the Broken Glass theory and all kinds of other things where this comes into play, but in this example that which is seen is the amount of money Jennifer Lawrence is paid versus her, you know, co-stars, or it’s the amount of money that a mom who has to, you know, wants to be soccer mom as well as, you know, work. It’s the salary she’s being paid versus the, you know, her male colleague who just stays there pulling late hours. Those are things that are seen. So it’s very easy to be a bad economist and just look at like, oh, well, you know, the, she’s not making the same amount of money. That’s wrong right? We’re just looking at the amount of money that’s what is seen. And that’s a bad economist. Instead, what Bastiat discusses is that which is not seen is, how you become a good economist. In other words, the things that are not readily apparent, the things that you don’t readily see and understand, you gotta dig a little bit deeper. You gotta try and understand what motivates people and what incentivizes them. Why are they making the decisions that they do? You can’t just rely on this superficial comparison of wages. There are these hidden preferences that people have, right? That as you point out, the women start to later in life desire more, schedule flexibility and so forth because of other priorities that emerge. And so those are the things that are not readily apparent. And it’s very easy in Twitter to be a woke social justice warrior. And, oh, women deserve, you know, equal pay. Those are bad economists. They’re not taking into account the full picture. They’re not taking into account as Bastia said, that which is not seen, and that’s these other preferences that come into play. Britney, I’ll give you the final word. Any thoughts?

Brittany: Yeah, I mean, again, as a woman, this really offends me because I have never felt that my gender has held me back. In fact, because I’m in the libertarian movement where there are few fewer women, being a woman has actually given me a little bit of an advantage. So, I really think we need to look closer at this. I love that you brought up Bastiat because this is something, this is a lie that just keeps going. And again, it just really offends me. So I want us to look closer at the data, look closer to preference, and understand that this is not, you know, some quest against women.

Connor: We will link, as I said on the show notes page, to, the article that Britney shared, maybe some, additional information about, the wage gap and preferences. This is an important topic because again, so many people are bad economists and they’ve got opinions on things. This is why you guys learning free market economics is so critical. As a reminder, we have a whole curriculum about this for kids of all ages, and the parents too. If you’re interested, head over to free Market.tuttletwins.com. you can sign up and get weekly lessons. Make it super easy. You guys can become free market champions, be good economists, and be able to combat all the crazy bad, information, and faulty economics that are out there. This is critical to making sure that we can defend our freedoms and you know, preserve a healthy economy from those who are trying to tank it into the ground. So, head to Tuttletwins.com/podcast to find the show notes page if you’re interested in those economic lessons, Freemarket.tuttletwins.com. as always, Brittany, great talking with you. And until next time, we will talk to you later.

Brittany: Talk to you later.

 

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