Is the gender pay gap fact or fiction? Depends on how you look at it

“Women all over America deserve a raise,” Hillary Clinton has said, again and again. “There’s no discount for being a woman — groceries don’t cost us less, rent doesn’t cost us less, so why should we be paid less?”

Depending upon which numbers you choose, women in America make 77 cents or 79 cents for every dollar men make. These numbers come from the U.S. Census Bureau, 77 cents to the dollar from the 2010 Current Population Survey, and an increase to 79.5 as of 2014.

What Clinton is saying in essence is that if a male family practice doctor makes $160,000, a female family practice doctor only makes $126,400. If a male schoolteacher makes $56,610, a female teacher only makes $44,722.

An analysis by Colin Combs at the National Center for Policy Analysis (NCPA) tells us; “The claim that women only make 77 [or 79] cents for every dollar a man makes is usually followed by a call for a whole new wave of regulations and pay mandates to stop this discrimination. The gender pay gap is undeniably real; men earn more than women, on average. The question is ‘Why?’”

Partly, it is in how the numbers are determined, which is illustrated by the fact that the Bureau of Labor Statistics determined that women make 83 cents for every dollar men earned in 2014, not 77 or 79 cents per dollar men earned. But there are other factors that must be considered in this assertion.

One of those factors is using the average pay for all men and the average pay for all women as the standard for analysis, about which Combs wrote: “What these statistics reveal is not what people are being paid for the same work, but what the average full-time working woman makes against the average full-time working man. It ignores differences in occupation. The average surgeon makes more than the average librarian, so if more men choose to be surgeons and more women choose to be librarians (which they do), this will be reflected in their average wage.” In reality, it is “unequal pay for unequal work,” Combs wrote.

The fact is that women voluntarily choose lower paying occupations, such as teaching, psychology and nursing, while men head toward computer science and engineering. Married women often reduce their participation in the job market for family reasons, and many other women are self-employed and run their own businesses. When adjusted for these factors, the results show that women do earn less than men, but only 5 to 7 cents less per dollar, not the much-heralded 21 or 23 cents.

The reasons for this smaller difference are not clear, Combs writes. Such things as salary negotiating skills or women being more risk-averse than men are suspected factors.  Since the true factors have not been determined, efforts to correct the difference will likely misfire; to solve a problem you first need to identify the problem.

The NCPA analysis quotes data from the Bureau of Labor Statistics:

■ Women’s inflation-adjusted wages have been increasing at a rate significantly higher than men’s, or rising even while men’s wages fall.

■ While the real wages of both men and women without a high school diploma have fallen, this decrease is three times worse for men than for women.

■ Women’s wages have been rising, even as the wages of men with a high school diploma or associate’s degree have been falling. Women are much more likely than men to interrupt their work for familial reasons, such as maternity leave.

Combs cites a Labor Department study conducted by CONSAD Research Corporation saying the 77 cent figure is misused and overshadows many real gains made by women since the 1970s. This is being done “to advance public policy agendas without fully explaining the reasons behind the gap,” the study said.

Never being one to let mere facts interfere with a good opportunity for demagoguery and pandering, Clinton charges ahead with her pledge to use government to get women a raise that they have largely already gained without her help.

“Our false preoccupation with pay equity is not costless,” said the Hoover Institution’s Richard A. Epstein, “for it leads to bad labor market regulations that hurt all workers.” Regulations imposed to achieve equality ultimately negatively affect the job market for both women and men.

Government tinkering with business elements it really knows nothing about, all to fix a small problem that it doesn’t understand is bad government. But bad government is a product that the Left produces in abundance.

This issue demonstrates how the Left is either unaware of, or simply chooses to ignore economic principles in order to pander to a special interest group to garner votes. Jobs have value based upon the dynamics of each business, and each business has its own dynamics. A government one-size-fits-all solution to this is, to be kind, highly unlikely to succeed.

An electorate that does not investigate issues and votes instead on emotion will help usher in more harmful policies like those that have prevented the U.S. from recovering from the recession that ended seven years ago.

What’s more important, a minimum wage hike, or fixing the economy?

An analysis by the Congressional Budget Office (CBO), a nonpartisan arm of Congress, shows that both sides in the debate over whether to raise the federal minimum wage from $7.25 an hour to $9.00, $10.10, or even $15 an hour have relevant points to make.

Advocates believe that the wage hike would lift nearly a million people out of poverty, increase productivity, reduce turnover and give those receiving the raise more money to spend, and that would translate to businesses recording higher sales, and an overall improvement in economic activity.

A $10.10 minimum wage, the CBO says, means 900,000 fewer people in poverty, and job losses will comprise only 0.3 percent of jobs affected by the wage hike.

The hike would boost wages for most low-wage workers, as about 16.5 million workers who make less than $10.10 an hour would see higher earnings once the higher minimum is fully implemented, which Democrats in the House and Senate have been calling for. And then, those making slightly more than the new minimum wage may feel they need a raise too, and employers would be virtually compelled to give them one in what the CBO calls a "ripple effect."

Let’s review: Advocates believe we should raise the minimum wage because the more low-wage workers make, the more they'll have to spend, and the better that will be for businesses selling products and services. People move out of poverty and spend more and consequently businesses prosper from greater sales. Our economic problems magically dissolve. Does it get any better than this?

Unfortunately for the advocates, good decision-making requires looking at all the factors, not just the ones that support a particular position.

Opponents point out that higher wages lead to higher prices, and lost jobs, and wages need to be related to the work involved and its value to the company, not artificially determined by Washington bureaucrats.

An essential factor that needs to be considered is what happens inside businesses when their labor costs increase? They must make adjustments in other expense areas, increase productivity or increase prices to maintain profitability and stay in business.

The other side of the CBO job loss estimate is that while only 0.3 percent of minimum wage workers will lose their jobs with the proposed wage hike to $10.10 an hour, and that sounds like a small effect, the number of actual people comprising that 0.3 percent is 500,000. So 900,000 will be lifted out of poverty, but more than half that number will lose their jobs. Thus, the picture painted by the CBO is somewhat less rosy than the advocates believe.

A study for the National Center for Policy Analysis by Richard B. McKenzie, explains that there are other forms of compensation to consider, nonmonetary benefits that may be as much as 30 percent over and above wages of all workers, a substantial percentage of the total compensation employees receive. Faced with higher labor costs, employers may make adjustments to these nonmonetary benefits to balance things. These benefits include relaxed work demands, workplace atmosphere, schedule flexibility, job security, and hours of work. Employers may also have to cut jobs, curb summer hiring, opt not to replace workers who leave; lower their profitability and/or raise prices to customers.

Despite what you may hear, read or think, most employers want the best employees they can get; the most productive, best trained, and most devoted workers they can find. They are willing to pay them to keep competitors from luring them away, however, there are financial limits to what businesses can pay without making other changes.

They may reduce jobs or cut worker hours, increase demands on existing employees and impose a stricter work atmosphere to increase productivity, replace workers with machines, or look for cheaper materials from overseas where labor costs are lower, affecting American suppliers.

The US economy is suffering, as evidenced by, among other indicators, the labor force participation rate, which shows that only 63.2 percent of Americans age 16 or older are participating in the labor force, the rate having fallen over the last several years to 1977 levels.

We need an atmosphere that encourages businesses to create jobs, not artificially raise the wages of the least skilled, least experienced people in the labor force, particularly when doing so will cost 500,000 jobs, and further depress the participation rate.

Among the many stunning failures of the Obama administration is its proclivity to pander to small constituencies to gain political support, all the while ignoring the broader problems facing the nation.

When an administration chooses to implement narrowly focused policies conceived for political gain, you get what the Obama administration has produced: an almost non-existent recovery from the recent recession, millions of Americans who can’t find a job, millions more who are too discouraged to keep looking and have dropped out of the labor force, and still millions more Americans on food stamps and other forms of welfare.

The Obama administration and Congressional Democrats have shown conclusively that the serious problems of the nation are far less important to them than winning the next election.

Government is a poor mechanism for correcting societal problems

Most Americans think that helping truly needy people, whether they live here or in some other country, is a worthy objective. Looking at charitable contributions as a benchmark, Americans are the most generous people in the world, giving $316.23 billion to charitable organizations in 2012, about 2 percent of GDP, according to Charity Navigator, and preliminary figures for 2013 indicate a significant increase to $328 billion.

Double those numbers and it still would not be good enough for the federal government, which believes that if private sources don’t relieve every semblance of suffering for every single suffering American, the government must step in and do the job better.

Except that government can’t do it better, never has, and never will.

Government’s failure to achieve better results than normal people doing what normal people do has never been a deterrent to wasting billions of taxpayers dollars in a futile effort to try one more time to do so.

The most notorious failure was Lyndon Johnson’s “War on Poverty” which began 50 years ago in Mr. Johnson’s State of the Union message. From the beginning of the war on poverty until 2013, local, state, and federal spending on welfare programs totaled $16 trillion, according to data from the U.S. Census Bureau. Currently, the United States spends nearly $1 trillion every year to fight poverty.

When the War on Poverty began, 33 million Americans were in poverty and the poverty rate was 19 percent. Today, approximately 46.5 million live in poverty and the poverty rate is 15 percent. Even though the poverty rate is lower than 50 years ago, because our population is much larger now than then, more people are poor today than in 1964. We have fought a long and expensive fight, and lost. Yet we still fight on.

President Barack Obama’s cause du jour is income inequality, and it’s significant other, the minimum wage. And now that “reforming” the best healthcare system in the world is well underway, he wants to declare war against income inequality.

In no free or relatively free economic system can there be income equality, for two reasons. First, inequality is a fundamental part of life. Some people sing better than others. Some are better athletes than others. And some people make more money than others, and that’s because some people are better at their job than others and deserve higher pay, and some jobs require more skill and training than others, and pay better.

So, like poverty, another area that will always exist, we will always have income inequality.

Far more important, however, is whether there is the opportunity to move up from the lower income levels, and that is an area that has been fairly stable, according to The New York Times, which reported last month that “the odds of moving up — or down — the income ladder in the United States have not changed appreciably in the last 20 years….”

That means that people in the lowest quintile are not condemned to stay there, and people in the top quintile are not guaranteed to stay there, and there is substantial movement in and out of all quintiles.

It’s a favored piece of envy politics that the rich get richer and the poor get poorer. But the data tell a different story. From 1967 to 2009, the real mean household income increased for every quintile, which means the poor became richer, not poorer. Americans in poverty could afford more goods and services in 2009 than in 1967, according to U.S. Census Bureau data.

Other factors, like where people live, have an effect. Harvard University’s Raj Chetty reported “the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4 percent in Charlotte but 12.9 percent in San Jose,” and factors such as better primary schools and greater family stability also aid upward mobility, he wrote.

Larry Kaufmann, senior advisor at Pacific Economics Group, discussed findings of the Pew Charitable Trust, which showed that “Half of children born to parents with bottom-third income levels experience upward relative mobility when the parents remain continuously married; the figure falls to 26 percent when this is not the case,” he wrote.

The Pew study shows that the poverty rate among married couples is only 6 percent, and among married couples who both have full-time jobs the poverty rate is practically zero. The poverty rate among single dads and single moms, however, is much higher: 25 percent for single dads and 31percent for single moms.

Investor’s Business Daily Senior Writer John Merline notes that income inequality has increased faster since Mr. Obama took office than under any of the three previous presidents, and that inequality is now greater than at any time since the Census Bureau started recording it back in 1947.

The message from this is that to assist folks in moving up the income ladder, Mr. Obama should replace his administration’s policies that impede economic recovery, and seriously encourage the restoration of family values among Americans. That would accomplish far more than making people think they are victims, and fomenting division among Americans.