The Nebulous Argument of Pay Equity

What everyone needs to know about government and wage-gap reporting

Once again, the topic of pay equity is front and centre in the news as Family and Community Services Minister Carmel Robichaud tabled the first annual report in the legislature yesterday regarding the government's five-year Wage Action Plan titled Facing the Economic Imperative. The crux of the report attempts to convince New Brunswickers that women are undervalued and underpaid in the workplace.

I know what you're thinking, who in their right mind could oppose something like pay equity or wage-gaps, especially when buzzwords like "discrimination", "fairness" and "equity" can be found riddled throughout the document. Well, let's get one thing clear here, I'm all for equal pay for equal work, however, in the document Facing the Economic Imperative, the conclusions suggest that the "wage-gap is the difference between the average wages that men earn and the average wages that women earn". Furthermore, the report suggest this gap is likely due to the discrimination which supposedly exist amongst women in the workforce. Two things that tend to favour the allure of the pay equity arguement.

First of all, I quickly noticed that the report identifies a wage-gap between males and females of 15.5%. This figure is very deceptive because it doesn't take into account differences in work hours, occupational choices, and other key variables. In other words, the concept may sound egalitarian, but many times certain variables are missed or left out so as to make the arguement stronger in favour of "pay equity" as the only means to curb wage inequalities. But please don't get me wrong here people, I'm not suggesting that there is absolutely no gender wage gap, but I do believe that one must consider a few things first before one quickly hops on the "pay equity" bandwagon.

For example, the wag-gap cited above does not take into account such factors as men who enter the Canadian Forces right out of high school do so at much higher rates than do women. Thus, these men command a bigger paycheck upon graduation and, in turn, widen the wage-gap. As well, fewer women than men work full-time, not to mention, those women who enter the workforce tend to work fewer hours than men on average --- according to a 2001 Statistics Canada report, women's participation rates were lower (59.3 per cent) than their male counterparts participation rates (68.3 per cent).

What does this all mean?

Given that these variables and discrepancies are not considered or accounted for in the "pay equity" arguement, then there is good reason to believe that wage gaps could be as low as 5 per cent in some parts of Canada, even New Brunswick. Statistics Canada notes that the unadjusted wage gap is small for workers with less than two years experience (4 per cent) but grows larger as years of work experience increase. A National Graduates Survey found that the gender gap was relatively small two years after graduation (7 per cent) but widened two to five years after graduation (16 per cent). Not only that, they found that single female university graduates earned more than single male university graduates: $40, 024, compared with men $39,342. So there definitely is a wage gap, however, it just isn't as sizable as initially reported (15.5 per cent).

Big or small, it would be easy to make the assumption that the remaining gap is primarily due to discrimination, but before one makes this judgement, there are two things to consider: choice and experience. In order to put this issue into a better and more working explanation, I will cite an arguement made by former director of the Canadian Taxpayers Federation Mark Milke;

If one compared the per capita earnings of female lawyers with their male counterparts, the wage gap would likely be even more pronounced.

Because women have only recently flocked into law school at the same rate as men, a majority of the most senior lawyers, judges, and law professors --- those with the money --- are male. Because it takes several decades to reach the top rung of any profession, it will take that long for the wages of women in the legal profession --- and thus the per capita comparison, to equal that of their male counterparts. And that assumes that one day both sexes will work the same number of hours over the course of their careers, have identical qualifications, and perform work similar enough that each will bill per hour at exactly the same rate. If even one female lawyer did more pro bono work than the average male lawyer did, the first statistical "wage gap" would appear between the sexes.
And the same example could be true in reverse. If 50 years from now, law is a female-dominated profession where the majority of the most senior and longest-serving lawyers and judges are women (and even both sexes worked the same number of hours at that point), the wage gap due to seniority reasons alone would then favour women.

Point being, any decision to stall one's career climb, whether to raise children, take a leave of absence or to backpack around Europe, will affect one's future earnings in relation to those who opt not to make similar choices. Granted, the person who takes time off to raise children or goes to Europe may be a more balanced person; they may have a fuller life than the workaholic lawyer. But none of that is relevant to wages. The wage gap that would exist between male and female lawyers in this example is because of different choices and experience, not discrimination.

So as you can see, the "wage gap" between males and females is due to many different variables, but to blame employers’ discrimination as its primary cause is irresponsible to say the very least. Instead of government's determining over-inflated salaries for each and every profession, the report Facing the Economic Imperative could have been more constructive if its policy-makers faced up to workforce realities in both the private sector and the public sector. To be honest, it's not up to government bureaucrats, lawyers and human rights tribunals to regulate wages, that should be the job of the market in a true egalitarian society. In other words, not allowing the market to determine wages and industry professions could only lead to one scenerio, a bureaucratic nightmare that New Brunswick taxpayers will ultimately be on the hook for. (Hat tip Spink About It)