We’ve been reading about the gender pay gap for many decades. Now it has become wider for two years straight, the first such reported plunge since the 1960s. This has fired up yet another movement to do something about it: crack down on discrimination, mandate equality in pay, and formalize the rules on who gets a raise and who does not.
In an effort to avoid charges of discrimination, most large companies have instituted regimented systems regarding pay, mirroring systems in government and the military. The idea is that you must have objective markers that have nothing to do with gender, race, religion, and so on. It comes down to credentials, productivity measures, and seniority.
Such a system makes it very difficult to reward top performers if obvious merit cannot be documented by some idiotic mathematical formula. I once argued with a long-time HR gendarme who could not understand why anyone would resist such a formula.
“How else are salaries to be determined?”
My answer: “Supply and demand.”
I don’t get why this is so complicated.
As for the reason for the widening pay gap, is it not obvious? Brutal COVID-19 pandemic policies mandated business closures. Those who could work from home in “essential businesses” did so. If the job required physical presence, such as a child-care provider, the job was simply deleted. The worker—the woman—had to live off government largesse.
For a time, work-from-home felt like the ultimate emancipation. Same pay, no commute. It’s a dream, except that companies with big offices are not going to put up with that forever. The return-to-work policies changed everything and forced some serious decision-making, particularly among families with two incomes and children of school age.
The schools had been closed for up to 18 months and then two years. That put many working moms in the position of becoming tutors and essentially adopting homeschooling methods. That gave them a clear look into what was really going on at the schools. They did not like it.
As life normalized, these moms also found that child-care services had dried up. Many had gone out of business. Because government so heavily regulates this sector—caretaker-per-child rules, safety restrictions, licensing mandates, and playground equipment rules—they are not easy to start back up.
One would suppose that child care in a free society would be plentiful. Many people want to care for children, and many mothers would like to work in professional life. The trade is an easy one. But with government restrictions, a sector that would otherwise be well-functioning has become seriously hobbled and outrageously expensive.
As a result, many moms with very young and school-age kids simply threw in the towel. They were done with corporate life. The demographic trends toward married women in the workforce that date back decades—it was 1985 when this became more common than not—flipped in the other direction.
All of this was easy to anticipate as the lockdown era unfolded. It was not difficult to trace out the cause, the effect, and the links between the two. Five years ago, I would have placed a high bet that the “gender pay gap” would massively grow. This is because many high-earning professional women would simply use the moment to make a decision to choose home and family over career and distant office work.
Let’s dig a bit deeper here. This gender pay gap hunt—the subject of multiple thousands of academic papers and books—has always been fruitless. In well-functioning markets, systematic errors in judgment tend to be weeded out by competition. If it were really true that, for decades and centuries, markets have undervalued half the human race, there is an easy answer. Firms could snap up undervalued resources—women workers—and beat the competition. The profits would flow.
That has not happened on any mass scale, which should be an obvious clue that something is wrong with the analytical framework. Men and women are different by virtue of biology and comparative advantages in bearing and raising kids. Yes, there are house husbands and stay-at-home dads, but the pattern will generally track toward women as primary caregivers.
This reality has implications for professional pay rates. Women who enter the workforce before bearing children find themselves in a pickle as the children grow. They have to face the decision over life priorities. If it means taking off a decade from work and then restarting, that will manifest itself in pay levels. They will be generally lower simply because the choice of family versus career is a gendered one, generally speaking.
It’s utterly bizarre that saying this could be even slightly controversial. The endless hunt for the “pay gap” is really about discovering evidence of some kind of invidious discrimination that is deeply embedded in social structures. In other words, the hunt itself is ideologically laden, a fake science that starts with the conclusion before any evidence has shown itself.
“What we’ve seen in the last couple of years has really been a big push by a big chunk of employers, and especially big employers, to really get people back in the office more often. And what’s kind of unique recently in contributing, in all likelihood, to the wage gap is that it looks like women are about three times as likely as men to leave after RTO mandates are put in place.”
To put a fine point on it, women are choosing to bail out from the rat race. This is not about discrimination or structural sexism. It is simply a reflection of people making decisions in a world that requires tradeoffs.
In my local neighborhood, there is a school with a soccer field and a playground where the kids play. In mid-afternoons, you can see all the moms gather for social time while they watch the kids. On the weekends, the dads come out to see the kids in games and cheer them on.
There is nothing weird or wicked about any of this. This is just families being families. When women stay unmarried and childless, the gap flips the other direction. Comparing childless women younger than 30 to men of the same profile, women earn about 8 percent more on average. That should tell you all you need to know.
That we are discovering these normal patterns of demographic prioritization is one of the spillover effects of the pandemic response. Any thoughtful person could have seen this coming from miles away, even from the first edicts to close the schools and businesses. Even from a “progressive” point of view, these policies reversed all the fragile gains for which they had inveighed for decades.
This is why it was utterly bizarre that the ideological left became so enthusiastic for all the coerced disruptions of the period, including the school closures. None of it made any sense. In particular, it made no sense for a movement that had long championed public and compulsory schools to celebrate when they were closed down. It felt like some kind of bizarro world was in operation.
Proposition: We are better off stopping with all these absurd obsessions about achieving pay parity and prioritizing something more humane and workable—namely, the freedom to choose. The same goes for wages and salaries. Let the market work those out on its own without the constant exhortations from academics and social scientists who always claim to know better than families themselves.
