Flat White

How to deconstruct the gender pay gap

19 June 2018

2:40 PM

19 June 2018

2:40 PM

A curious trend is emerging from fashionable cafes all over the country, a trend to offer certain menu items as deconstructions – a dish served as a collection of separated constituent elements. It’s true if you look in the appropriate places you can find deconstructed coffee, deconstructed vegemite toast and deconstructed sushi. People seem to be happy to have their food deconstructed as a source of culinary pleasure.

It’s strange how the desire to understand which ingredients hide inside the meal doesn’t extend to other domains. Take the gender pay gap for example – the phrase no longer corresponds to any sort of empirical method or ongoing area of study, it’s become a self-evident truth, a term used to refer to something that is supposedly concrete and real. Do we no longer have an appetite to understand what comprises the glib politicised language that is dominating our public discourse? Perhaps the more likely case is that fewer people understand that something so nebulous as a gender pay gap can be deconstructed.

If such thoughts of injustice and discrimination have been keeping you awake at night, fear not. Australia now has its very own gender equality bureaucracy. The WGEA (Workplace Gender Equality Agency) has been quietly working since to 2012 (established as a provision of the Workplace Gender Equality Act) to undertake the noble mission of ensuring complete and utter equivalence between the sexes (sadly not all of them, just the traditional ones). How? Forcing certain organisations to hand over their payroll data, of course. Why? To encourage discourse on the gender pay gap and help foster a climate of restorative, proactive policy to close it over time. To what end? That much remains unclear. Their own annual report (Gender Equity Insights 2018 – Inside Australia’s Gender Pay Gap) doesn’t care to explore the causal reasons for any type of gap, they merely point to discrepancies and assume that the existence of a difference necessitates the suppression of that difference. Welcome to weaponised equality, everyone.

The major flaws in the approach of the WGEA are immediately obvious. Firstly, the elements of the gender pay gap are never deconstructed, which makes sense when you realise that the agency has a relatively restricted dataset that only covers individual wages by industry and employment type. Wielding the hammer of raw pay data, the report sets out to nail the misogynistic bias and patriarchal discrimination that must surely be the latent cause. Secondly, the report ignores the multiple, independent studies available that help to explain why a gap in earnings between males and females might come to exist. Finally, the report glosses over the fact that the part-time gender pay gap (across all industries) is actually negative, that is, in favour of women! Does the report call for an immediate reduction of this pay gap? Of course not:

While the gender pay gap for part-time workers overall is in favour of women (around -7.3 per cent), this pattern reverses among part-time workers in managerial positions.

Taking the same approach as the WGEA (i.e. ignoring the fact that the part-time gender pay gap favours women) one must then ask – what are the factors that result in the full-time gender pay gap favouring men? The three largest components are:

  • The tendency of women to choose lower paying roles.
  • The maternal career break effect (i.e. the cumulative effect of foregone experience resulting from maternity leave).
  • A generalised female preference for non-competitive workplace behaviour.

What room do these ingredients leave for male oppression and unconscious gender bias then? Precious little. Analysis of the types of roles that women will choose in a free labour market, as well as the choices that they make in their professional and personal lives are the crux of the earnings disparity.

Nonetheless, the WGEA saw fit to endorse research by KPMG (She’s Price(d)less – The Economics of the Gender Pay Gap) that highlighted the shocking emergence of sex discrimination (both overt and subconscious) as the main component of the gender pay gap. How on earth did KPMG manage to pin the gender pay gap on sex discrimination exactly? Well, that’s easy – using a method designed by Wendy Olsen and Sylvia Walby in 2002. What was that method exactly? Run a regression analysis on the logarithm of the wage difference using a number of available variables (such as parenthood status, education level and years of experience) and then assume that all remaining disparities are the result of direct discrimination.

From the paper:

For the purposes of this report, the … components thought to reflect ‘discrimination’ are all located in the unexplained components of the gender wage gap decomposition.

How convenient.

Given the highly spurious nature of the research, the WGEA sees fit to produce and share you’re probably wondering how much it costs you, the taxpayer. The answer is $5.9 million (in the 2016-2017 financial year). Hooray for equality. But of course, the $5.9 million doesn’t factor in the administrative burden placed upon all businesses with more than 100 employees subjected to the mandatory reporting framework. I doubt the WGEA has the statistical competence to derive the NRACC (Needless Regulation and Compliance Cost) it foists upon Australian business. If you’re a fan of black humour you’ll probably appreciate that one of the goals of the Workplace Gender Equality Act is to:

Improve the productivity and competitiveness of Australian business through the advancement of gender equality in employment and in the workplace.

But I’m sure one more faceless government agency tossing another compliance obligation onto the heap can’t hurt.

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