Equal Pay for Equal Risk

It is a well-known fact that women, on average, make less than men in the US work force.  Whether that appalls you depends a bit on your political motivation, as well as your facility and honesty with data analysis.  The raw numbers tend to show a large gap, while numbers corrected for things like years in the work force, education, and industry selection tend to show a smaller gap.

A big driver of gender wage disparities is the industry in which males and females tend to work.  Male preference industries like construction and heavy manufacturing tend to pay more than female preference industries like health care and education  (yes, I know we could argue all day as to whether these industries are truly a preference or the result of some implicit cultural direction, but I am not going to touch that today).

But one thing I have never thought about, or heard discussed, is the issue of risk.  When we discuss securities and investments, we often talk about income in the context of risk -- the more risk one takes on, the higher the average returns one typically gets.  It may be, though, that we should talk about employment income in the context of risk as well.  After all, if one were looking at two fairly similar jobs, except the chance of layoff or job loss were much higher in one than the other, then one would expect the job with more job loss risk to pay more.

In this context, recent job loss numbers by gender are interesting  (a story, by the way, Mark Perry has been on for months but the MSM is only just now waddling in to notice).

employment2

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  • Ari

    Oh, no, these graphs *actually* mean that males face more discrimination in the workplace. Equal employment for equal -- wait, what?

  • Interesting thought -- I'd love to hear if you actually do further study on it.

    One question that comes up regarding this is how tightly coupled the numbers usually are. The graphs are Jan '06 to Feb '09, and I wonder whether Jan '06 (due to high employment in construction and other male-dominated fields) actually showed an artificially low unemployment rate for males...

    I.e. what I'm getting at is whether there is a naturally higher unemployment rate amongst men, and if that might be evidence of men working in jobs with higher employment risk.

    Either way, if you have more info over time, I'll be reading.

  • Link

    Males typically pay more for life insurance, because of higher mortality. Where's the outrage.

    I had never heard of a correlation between wages and unemployment risk, but it's illuminating.

  • morganovich

    i don't have any hard facts to back this up with, but anecdotally have heard from 3 different HR folks with whom i have spoken and the risk issue has a corporate component as well. women in their mid/late 20's to mid 30's are in peak child bearing years. they tend to take time off to have and raise children. whether or not it's fair, biology is biology.

    as a company, investing in training and promoting them carries a risk. they may leave either temporarily or permanently. this makes "investing" in them riskier. compensation (per year of experience) between men and women in their late 30's tends to converge as this issue goes away.

  • Methinks

    I too can offer only anecdotal evidence. I'm in a high stress, male dominated industry where I basically eat what I kill. Consequently, my compensation was much higher than average. I've never ever been underpaid - for long. When I felt that I was, I started my own company. Of course, I chose not to have children. Time marches on and when women return from maternity leave they are inevitably behind, distracted and worth less to their employer. On the other hand, they have children. That's a form of compensation that everyone seems to ignore.

  • GU

    Warren Farrell, former member of the Board of Directors of NOW, wrote a book called "Why Men Earn More." His basic thesis is that they work crappier, riskier jobs. His point overlaps substantially with Coyote's, but not exactly. The book is worth a read if you're interested in the topic.

    http://www.amazon.com/Why-Men-Earn-More-Startling/dp/0814472109

  • Don't forget another form of risk differential: Men have an occupational death rate 9 times higher than that of women.

  • usreporter

    People do get paid differently according to the amount of risk they take. Sales people who can be shoved out the door tomorrow if they do not make target get paid a disproportionate amount compared with the people making the product they sell, even though those people are often more qualified. I'm thinking specifically about journalism but the same could be applied to other industries.

    Also, I don't really understand the chart. On the employment chart the pink line is consistently higher than the blue one. It seems to be saying that generally there are more women in employment than men. Given that in most cases it is the women that stay home temporarily when children are born, I find it hard to believe that there are more women in the workforce than men. I would be grateful if someone could explain this to me.

  • DKH

    usreporter:

    The pink line uses the scale on the right side of the graph, the maximum of which doesn't even meet the minimum of the left-side scale. The left-side scale is where the blue line should be reckoned.

  • Joe Magner

    Ah,

    So that makes all the sense in the world out of mexican labor and immagration. Why they flock to the United States. Why they take jobs in the fields where pestisides kill and construction where there is danger of falling. Why they dont demand Health Benifits.....Why they are paid SO MUCH and why they are displacing American Workers.....American Works would rather settle for bad wages and the mexicans - who like risk and bring their families for risk - want to be paid all those big bucks.

    If only Americans would just no be so Risk Adverse they could be making millions like the mexicans!!!!!!

    Thank you for so thoughtful a piece.

  • frankania

    Remember back in the 70's, Carter's plan to equalize wages. He pointed out that a truckdriver made more than a nurse! Well, the answer is easy, if the nurse doesn't like her salary, she should DRIVE A TRUCK!