Pay equity laws may rest on flimsy foundations

By John Thompson News Reporter Why do women, on average, earn less than men? This is a complicated, politically charged question. For the Public Service Alliance of Canada, it's a no-brainer: women continue to be oppressed at the workplace by systemic sex

Why do women, on average, earn less than men?

This is a complicated, politically charged question. For the Public Service Alliance of Canada, it’s a no-brainer: women continue to be oppressed at the workplace by systemic sexism, as we are reminded in full-page advertisements that attack the Harper government for its proposed changes to pay equity legislation.

Women only earn 70 cents on the male dollar, the union’s ad tells us, repeating a commonly cited figure.

The union is not alone in accepting the premise that sexism is rife within the Canadian workplace. Canada’s pay equity laws are based upon the assumption that work routinely performed by women is underpaid, and it provides complicated mechanisms to right this imbalance.

These laws apply to the federal government and to federally regulated industries, such as airlines and telephone companies.

What’s surprising about all this is that some studies published by Statistics Canada undercut these assumptions to varying degrees.

The reports disagree on the details, but they commonly suggest that the frequently reported wage gap between the sexes is exaggerated, and that a large portion of the gap can be attributed to reasons other than discrimination.

Most remarkably, one study produced in 2000 by Michael Baker, of the University of Toronto, and Nicole Fortin, of the University of British Columbia, found no evidence that a pay-equity problem exists in Canada.

It’s important to understand that pay equity means something different in Canada than in the rest of the world. Most people take the term to mean equal pay for equal work. That’s not what we’re talking about here.

Instead, Canadian pay equity is the theory that work traditionally done by women – such as child care and secretarial work – is paid less than similar tasks performed by men. Women are paid less because of discrimination, the theory holds.

Interesting idea. But where’s the evidence?

Baker and Fortin went looking for it. They found none – at least, none in Canada.

They reasoned that if pay equity were a problem, a statistical relationship should exist between wages and the ratio of men to women in an occupation.

As the proportion of women at work rises, wages should drop, if systemic sexism is at play.

But no such pattern could be found in Canada.

True, women cluster in some low-paying occupations. But this is offset by women’s over-representation in high-paying jobs in education and health care in Canada.

What’s interesting is that the authors did find a pay equity problem in the United States, where many of these jobs in education and health are not unionized. In Canada, these jobs are overwhelmingly unionized and, as a consequence, pay better.

In both countries, about 15 per cent of employed women work in the education and health fields. That’s a big enough piece of the female workforce to balance out low-paying jobs dominated by women.

This conclusion is “particularly disturbing,” the authors note, because it demolishes the premise upon which Canada’s pay equity laws stand.

Not everyone agrees. Marie Drolet with Statistics Canada has looked hard at the wage gap between men and women and tried to quantify the gap using complicated statistical tools.

She suggests that the clustering of women into low-income occupations may explain about 10 per cent of the gender wage gap.

But the gap is much smaller than is commonly reported, Drolet found. She puts it between 84 and 89 per cent, rather than 70 per cent.

Why the discrepancy? The often-quoted figure is likely taken from the Survey of Consumer Services, which found a male-female earnings ratio of 72.5 per cent in 1997, up from 58.4 per cent in 1967.

This figure is misleading because it compares annual salaries between men and women. But women, on average, work fewer hours during the year than men. This skews the ratio.

A better comparison is between hourly wages, which, with other adjustments, produces Drolet’s figure.

What’s more, when men and women enter the workforce, their wages are very similar, with women earning 96 per cent of the average male wage during the first two years of work.

The gap only widens in later years. Why is this? Drolet cannot explain the entire gap, but a good chunk can be attributed to differences in how men and women behave.

Specifically, many women take time off work to raise families. Research shows this has several important consequences for women’s wages.

It means women, on average, end up with four fewer years of work experience than men. It also means women take more time off and leave jobs earlier than men.

This results in less seniority and missed opportunities for promotions.

As well, wages are higher for full-time jobs, while women are more likely than men to take part-time work.

Evidence suggests this behaviour is tied to raising families. Hence the wage gap is smallest between single men and women, at just 96 per cent, while the gap is widest among married men and women, at 77 per cent.

All this suggests women choose jobs that offer flexible working hours as a trade-off for lower wages.

Behavioural differences also give men certain wage advantages. Men are more likely to graduate with degrees in natural science or engineering, and these are high-paying occupations.

Men are also more likely to work in jobs that offer commissions, bonuses and other pay incentives.

All said, Drolet believes she can attribute about half of the gender wage gap to behavioural differences between men and women. These differences include the tendency for women to cluster into low-paying jobs.

The reasons behind the other half of the gap remain unknown.

Maybe the remainder is due to outright sexism. There’s some evidence to support this, as it is largely the unexplained portion of the wage gap that has shrunken in the past 30 years.

Or maybe not. We don’t know.

Either way, the theory that Canada has a pay-equity problem remains just that: a theory, and one that remains to be conclusively proven.

There’s good reason to suspect it never will be. After all, sexist bosses are unlikely to admit their prejudices to anyone conducting a survey.

Contact John Thompson at

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