Thursday, 14 January 2016

Part time work and the wage gap

The Herald's reporting on a new tool they've produced to investigate the gender wage gap. Enter your broad age and profession (ANZSCO 2006), and it will tell you how much more (less) you earned than a woman (man) of the same age and profession. How?
This annual calculation makes the assumption of working 40 hours a week and 52 weeks a year. These rates are before tax.
There are a range of reasons which can influence the number of hours men and women work.
If an occupation has been selected we calculate the difference in male and female median hourly wages for that ANZSCO 2006 category and age group. If no occupation has been selected the overall difference in median hourly rates is displayed.
Last year, I'd noted that there are some pretty substantial differences in full-time and part-time work choices that affect the overall pay gap results:
One simple change could almost halve measured pay inequality. What is it? Have women replicate men’s split between full-time and part-time work. Ok, maybe that’s not so simple. But while there are 7.05 full time male workers for every part-time male worker, there are 1.96 full time female workers for every part-time female worker. And part-timers always earn less than full-timers. Interestingly enough, part-time female workers earn more than part-time male workers – for the obvious reason given those numbers.

If you re-weighted the pay gap using women’s median earnings for full-time and part-time work, but men’s split between full-time and part-time work, the pay gap would drop from 11.9% to 6.6%. And that’s without controlling for a pile of other important stuff, like time spent outside of the workforce or differences in education background and the like.
The mix between part-time and full-time work matters. Part time work generally pays less per hour than does equivalent full-time work - except in some higher end contracting that won't much be evident in median earnings anyway.

If we look only at full-time earnings, men make $25 per hour and women make $23.02. Or 92 cents for every $1 of male earnings. If we look only at part-time earnings, men earn $16 per hour and women earn $17.65 per hour, or $1.10 for every $1 of male earnings. If we bundle those both together, because a greater proportion of women are in part-time employment which pays less overall, you get a larger pay gap: women earn $0.88 for every $1 of male earnings.

So, what to do about it? I'd suggested (as a first cut) equivalising things so that you were comparing men and women on the same basis, such that they'd have equivalent proportions of men and women.

When I asked the Herald why they hadn't accounted for full versus part-time employment, they noted they were following Stats' recommended procedure:
We can measure a gender pay gap for either full-time or part-time workers separately. When we do this, we find that for full-time workers only, the gap is smaller but has a similar up-and-down pattern over time as the ‘total’ gender pay gap. For part-time workers, the gap reverses – women who work part time typically earn more (per hour) than men who work part time.

When we separate workers into full-time and part-time groups, we hope to remove the differences caused by the types of jobs that offer (or don’t offer) part-time hours. However, splitting workers into full-time and part-time work can change the balance of other factors that affect pay, such as age. For example, females working part time are more likely to be older than males working part-time.

Overall, we recommend using the median hourly pay across all workers, rather than using full-time or part-time workers separately.
That's all well-and-good, but you can't really go from there to talking about the resulting gap reflecting failures in equal-pay-for-equal-work, as some of the quoted folks in the story then do. Part of the salary bundle in part-time work is the flexibility it gives you. That is worth something to those in part-time work or they wouldn't be choosing it. And because it is valuable to employees and costly to employers, it draws a pay penalty.

I really can't recommend strongly enough that folks running the pay equity beat read Claudia Goldin's summary of the state of the literature. It was her 2014 American Economics Association Presidential Address. Or, just listen to her interview with Kathyrn Ryan from 2014.

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