Jeanne Sahadi Commentary:
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The 76-cent myth
Do women make less than men? The wage-gap ratio isn't the best gauge for pay discrimination, and overemphasizing it can undermine an important issue.
By Jeanne Sahadi, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) - When you have a legitimate point to make, it can undercut your argument to rely heavily on a sound-bite statistic that easily can be misinterpreted.

When it comes to pay discrimination, the one statistic you hear over and over is that women make only 76 cents for every dollar a man earns.

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To the average person, that ratio gives the false impression that any woman working is at risk of being paid 24 cents less per dollar than a man in the same position.

But all the wage-gap ratio reflects is a comparison of the median earnings of all working women and men who log at least 35 hours a week on the job, any job. That's it.

It doesn't compare those with equal work, equal training, equal education or equal tenure. Nor does it take into account the hours of overtime worked.

The wage gap, in short, "is a good measure of inequality, not necessarily a measure of discrimination," said Heidi Hartmann, president of the Institute for Women's Policy Research.

Unequal doesn't always mean unfair. Much depends on the reasons for disparity. And, Hartmann notes, "parsing out (the reasons for the gap) is difficult to do."

Factors may include: more women choose lower-paying professions than men; they move in and out of the workforce more frequently; and they work fewer paid hours on average.

Why that's the case may have to do in part with the fact that women are still society's primary caregivers, that some higher-paying professions require either too much time away from home or are still less hospitable to women than they should be.

However, while those factors account for a good portion of the wage gap, actual pay discrimination likely accounts for the balance, experts say.

Hartmann believes discrimination accounts for between 25 percent and 33 percent of the wage gap. Compensation specialist Gary Thornton, a principal in the HR management consulting firm Thornton & Associates, figures at least 10 percent to 15 percent does.

Whatever the breakout, there certainly are numerous studies that show discrimination -- however unconscious -- still exists. For instance:

  • A recent Cornell study found that female job applicants with children would be less likely to get hired, and if they do, would be paid a lower salary than other candidates, male and female. By contrast, male applicants with children would be offered a higher salary than non-fathers and other mothers.
  • A recent Carnegie Mellon study found that female job applicants who tried to negotiate a higher salary were less likely to be hired by male managers, while male applicants were not.

Then there's the phenomenon of wages going down when more women move into a field.

Take human resources, now a female-dominated profession. I asked Thornton if he thinks female human-resource managers today are paid as well as he and his male colleagues were 15 years ago. "Not at all," he said. He estimates that in inflation-adjusted terms they're paid about 20 percent less.

Why? "That's the million-dollar question," he said. "There are many things at play. But we still have a long way to go to change unintentional discrimination."

A few years back, the Massachusetts Institute of Technology found that its women scientists were routinely given less pay, space, funding and rewards than their male colleagues.

"Did anyone intentionally give them smaller offices and labs? Probably not. It's just one of those things (that) accumulate and add up to barriers and institutional discrimination," Hartmann said.

Even though discrimination may not be intentional, Hartmann said, companies should be intentional about regularly reviewing their compensation structures and promotion records to correct for patterns of discrimination.

But maybe there can never be absolute parity because often there are many non-discriminatory variables that cause a differential in pay. What determines someone's pay isn't just a title and job description, but also performance, tenure and market forces -- e.g., what it takes to get a desirable job candidate to accept a position.

And then there are situations in which a company may do well by a female employee but still be vulnerable to charges of discrimination and reverse discrimination.

In an article, Warren Farrell, author of "Why Men Earn More: The Startling Truth Behind the Pay Gap -- and What Women Can Do About It," tells of a company that promoted good women employees faster than men. But consequently the women moving into the higher positions often were paid less than men in the same position because the men had greater tenure at the company.

Or, Thornton noted, a man's request for pay equity is more likely to fall on deaf ears if he finds out a newly hired female colleague is paid more. But if a woman made the same request, it's more likely to be treated seriously, due to fear of a lawsuit.

If anything is clear cut, it's that pay equity can be a complex issue. And it's one that a single, overly generalized statistic does little to elucidate.

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Jeanne Sahadi writes about personal finance for CNNMoney.com. For comments on this column or suggestions for future ones, please e-mail her at everydaymoney@cnnmoney.com. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.