
Gender pay gap shrinks when companies disclose wages - LogicRiver
http://news.cornell.edu/stories/2019/02/gender-pay-gap-shrinks-when-companies-disclose-wages
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ve55
>From 2003 to 2008, the gender pay gap at the reporting companies shrank 7
percent, from 18.9 percent down to 17.5 percent

Is this really a large enough effect size to justify such a headline?

>Our findings suggest that regulatory mandates on pay transparency, as a means
to overcome biases against women in the workforce, may be effective in closing
the gender pay gap.

No, they really do not. A potential reduction from 18.9% to 17.5% does not
'close the gender pay gap', and attempting to close such a gap in this manner
to begin with just demonstrates a misunderstanding of what confounding
variables cause it to begin with.

~~~
dmichulke
I once read an interesting thought experiment about this, adapted to this
story it goes like this:

We assume:

\- Greedy capitalist bosses (wanting to pay less for more work)

\- Same productivity of men and women

Now if there's an 18.9% pay gap, then women are on average 18.9% cheaper to
employ than men.

Greedy capitalist bosses should therefore only employ women, closing the
gender pay gap by driving womens' wages higher (and those of men lower).

Yet this doesn't happen, so one of the assumptions is wrong or the gender pay
gap difference (the 18.9%) is not correct.

~~~
adrianN
Another assumption that could be wrong is that greedy bosses can accurately
determine productivity. If bosses have biases that cause them to underevaluate
women's productivity this would also explain the pay difference.

~~~
coldtea
That would still give a huge benefit to the greedy boss who can "accurately
determine productivity" and hires all women for cheaper, which means it would
inevitably be copied in the end.

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xfitm3
I found this to be really interesting:

"The researchers were especially surprised by the way in which the companies
adapted to the regulation – by slowing the growth of men’s wages, not
increasing women’s."

~~~
gherig4
I experienced this first hand and as a result I departed for greener pastures.
Isn't diversity a great thing when it suppresses wages, no wonder all the big
boys are pushing for it.

~~~
marvin
This is happening at my place right now. Leadership has dictated that priority
is now to even out gender imbalances rather than giving raises. Since the
women in our company are heavily skewed towards lower-paying roles (QA,
customer support), this means the company will avoid giving raises to the
roles that actually are in demand and have strong salary growth elsewhere.
Needless to say, those of us with options have started looking.

Of course, everyone who gets a competitive offer elsewhere will get a
counteroffer, so this policy only applies where it’s convenient.

~~~
mcv
I don't get this kind of destructive attitude. Surely the sensible thing to do
when you want more equality and women are skewed towards lower paying jobs, is
to hire more women in higher paying jobs?

I'm all for paying people in lower-end jobs better, mind you, but using this
as an excuse to hurt salary growth seems like it's intended to discredit the
whole idea of gender equality. Well, unless the people involved are provably
overpaid, like CEOs tend to be. But somehow I suspect the CEO is still getting
his excessive raises.

~~~
faceplanted
> When a measure becomes a target, it ceases to be a good measure

Very simply, the measure of women being paid less is useful on wide scale in
demonstrating women's position in society, but it doesn't go into the
complexities of the issue, so aiming to get your company more equal on that
measure can mean so many things as to make it a useless target unless you
understand the situation.

~~~
mcv
Excellent point. Reminds me of the Bechdel Test, a simple test to show how
poorly women are treated in movies. To pass the test, the movie has to have at
least two named women talking to each other about something other than a man.
It should be trivial to pass, yet a surprising number of movies don't.

But that test doesn't mean that movies that pass the test are better or more
feminist than movies that don't. Terribly sexist/misogynist movies can still
easy pass it, whereas _Gravity_ , a movie starring only Sandra Bullock for
most of its duration, doesn't pass it because there's nobody else in the movie
to talk to.

Similarly, the point of calling attention to the gender wage gap should be to
pay women better and give them better access to higher paying jobs, not to
deny men raises.

Equality should lift people up, not push them down.

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factsaresacred
Here's the study:
[https://wpcarey.asu.edu/sites/default/files/daniel_wolfenzon...](https://wpcarey.asu.edu/sites/default/files/daniel_wolfenzon_seminar_november_9_2018.pdf)

To describe a 7% change as "shrinks" is a bit of a stretch.

And to attribute it to solely to the requirement to disclose may be incorrect
as there was only a 1.4% difference vs companies that were not required to
disclose anything (the 7% figure is vs pre-regulation).

So wages rose for women post-regulation, regardless of whether the company
they worked at disclosed wages or not. Meaning other provisions in the law
also likely played a role in the decrease of the gender gap.

The study also references another study that finds:

> _that firms with higher pay inequality exhibit larger equity returns
> suggesting that differences in pay inequality across firms are a reflection
> of differences in managerial talent._

All just food for thought. Regulation and transparency can produce interesting
outcomes and side-effects without making us any wiser as to the dynamics
driving the differences in outcomes.

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anoplus
Not just gender I think. I witness over and over how employees one day realize
they were underpaid and get paid immediately. Including myself. Sometimes the
company asks the employee to keep it silent so the other ones won't do the
same. This is ofcourse unhealthy situation, and too common. You got to win
your rights manually.

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lm28469
The problem of gender pay gap is a really hard one to tackle. You have to be a
fool to pretend there is no issue, but the number of causes is incredible at
the gender, education, industry, company and individual levels.

Every time there is a public debate around that topic you end up with two
major groups, one saying that women work less or are less productive because
of XYZ, the other saying something close to "it's the patriarchy".

Striving for equality of outcome is a good first step, but it's attacking the
symptoms and not the causes.

Just like for politics or employees quotas, you can bend the end of the
process to make it look fair and balanced but if the 10 steps before are
biased against women (and other groups) you end up with an illusion of parity
while the only thing that changed is you now make "positive" discrimination.

Making the wages public is a good thing no matter the reason, after all the
first step of making a decision is to have access to data. If it helps with
pay gaps all the better.

~~~
raducu
How about option 3: men choose to work on jobs that pay more but are more
stressful while women chose to work on more social jobs that pay less and
value other things more than just pay.

~~~
lm28469
You'll have to be a bit more precise because right now it's hard to tell if
you're trolling or trying to make a point. In any case, the pay gap isn't a
thing that can be addressed with a single sentence such as yours.

It's a really simplistic point of view to say social jobs are valued other
than with a salary. And I'm fairly certain that social workers, teachers and
nurses get their share of stress.

If anything the "men do manly jobs and women do social jobs" is another
symptom of the underlying causes. Sure you can say "that's the way it is" and
move on, but if you want to take part in the debate you have to show a minimum
of intellectual honesty.

Plus it doesn't work for people having the same position in the same company.

~~~
raducu
I agree stress was a bad metric, I'm sure there are other metrics some
sociologists would be able to enumerate, I can just speculate based on my
experience: In my country when I started studying computer science -- which
was a niche area, I had 90% male colleagues; after 15 years with all the media
coverage of high salary in the industry, the proportion shifted to 60-40,
because the profession has become main-stream.

So another factor could be risk -- women are more risk averse than men; hence
they choose more established professions where the pay is less.

Then, there's the drive and single-mindedness some high paying jobs require --
men are built that way, women are less likely to have obsessions on obscure-
technical hobbies; heck, most men aren't built that way, it just happens that
for those people that have such drive and single-mindedness, most of them are
men.

And that's the way it is -- unless there's some moat protecting your job, due
to the laws of supply and demand the higher paying jobs are the ones nobody
wants to do because of risk, discomfort and so on, and those that most people
cannot do because of the dedication and single-mindedness they require, and
for both categories men are the likely candidates.

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fastball
I couldn't find an _N_ of the study.

It seems important to me in order to ascertain the statistical significance of
this. Were there 10 companies in one group? 100? 1000? Did anyone else see
this in the study?

~~~
retypepassword
Based on table 1, it was probably about 4000 companies and 66000 employees
total.

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xref
These articles tend to attract comments with dire predictions for US society
if people knew each others salaries, so just a reminder Norway always does
nationwide salary transparency

[https://www.bbc.com/news/magazine-40669239](https://www.bbc.com/news/magazine-40669239)

~~~
chosenbreed37
> These articles tend to attract comments with dire predictions for US society
> if people knew each others salaries, so just a reminder Norway always does
> nationwide salary transparency

True. But I think it is worth pointing out that the US is not Norway. There is
a significant culture difference for one. Secondly the policy may simply not
scale. The US population, workforce, economy is orders of magnitude greater
than that of Norway.

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zuhayeer
Been working on a tool called [http://levels.fyi](http://levels.fyi) to help
increase career ladder and salary transparency in the workplace (mainly for
tech right now). Would love suggestions on things to add to make it more
powerful!

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knowThySelfx
Shouldn't remuneration depend on the amount of work done? Gender issue
shouldn't come into it.

~~~
Firadeoclus
Should the price of something depend on the amount of work done? On how much
the buyer values it? Or on the amount the buyer has to offer to outbid others?

Does an employer just pay for work done, or possibly also for availability,
potential, loyalty, goodwill?

Edit: That said, I absolutely agree that gender isn't something that should
figure in those considerations. At best it's a poor proxy for much more
specific differences between individuals.

~~~
knowThySelfx
I agree its not easy to quantify wage rates. It is highly context dependent.
The valuation depends on many things. Still gender should not be the parameter
since valuation depends on an individuals performance.

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tapland
Conclusions that the companies hired more women because of it are a bit weird
to draw since every company that would be a comparison in the country also has
to follow the same rules?

And ofc it's solved by lowering the growth of male wages :D Business

~~~
fastball
No, they were comparing companies that didn't need to follow the regulation
(companies with 24-34 employees) with companies that did (35+ employees).

Of course, the problem with this is twofold:

1\. Companies with <35 employees is a tiny slice of the population and should
generally not be expected to follow normal population distributions.

2\. Companies with <35 employees are already behaving differently than larger
companies with >35 employees. I do not think that variable was accounted for
in any way by the study and that is problematic.

~~~
hayksaakian
Over 80% of all companies in the USA have fewer than 35 employees

[https://www.naics.com/business-lists/counts-by-company-
size/](https://www.naics.com/business-lists/counts-by-company-size/)

i agree with your point #2

the differences between large and small companies are significant enough to
outweigh the causal relationship that the OP implies

~~~
bsanr
I think he was referring to the relative number of workers at companies with
more/less than 35 employees. Clearly the average worker, by a large margin,
works at companies with 50 or more employees. Even more so when you don't
include whatever proportion of businesses counted that are essentially self-
employment.

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3rdgender
"The researchers compared those companies to firms with 25 to 34 employees
that didn’t have to release their data"

So they are comparing two different types of firms (with > 35 employees and
between 25 and 34 employees): Doesn't that invalidate their study right there?

~~~
progval
They did not directly compare the two types of companies, they compared
evolution of each type.

Of course that's not perfect, but it's good enough

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baybal2
Very logical. Well, it gets to 0 if the pay is fixed.

You don't have much companies using that in the West

