Thursday 5 April 2018

Thoughts on the gender pay gap

I've already managed to upset someone on Facebook because I apparently said that women are worth less than men (I didn't).  I don't regard myself as a feminist, but rather an equalist.  Discrimination of all forms is bad - women shouldn't be discriminated against based on their gender, but similarly men shouldn't be discriminated against in order to give women an advantage.

Discrimination is as old as time itself but I don't think you fix the problem by just changing which group you discriminate against, any more than you prevent war by changing which group of innocent people you're blowing up.

The British government is now requiring all businesses with over 250 employees to publish figures summarising the gender pay gap.  There are a few bits of information required, but essentially this boils down to a simple average difference in pay between men and women.

The press is then using the figures to bash the companies with the biggest pay gap.  No consideration is being given to what types of work are being done since that isn't in the information that companies are expected to publish.  i.e. this is not a like-for-like comparison.

There are a few potential reasons why women may be earning less than men:
  1. Maybe there are less women qualified and applying for the higher paid jobs.
  2. Maybe employers are refusing to employ women in the higher paid jobs.
  3. Maybe employers are employing women in the higher paid jobs but are paying them less than the men who are doing the same work.
All of these points are, of course, a problem.  The two last points are directly under the employer's control and any employer undertaking in this kind of discrimination deserves to have the book thrown at them - I firmly believe that equally qualified men and women should be given the same opportunities as each other and the same pay for doing the same work.

However, it is fairly unclear to me how the first point can be regarded as a specific employers' fault.  Since the information that is being made available doesn't do anything to differentiate between these possibilities, it seems completely unfair to vilify an employer based solely on this data.

So we have STEM companies and the construction industry with a fairly big pay gap simply because it's very difficult to recruit women to do the higher paid jobs in these fields.  I'm sure that in some cases there is discrimination going on, but you can't determine that from the data being used by the press to attack employers.

To demonstrate the issue, lets take a simple fictional employer - they aren't discriminating and they have the following breakdown of employees:

Total Men Women Salary
Engineers 200 180 20 £50,000.00
Admin staff 50 15 35 £20,000.00
Total 250 195 55

The mean pay is £47,692.31 for men and £30,909.09 for women, yielding a pay gap of £16,783.22, even though everyone doing the same job is paid the same.

So, how can the employer fix their pay gap?  Since we're already assuming there is no discrimination going on, we can look at it rationally with maths:

1. Increase the proportion of female engineers
It's very unclear to me how a single employer can increase the proportion of applicants who are female.  In order to do this the proportion of women training in engineering needs to be increased, starting with school kids.  There is some scope for the industry as a whole working to promote engineering to women, but it takes years and a single employer can't do a lot on their own.

At work, when we were last recruiting, we didn't end up hiring a man because we're horrible people who support the patriarchy; we ended up hiring a man because no women applied for the job.  We would usually want to pick the best person for the job, regardless of their gender.

So with far less women in the engineering job market than men, the immediate options are:
  • Increase the women's benefits and decrease the men's.  The women will be "overpaid" with respect to other employers and want to work for you whilst the men will be "underpaid" and get a job elsewhere.
  • Recruit underqualified women to make up the numbers, since there aren't enough qualified women applying.  Recruiting people who aren't qualified to do the job sounds like a bad idea for the business.
  • Restrict the number of applications from men.
All of these options discriminate against men based solely on their gender and are therefore pretty unethical (and probably illegal).

2. Increase the proportion of male administrative staff
So given that we probably can't do a lot to recruit more female engineers, we could tweak the balance elsewhere in the business.  The average women's pay is being dragged down by the fact that a disproportionate number of women are employed in the lower paid administrative roles.  Only 10% of the engineers are women, but 70% of the administrative staff are women.  If the employer reduces the proportion of women in the admin roles down to 10%, that will eliminate the pay gap.

This problem is pretty much the opposite of (1) - the same options apply, but this time the employer must discriminate against women.  Again, doesn't strike me as a good plan.

3. Increase the women's pay or decrease the men's pay
So far, the employer has paid men and women the same amount for the same work, which has led to a big pay gap simply because of the job role demographics.

Adding about 55% to the womens' pay in both job roles eliminates the pay gap.  We're now paying female engineers £77,000 and female administrative staff £30,800.  Of course, the employer may well not be able to afford these kinds of expenses, especially when the men find out that they are earning far less than the women and take their employer to court for sexual discrimination.

Similarly, reducing the men's pay by 65% across the board achieves a similar result - the employer gets sued into the ground for sexual discrimination, and if they survive that, with the men now being paid far below the market rate, they all leave for greener pastures.

4. Pay the engineers and administrative staff the same
Another option is to decrease the pay the engineers receive and increase the pay the administrative staff receive.  By paying everyone £44,000 irrespective of what job they do, the pay gap is eliminated whilst keeping the total wage bill the same.

Unfortunately, the company's engineers are now underpaid relative to the market rate, so they will leave and it will be impossible to recruit replacements.

The entire industry could follow suit, but this would lead to a long term shortage in engineers - it costs tens of thousands of pounds and several years to become an engineer, and how many people would do that if their pay is the same as someone who hadn't spent that time and money on training?

I am a firm believer that equally qualified and experienced women and men are equally valuable and should be paid the same.  For some jobs it is easier than others to ensure that this is happening - where there are fixed non-negotiable pay scales things are obviously clearer than jobs where employees are expected to negotiate their salaries.  In the latter case, people who are poor negotiators are obviously not going to do as well as good negotiators.  I don't know if there's a gender bias when it comes to negotiating skill, but any protection should surely extend far beyond the work place since poor negotiators also lose out when negotiating other things, such as buying a car, etc.

There are also big differences in demographics that need to be accounted for: is a 35 year old who graduated from university at 21 and has been in relevant employment for the whole time (giving them 14 years industry experience) as valuable as someone else who took 10 years off between 23 and 33 to bring up their children (so they have only 4 years industry experience)?  These people could be either men or women, but in the current society the majority of child carers are women and it doesn't seem right to completely discount that when comparing pay.

From taking a rational look at the data being collected, it seems clear to me that it is tackling the wrong thing.  Whilst I'm sure that discrimination is happening, the data being published cannot be used to determine who is discriminating.  Indeed, in many cases reducing the pay gap seems to actually require the employer to discriminate, so the whole thing seems very counter productive to me.

The things that need to be tackled are:
  • Ensuring that men and women are given the same opportunities.
  • Ensuring that men and women receive similar pay for similar work.
  • Ensuring that neither men and women are put off from taking any opportunities that are open to them.
Lets work on those points instead of attacking employers for things that they can't do much about.