Thursday, 23 August 2018
Korea’s “Gender Income Gap” is NOT Based on Gender Discrimination
Korea’s “Gender Income Gap” is NOT Based on Gender Discrimination
For the past few years, Korea�s Gender Income Gap has been widely reported in international and national media outlets (as can be seen here, here, here, here, and here). Each time the media reports on Korea�s �dismal� gender income gap, it is always followed by the usual hand-wringing and calls for the central government to do something about this.
As a result, over the past few years, the Korean government has passed laws that ensure maternity leave for up ninety days. Furthermore, earlier this year, the Korean government increased spending from previous years in order to promote gender equality (?13.3 trillion) and plans on spending up to ?22.4 trillion, a 68% increase, next year.
Despite all this, however, a not insignificant number of women are either pressured to quit their jobs or indeed do quit their jobs after giving birth. Furthermore, as can be seen in the news articles that were cited earlier, Korea�s �gender income gap� ranking has fallen over the past few years instead of climbing. It would appear that throwing money at the problem of gender income inequality has not had the desired effect of solving the problem.
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Those who find these statistics offensive have pointed their fingers at various factors but they all boil down to one thing � gender discrimination. Therefore, many people who are calling for the closing of the �gender income gap� have been demanding for �equal pay for equal work.� The government has also weighed in on this by amending the Equal Employment and Support for Work-Family Reconciliation Act. Article 6-2 Section 2.3 emphasizes the importance of �the principle of equal pay for work of equal value.� In fact, an employer who is found guilty of violating this law faces imprisonment of up to three years or a fine of up to ?20 million.
�Equal pay for equal work� is a beautifully crafted call to arms. Its unnuanced brevity is the verbal embodiment of a clenched fist; loudly demanding an end to injustice. It is as poetic as political rallying calls come. Unfortunately, however, the phrase is intellectually bankrupt. This phrase (and, in fact, most arguments made in favor of closing the �gender income gap�) is intellectually bankrupt because of several factors.
Firstly, this cleverly constructed political phrase does all that it can to obfuscate one very important factor: statistical misreading.
- Statistical Misreading
The OECD reportthat showcases member nations� �gender wage gap� claims that the difference between male and female earnings is expressed as a percentage of male earnings. However, due to the fact that there are various factors at play such as the different types of jobs held by men and women, which translates to the differences in pay (depending on other factors such as industry type and level of unionization) and thus differences in taxes and pension contributions, and work experience, the only way the �gender wage gap� can be measured is via accounting for the medianand averagewage earnings.
In other words, the �gender wage gap� is based on aggregate information � information that does not measure individual jobs or tenure or hours worked, but merely the aggregate of all jobs and all employees.
If we want to see if gender discrimination is the culprit behind the �gender wage gap,� it becomes important to control for all other differences between men and women in order to explain the gap in a non-discriminatory fashion. However, seeing that these statistics do not compare men and women who hold the same job or do the same work, much less find a satisfactory way for controlling all those other differences, it requires a leap of faith, or a political agenda, to make the claim that the gap is a result of gender discrimination.
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- �Greedy businesses only care about the bottom line... until they don�t.�
Another thing that the phrase �equal pay for equal work� carefully neglects is the Marginal Revenue Product Theory of Wage Determination, which is a fancy way of saying that an individual�s wage is dependent upon his/her level of productivity. Productivity, for its own part, is NOT synonymous with �equal work.�
For example, let us say that there are two men who both work ten-hour days at a construction site and they both have the same job of moving a tonne of bricks up three storeys. The first man moves the bricks by carrying them on his back up the three storeys. The second man moves the bricks via a pulley and lever system. At the end of the ten-hour work day, though both men have worked the same number of hours (equal work), assuming that all other factors remain unchanged (ceteris paribus), the second man would have moved many more bricks than the first man had (unequal productivity) because of his greater efficiency.
From the business owner�s perspective, the second man has a greater rate of marginal productivity of labor aka he works harder and smarter and, therefore, has a higher marginal rate of utility aka he is worth the pay. Therefore, when both men ask for a pay raise, the business owner is more likely to acquiesce to the second man�s request than the first man�s.
As a result, considering the fact that men and women, for various reasons of their own, have a tendency to work different jobs and therefore have different rates of productivity (as well as there being different levels of supply and demand for those different kinds of jobs), it makes sense that there is some amount of difference in the income levels between men and women.
However, let us assume for a moment that there is no difference in productivity between men and women as the phrase �equal pay for equal work� so often insinuates. Let us assume that despite the equal level of productivity between men and women, men do, indeed, on average earn 38% more than their female counterparts.
If that were true; if women are not getting equal pay despite doing the same job with the same level of productivity, then why would any business, which almost always cares about profitability above all else, employ any man at all? What reason would there be for businesses to not employ only women to fill all of their job positions and save 38% on their labor costs (labor costs usually being most businesses� single greatest expenditure)? If greedy business executives� main concern is almost always profit maximization, how do we account for so many �overpaid� men in the workforce?
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Do business executives only want to maximize profits until they happen to come across a woman at which point they decide to forget about maximizing profits so that women will sooner or later realize that their only proper place is in the kitchen/bedroom? The answer is obviously �No.�
Assuming that men and women are equally productive, the sexist employer has no choice but to become extinct, courtesy of market forces. If he were stupid enough to hire a man when he could have employed an equally productive woman for less money (because of the pay gap), his gender-blind competitors would hire her, and price him out of business.
Businesses have different needs when it comes to employment; and men and women, who have a tendency to work different jobs (which in turn are affected by different rates of supply and demand) are often paid different wage rates. To insinuate that this is somehow the result of some kind of woman-hating conspiracy that is engineered by a cabal of patriarchal Taliban-lite business executives is, to say the very least, disingenuous.
- The Mommy Factor
In an editorial titled �The Fear of Becoming a Housewife,� which was published in Groove Magazine in August2013, the author, a self-proclaimed Feminist, who married a supposedly modern Korean man, wrote that she was disappointed that her husband �simply could not imagine a home in which the husband and wife share household duties.�
The fact is that women bear a disadvantage when it comes to working in the market not because of some kind of inferiority, but rather because women, especially after marriage and having children, tend not to be able to be as productive in their occupations as the men are because women, who would otherwise have equal productivity with men, tend to be more subjected to their intensive home and child-rearing interests than men with children.
Either due to biological reasons or social behaviorism (or perhaps both), marriage tends to result in vastly unequal division of housekeeping and child-rearing responsibilities. As a result, men, who tend to pick jobs that are relatively more dangerous and better paying (especially so when they become fathers), find that marriage enhances their take-home pay. On the other hand, again, either due to biological reasons or social behaviorism or both, women tend to seek jobs that have more flexible hours with slow obsolescence rates (jobs where their skills or knowledge has not become outdated by the time they resume their careers after they raise their children; jobs such as librarians and teachers, as opposed to software engineers) so that they can spend more time with their families, which in turn reduces their take-home pay.
Though this may seem unfair upon first glance, this is only part and parcel of the fact that nothing in life is free; goods are scarce, and thus everything has a cost. And as everything else, time has a cost. When an individual devotes a large part of his/her life/thoughts/energy to any one particular task, he/she will be able to accomplish less in alternative pursuits than otherwise (opportunity cost). Similarly, when a woman/mother devotes a large part of her life/thoughts/energy to housekeeping and/or child-rearing, in itself not an insignificant task, it is only natural that it comes at the expense of her productivity at her job.
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| I wanted to find a picture of a "super mom" but there wasnt a single picture that wasnt just insultingly cartoonish or condescending. Hence, "No Image Available!" Source: http://www.clubwebsite.co.uk/img/misc/noImageAvailable.jpg |
- More female executives to close the �Gender Income Gap?�
In recent years, some have claimed that the reason that Korea has such a wide �gender income gap� is due to the dearth of female business executives; that somehow this male-dominated business culture, which fails to understand women�s issues and plights, is one of the main factors that perpetuates gender discrimination. Therefore, naturally, �improvements� in gender diversity in executive boardrooms in places such as Samsung, Hyundai, Kia, and LG will bring about the necessary changes.
No one who makes these claims ever seems to like to share with the rest of the world the evidence of the causal links between gender diversity and equalized gender income gaps and/or improved profitability. There are certainly companies around the world such as IBMand Johnson & Johnsonthat are more women-friendly AND profitable. However, correlation is not the same as causation. A more plausible explanation for the correlation between these businesses with strong financial performance is that these businesses, which have been powerful players in international business for a very long time, can better afford social engineering initiatives such as the appointment of more women onto their boards. It also does not hurt that their social engineering initiatives of this kind gives them a good public relations story.
The fact of the matter is that boardroom members of Goldman Sachs or Hyundai Motors are NOT representative of the vast majority of society. That elite groups inhabit a different social universe than the majority of the population is hardly surprising. There is no evidence to suggest whatsoever that forcing these groups to �better� mirror society at large would somehow lead to higher rates of profit.
Would gender diversity, in all levels of industry, lead to less social injustice? It is certainly plausible. However, there is no causal proof (as yet) that an increase in the number of female executives at the top would necessarily lead to equalized gender income gaps and/or improved profitability.
Would gender diversity, in all levels of industry, lead to less social injustice? It is certainly plausible. However, there is no causal proof (as yet) that an increase in the number of female executives at the top would necessarily lead to equalized gender income gaps and/or improved profitability.
- Milton Friedman�s Argument Against �Equal Pay for Equal Work�
And here it is; straight from the horse�s mouth.
Firstly, even though Dr. Friedman did not challenge the premise�s assumption that equal work is synonymous with equal productivity, he is correct when he says that �Equal Pay for Equal Work� laws would have the same effect on women that the minimum wage has on unskilled labor, i.e. disemployment(though there is no evidence whatsoever to suggest that this is a direct causation, there certainly seems to be a positive correlation between �Equal Pay for Equal Work� laws and the disemployment of women considering Korea�s worsening �Gender Income Gap�).
While those who support �Equal Pay for Equal Work� laws may be well-intentioned, such laws must not be judged based on their good intentions, but rather their actual results. Instead of throwing money at the �gender income gap� problem, which might not even be a problem at all, as the Korean government has been doing, a better course of action for the government might be to rescind those policies which have brought gender economics/politics to its present disarray.
- Real Sexism vs. Perceived Sexism
This is in no way to suggest that sexism does not exist. There are many well-written and well-researched articles in The Grand Narrative and Korean Gender Caf�, just to name a few, to know that sexism is not a figment of people�s imagination.
That businesses do not pay women as much as they pay men for differences in productivity, supply and demand, and the different choices that are made by men and women in their respective lives is not a result of gender discrimination, but rather a reflection of reality. Claiming that this �pay gap� is a result of sexism is comparable to yelling at the bathroom scale for telling us that we are overweight and attempting to pass a law that �fixes� this �pay gap� is to indulge in that ultimate totalitarian fantasy where passing a law against bad weather will actually have its desired effect.
The real sexism that ought to be challenged is not the �pay gap,� but rather Korean society�s long-held belief that housekeeping and child-rearing responsibilities are strictly the domain of women. And there is no real way to challenge that without challenging the efficacy, the morality, or even the necessity, of a nuclear family. Cultural changes, which are the result of moral and philosophical changes, must always precede political changes. Any attempt to usurp that order will be met by nothing more than a series of failures. The �gender pay gap� is an economic issue, but those who advocate �Equal Pay for Equal Work� laws are attempting to turn it into a political one, because, as usual, political arguments require much less thought to understand than economic arguments.
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