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Buried in today’s Employment Situation report from the BLS for January jobs data were these factoids and job market milestones:
1. Total US civilian employment topped 150 million jobs in January (150,544,000), for the first time ever. Previously, civilian employment in the US topped 140 million jobs for the first time in November 2004, 130 million jobs in August 1997, 120 million jobs in May 1993, 110 million in August 1986 and 100 million in February 1981.
2. For the first time ever, the number of men working in the US surpassed 80 million in January (80,104,000). In contrast, there were 70,440,000 women working in January, representing 46.8% of all US workers. The number of women working surpassed 70 million for the first time in November of last year.
3. For the first time since November 2007, the month before the onset of the Great Recession, the jobless rate for men fell below 5% in January (to 4.9%, the same as the female jobless rate last month, see chart above). Interestingly, during the last 109 months starting in January 2007, the male jobless rate has only been below the female jobless rate in 3 months (September and October 2014 and July of last year). Stated differently, the female jobless rate has been at or below the male jobless rate in 97.2% of the months over the last 9 years! Perhaps that’s another factor that helps explain the gender pay gap — women may be more willing than men to accept jobs with lower pay but in occupations and industries that are more stable with less chance of a layoff or job loss (e.g. education), while men are more willing than women to accept higher-paying jobs, but with a greater chance of layoffs and job losses, especially during recessions (e.g. construction).
4. Restaurant employment in the US grew by 3.5% in January compared to the same month last year, which was almost double the 1.9% growth in US payrolls over the same period. January marked the 65th straight month starting in September 2010 that restaurant employment grew at a faster annual rate than overall US payroll employment (see first chart below), so those data suggest that there’s robust hiring and job growth at the nation’s restaurants. Over the last year, America’s restaurants added 383,500 new jobs, which is a hiring pace that exceeds 1,000 new restaurant jobs every day of the year!
To bring attention to the 23% “gender commute time gap” I introduce the new “Equal Commute Day” on April 14
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The OECD Family Database (available here) has some fascinating statistics on average commute times by gender, and a summary of some of those data are displayed in the two tables above (click to enlarge). I was first made aware of these OECD commute times data from a blog post by Jim Rose (“The reverse gender gap in commuting times across the OECD”) where Jim suggests that “Commuting times need to be incorporated into calculations of the gender wage gap because they represent a serious fixed cost of working that is higher for men than for women.” Good point.
The graph that Jim displays on his blog is based on data from this OECD Excel file that contains the average commute times (minutes per day) for all adult men and women, including “self-employed who work at home and working age survey-respondents who do not participate in the labor market.” The OECD goes on to say that “Obviously, estimates on average commuting times for all respondents are lower than when such estimates are based on responses by workers only.”
The top table above displays average commute times for 17 OECD countries from this OECD source (see Table LMF2.6.A) that considers only “paid workers.” Some observations:
1. For all 17 OECD countries in the top table, men spend more time on average commuting to and from work each day, and the “gender commute time gap” ranges from as little as one extra minute of commuting time each day in Norway to as high as 18 minutes each day in the U.S. Interestingly, the difference in average commute times in the US by gender – 61 minutes for women vs. 79 minutes for men – represents a 23% “gender commute time gap” in favor of women that is exactly equal to the 23% “gender pay gap” that we hear about from President Obama:
Today, the average full-time working woman earns just 77 cents for every dollar a man earns…in 2014, that’s an embarrassment. It is wrong.
Let me re-phrase Obama’s statement to highlight the “gender commute time gap”:
Today, the average full-time working woman commutes only 77 minutes for every 100 minutes a man commutes to work…in 2014, that’s an embarrassment. It is wrong.
2. Following my introduction in 2010 of the “Equal Occupational Fatality Day” to highlight the “gender occupational fatality gap” in favor of women, let me now introduce the “Equal Commute Day” to highlight the significant “gender commute time gap” in favor of women. As displayed in the top table above, “Equal Commute Day” in the U.S. will fall on April 14* (see update below) this year and represents how far into the current year women will be able to commute to work before they have spent as much time commuting to work as men did in 2015. Interestingly, that will be a few days after the next “Equal Pay Day” on April 12. “Equal Commute Days” for other OECD countries are also displayed in the top table above.
[*Update: To calculate the “Equal Commute Day” for the US, I took the daily “gender commute gap” of 18 minutes and multiplied that by 250 days (5 work days per week X 50 weeks of work per year), to get 4,500 (18 X 250) extra commute minutes per year for men. Then I divided 4,500 extra minutes per year by the average daily commute time for women (61 minutes) to determine the number of extra days women would have to commute this year to equal the amount of time men spent commuting to work last year: 4,500 / 18 = 73.8 days.]
The bottom chart above displays some really interesting data on the average amount of time spent commuting by paid workers by gender and by the presence (and ages) of children in the household (also from Table LMF2.6.A). Note that:
3. Having children is actually associated with a slight increase in commuting times on average for men in the 16 OECD countries in the bottom table (U.S. data weren’t available for this part of the OECD study). In the UK, the average commute time increases by 2 minutes per day for men with young children (under 7 years old) and by 6 minutes per day for men with school aged children (7 to 17 years old).
4. In contrast to men with children, the average commute times in the OECD countries for women with children does change significantly – there is an average reduction of 4.6 minutes commuting time per day (1,150 minutes per year, or more than 19 hours) for women with young children (from 55.6 minutes to 51 minutes) and an average reduction of 3.9 minutes per day (975 minutes per year, or 16.25 hours) for women with school aged children (from 55.6 to 51.7 minutes).
5. In summary, the average “gender commute time gaps” for paid workers are as follows: a) 10.2% less commuting time per day for women vs. men in households without children (55.6 minutes for women vs. 61.9 minutes for men), b) 18% less commuting time per day for women vs. men in households with young children (51 vs. 62.1 minutes) and c) 17% less commuting time per day for women vs. men in households with children between 7 and 17 years of age.
Bottom Line: Behind the drive for closing the “gender pay gap” – presumably to zero – is often the mistaken assumption that men and women are, or should be, completely interchangeable in their roles in the labor market and in the family. Those assumptions defy innate biological differences and the forces of Mother Nature. It’s an empirically supported fact that men have a much greater tolerance for (and attraction to) risk than women. For example, 91% of motorcycle deaths in 2013 were male, 92% of workplace fatalities in 2014 were men, 93.4% of the current federal prison population is male, and almost 90% of climbers attempting to reach the peak of Mount Everest between 1990 and 2005 were men. That higher male tolerance for risk helps explain some of the gender differences in pay – dangerous, higher risk jobs that are more physically demanding in harsh outdoor work conditions pay more on average than safer, lower risk jobs that are less physically demanding and are in pleasant, air-conditioned indoor offices. It’s also a biological reality that men can’t get pregnant and can’t breast feed, which means that men and women will always play different family roles in childbirth and breastfeeding, and other nurturing child care responsibilities.
We learn about other gender differences for workplace preferences and for family roles from the OECD “gender commute time gaps.” In 17 OECD countries, and especially in the U.S., men are disproportionately more tolerant of longer commute times than women, who on average prefer to work closer to home at job locations with a shorter commute. To the extent that longer commute times are associated with a greater selection of higher-paying jobs, longer average commute times for men would be another factor that would explain some of the aggregate gender differences in pay favoring men. Further, while having children has no effect on men’s average commute times (and in fact increases their commute times slightly), having children does seems to affect women’s preferences for even shorter commute times compared to when they were childless. This might suggest that women want more flexibility and shorter commute times after they have children so that they can more effectively provide family and child care services. In conclusion, the OECD data suggest that women on average place a premium on shorter commute times to work, and therefore may be willing to voluntarily accept fewer job options and lower pay for being able to work close to home, especially after they have children.
Q: To close the “gender pay gap” women might have to be willing to spend a lot more time commuting to higher paying jobs and close the 23% “gender commute time gap,” which is currently 4,500 minutes annually in the U.S., or 75 hours per year and more than nine 8-hour work days per year in additional commute time for men. Would that increased commute time really be worth it to most women? Based on their current “revealed preferences” for shorter commute times than men according to the OECD survey, I think the answer is obviously “No.”
Obama proposes new rules to close the gender pay gap even though there’s a 16% gender pay gap in his White House
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The persistent gender pay gap at the Obama White House has been well-documented on CD. In 2015, the median salary for women working at the White House was $65,650, which is 15.8% and $12,350 less than the median salary of $78,000 for men (see chart above), see CD post here. It’s highly likely that the unadjusted 15.8% difference in aggregate salaries at the White House can be explained by factors other than gender discrimination, and I discuss those reasons here. But it’s also highly likely that the overall national gender pay gap of 17% (according to the most recent BLS report) can also be explained by factors other than gender discrimination: hours worked (men working full-time put in more hours per week on average than women), continuous and uninterrupted work experience (women are more likely than men to take time off from work for family reasons), choice of careers (e.g. more men than women work in higher-risk, higher-paid occupations and experience 92% of workplace fatalities), marital status, number of children, etc.
Despite the fact that most of the raw, unadjusted gender pay gap in aggregate salaries can be explained by personal choices made by men and women, the gender pay gap activists continue to use unadjusted, aggregate gender pay gaps as rallying cries for corrective government action to address a problem that might not even exist.
The latest example of gender pay gap activism is President Obama’s announcement last week that he plans to impose new rules on employers to help “close the 21% gender pay gap”:
Obama on Friday unveiled new rules that would compel companies with more than 100 workers to provide the federal government annual data for how much they pay employees based on gender, race and ethnicity. That information would be used to help public enforcement of equal pay laws while giving more insight into discriminatory pay practices, he said from the White House.
Historically, full-time female workers have only been paid a fraction of their male counterparts: In 2014, it was 79 cents for every dollar, according to the latest White House brief.
Don Boudreaux responded on the Café Hayek blog with a letter to Obama:
In remarks today supporting government regulations designed to close the so-called gender pay gap, you asked rhetorically “What kind of example does paying women less set for our sons and daughters?”
I’m tempted to ask different questions, such as: What kind of example does your abuse of statistics in order to politically grandstand set for our sons and daughters? (Surely you know that this ‘gap’ virtually disappears when the statistics are properly controlled for differences in women’s and men’s career choices.) Or what kind of example does your incurable itch to officiously second guess and to coercively interfere with voluntary contractual arrangements between consenting adults set for our sons and daughters?
But instead I’ll grant, for argument’s sake, the premise of your complaint about the “pay gap” and ask a different question: What kind of example does your own White House – in which, as documented by economist Mark Perry, the median salary of female employees is 16 percent lower than the median salary of male employees – set for your two daughters?
Perhaps you should stop shoving your nose into other people’s affairs and attend to your own.
Donald J. Boudreaux
Professor of Economics
While pondering the persistence of the gender pay gap myth, especially the implication of gender activists that any “unadjusted pay disparities by gender proves discrimination and requires corrective government action,” I came up with an explanation for the persistence of the pay gap myth that involves a false, but very effective statistical “bait and switch” scheme. Here’s how that statistical fraud takes place:
1. Start with an accurate, but mostly meaningless statistic about gender differences in unadjusted, aggregate salaries for full-time workers. According to the BLS, the current unadjusted national gender pay gap is 17% and according to the White House, “the typical woman working full-time full-year earns 21% less than the typical man.” According to my analysis of 2015 White House salaries, the current unadjusted pay gap at the White House is 15.8% (which is higher than the overall 4% gender pay gap in the District of Columbia).
2. Then, using unadjusted, aggregate gender pay gaps in median salaries, extrapolate those gender pay gaps with a statistical “bait-and-switch” technique to claim that women are paid 17% or 21% less than men FOR DOING THE SAME WORK. For example, while running for re-election in 2012, President Obama sponsored an ad claiming that “Women are paid 77 cents on the dollar for doing the same work as men.” And that’s the statistical fraud that perpetuates the gender pay gap myth.
Start with an accurate statistical fact about aggregate differences in pay, but falsely generalize it to the individual level and falsely imply that the aggregate, unadjusted pay gap means that all women are getting paid 17% or 21% less than men not just on average, but more importantly even when they are working side-by-side doing the exact same job at the same company.
3. By using a statistical “bait and switch” scheme to promote a false narrative, the gender pay gap activists are able to convince the general public that the 17% or 21% unadjusted pay gap is caused primarily by gender discrimination and is the norm throughout the labor market. The public now believes that it is standard practice for US companies to have two different pay scales: one for men at full pay and one for women at wages that are 17% or 21% less than wages for men.
4. After enough people have accepted the statistical fraud that the unadjusted pay gaps (17% or 21%) are primarily the result of gender discrimination, then of course there will be support among politicians and the public for corrective government action to address the gender pay gap through legislation at the national and state levels.
And that’s what we’re seeing today, with Obama proposing new reporting rules to close the gender pay gap that exists even in his own White House. Further, according to a recent Washington Post article (“Legislators organize blitz of equal-pay legislation in nearly half the states”):
And then there’s the supernova approach. That’s what a coalition of progressive and women’s empowerment groups are trying this week around the issue of equal pay, advancing bills in nearly half the states at once — from Alaska to Kansas — in a bid to elevate solutions to America’s nagging gender pay disparity at a time when little seems likely to happen in Congress.
Bottom Line: As I wrote last summer in my post about the gender pay gap at the White House, President Obama, politicians and the gender pay gap activists can’t have it both ways, either: a) there are gender pay differences throughout the economy and in any organization including at the White House, which can be explained by factors other than gender discrimination including age, years of continuous work experience, education, differences in positions, hours worked, marital status, number of children, workplace environment and safety, industry differences, etc., or b) any gender pay gap in aggregate, unadjusted salaries automatically exposes gender discrimination – including the White House – and Obama needs to explain why he is “waging a war on his own women staffers” by paying them less than men on average.
So either: a) there is a glass ceiling at the White House and Discriminator-in-Chief Obama is guilty himself of paying his female staffers significantly less than men by $12,350 per year on average, or b) Obama is guilty of statistical fraud and deception for continuing to spread misinformation about the alleged discrimination-based gender pay gap at the national level with bogus claims like “Women are paid 77 cents on the dollar for doing the same work as men.”
But realistically Obama’s hypocrisy about the gender pay gap won’t stop Obama from moving forward with onerous government regulations that will burden every company in America that has more than 100 employees with additional paperwork every year to report salaries by gender, race and ethnicity to the EECO that could potentially be used against them. All in an effort to address a problem of gender discrimination that might not even exist. Or to the extent that it does exist, it happens in very isolated cases. Perhaps President Obama should set an example and have his own 16% gender pay gap at the White House be subject to an analysis by the EEOC for gender discrimination before he imposes new burdensome government reporting rules on thousands of private companies?
Update/Related: In January 2009, the CONSAD Research Corporation prepared a report for the US Department of Labor – “An Analysis of the Reasons for the Disparity in Wages Between Men and Women.” The findings of that detailed report on gender pay differences didn’t fit the narrative that discrimination is behind the gender pay gap and therefore no longer appears on the Department of Labor website. Here is the main finding of the CONSAD report (emphasis mine):
This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.
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Pictured above is the HP 12C Financial Programmable Calculator, available from the Hewlett-Packard website for $69.99. What makes this calculator totally unique among all consumer electronic products is that it was first introduced by HP 35 years ago at a retail price of $150 (almost $400 in today’s dollars) in 1981, and yet even today is considered to be a relevant, up-to-date, “state of the art” product for financial professionals, CPAs, financial analysts, mortgage brokers, real estate agents, investors and finance professors. I have used HP-12C financial calculators on almost a daily basis since the 1980s and currently own five of them: two original 12C models, one 25th Anniversary models (released in 2006), and two “Platinum” 12C model (which sells for $79.98 and has more processing power and storage space than the regular 12C, and also features both RPN and Algebraic entry modes – more on that difference below). Now that it’s 2016, and since I couldn’t find anybody else who has done so already, let me be among the first to say “Happy 35th Anniversary, HP 12C Financial Calculator.”
If you aren’t convinced that the HP-12C financial calculator is maybe the only consumer electronic product from 1981 that is still relevant and up-to-date after 35 years, browse a 1981 Montgomery Ward catalog here (and check out the cameras, microwave ovens, Super 8 movie projectors, typewriters, sewing machines, dishwashers, telephones, stereo equipment, TVs, VCRs, etc.) or a 1981 Radio Shack catalog here (check out the telephones, stereo equipment, reel-to-reel tape decks, cassette players, portable stereo systems, 8-track tape players, telephone answering machines, TV antennas, radios, calculators, “microcomputers,” typewriters, etc.) and see if you can find any other consumer electronic available in 1981 that is still considered relevant and up-to-date today! If you can find an example, I bet there won’t be very many!
Here are some related links about the HP-12C Financial Calculator:
1. Almost ten years ago in the very early days of CD, I wrote a post about the 25th anniversary of the HP-12C in 2006, here’s an excerpt of that post:
The goal of developing the HP-12C was to have a sophisticated programmable financial calculator, that would be small enough to fit in a shirt pocket, would have long battery life and would meet the HP “drop test” – the ability to withstand a fall from a desktop onto a concrete floor. HP worked with a team of researchers who had Ph.Ds in numerical analysis, mathematics, electrical engineering, and computer science to develop the 12C.
The decision was made, for the ultimate mathematical and computational efficiency, to use RPN (Reverse Polish Notation) for data entry (with no need for Equal key on the calculator), instead of the traditional algebraic entry (which uses an Equal key on a traditional calculator). For example, instead of 2 + 2 = 4 (algebraic entry), RPN entry would be: 2 ENTER KEY 2 + (the mathematical operation comes last). Although mathematicians and engineers were comfortable with RPN, HP was concerned that finance professionals would have trouble accepting RPN, but the calculator became a huge success among the finance crowd, and is still used widely today.
In 2003, HP introduced the HP 12C Platinum that allows the user to select either entry mode: RPN or Algebraic. Although once you get comfortable with RPN, I can guarantee that you will NEVER want go back to traditional Algebraic entry, it is way TOO slow and inefficient.
2. Here’s one explanation of why RPN is more efficient than the Algebraic entry mode:
RPN is an extremely powerful system and when mastered can save you keystrokes and thus saving you time. This would mean that you would not need to use parenthesis in your calculations. The RPN mode also shows you the intermediary results in your calculations, which makes complex calculations easier to keep track of.
3. Also in 2006, HP had a backgrounder on the HP-12C titled “Some things at CES never go out of style – HP’s 12C hits 25-year mark in 2006,” here’s the opening:
The first business “personal computer” was unveiled, Pac-Man was the blockbuster video game, and Chariots of Fire was a box office hit when HP introduced a $150 pocket-sized device that revolutionized financial calculations for people on the move. The big hits of 1981 are now history, but the HP 12C financial calculator is still going strong.Instantly recognized for its unique horizontal layout, the HP 12C financial calculator has sold in the millions to investors, real estate professionals,accountants, loan officers, business students and teachers.
The HP 12C financial calculator, the product of a vision by HP’s labs and an Iowa farm boy with a love for physics, is an iconic consumer electronics product that is still sold virtually unchanged under its original name and model number 25 years after it was introduced. The HP 12C that’s sold today acts and looks just like it did when it was first snapped up by thousands of financial and real estate students and professionals at its worldwide debut. Few other products of industrial design have achieved such a classic distinction.
4. Here’s the Wikipedia entry for the HP-12C, which is “HP’s longest and best-selling product, in continual production since its introduction in 1981.”
5. Here’s a comparison of the HP 12C vs. the HP 12C Platinum models (e.g. HP 12C Platinum has “Undo” and “Backspace” buttons which the HP 12C lacks).
6. In 2011, CNet wrote about the 30th anniversary of the HP 12C in an article titled “HP 12C calculator: Still up-to-date after 30 years,” here’s a slice:
You probably change your computer every couple of years and update your phone based on Apple’s release cycles. But chances are that inside your briefcase or in your desk drawer, there’s a gadget that hasn’t been changed for decades. It still works well, and you like it just the way it is.
The device in question is the HP 12C calculator, first launched exactly 30 years ago today, on September 1, 1981. Ever since, without much fanfare, it’s been a quietly vital tool in finance, business, and academia. According to HP, the 12C is still one of only two standard calculators permitted for use during financial professional certification exams. This is because when it was released, the calculator offered more-accurate computations than the federal standard. It also features an unmatched keypad layout that provided unprecedented ease of use. The device itself is compact enough to fit in a pants pocket.
MP: The Schumpeterian forces of creative destruction have made almost all consumer electronic products from the early 1980s obsolete today, having been replaced by products that are better, faster and cheaper. But possibly more than any other consumer product that was available in 1981 (think cars, phones, cameras, TVs, stereo equipment, computers, etc.) the HP 12C Financial Calculator might stand alone as maybe the only electronic product that has survived the last 35 years of tsunami-level tidal waves of “Hurricane Joseph’s” creative destruction that has destroyed almost all other 1981-era products!
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Inspired by Donald Trump’s multiple mistakes in Item No. 7 below, it’s time for my first quarterly spelling/punctuation/grammar rant of the year (see seven “quarterly” rants last year here, here, here, here, here, here and here) on what I think is the most common spelling/punctuation/grammar/orthographic mistake in the English language — the misuse of it’s (or its’) for its — illustrated by the examples below collected from CD comments and other sources on the Web:
1. To conquer a nation, you must first disarm it’s citizens.
2. But the members of the OSAC were livid with it’s results:
3. I recommend browning the roast to seal in it’s natural flavor and juices before placing it in the crock pot.
4. Liberalism at it’s finest.
5. So, to help make the beer survive it’s long trip, it was given substantially more hops and was fairly higher in alcohol than common pale ales of the day.
6. I love it’s fragrance very much….
7. Donald Trump on Twitter: “National Review is a failing publication that has lost it’s way. It’s circulation is way down with its influence being at an all-time low. Sad!”
‘Equal pay day’ this year is April 12; the next ‘equal occupational fatality day’ will be in the year 2027
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Every year the National Committee on Pay Equity (NCPE) publicizes its “Equal Pay Day” to bring public attention to the gender pay gap. According to the NCPE, “Equal Pay Day” will fall this year on April 12, and allegedly represents how far into 2017 the average woman will have to continue working to earn the same income that the average man will earn this year. Inspired by Equal Pay Day, I introduced “Equal Occupational Fatality Day” in 2010 to bring public attention to the huge gender disparity in work-related deaths every year in the United States. “Equal Occupational Fatality Day” tells us how many years into the future women will be able to continue to work before they would experience the same number of occupational fatalities that occurred for men in the previous year.
The Bureau of Labor Statistics (BLS) released data last fall on workplace fatalities for 2014, and a new “Equal Occupational Fatality Day” can now be calculated. As in previous years, the chart above shows the significant gender disparity in workplace fatalities in 2014: 4,320 men died on the job (92.3% of the total) compared to only 359 women (7.7% of the total). The “gender occupational fatality gap” in 2014 was considerable — more than 12 men died on the job last year for every woman who died while working.
Based on the BLS data for 2014, the next “Equal Occupational Fatality Day” will occur about 11 years from now – on January 12, 2027. That date symbolizes how far into the future women will be able to continue working before they experience the same loss of life that men experienced in 2014 from work-related deaths. Because women tend to work in safer occupations than men on average, they have the advantage of being able to work for more than a decade longer than men before they experience the same number of male occupational fatalities in a single year.
Economic theory tells us that the “gender occupational fatality gap” explains part of the “gender pay gap” because a disproportionate number of men work in higher-risk, but higher-paid occupations like coal mining (almost 100 % male), fire fighters (94.3% male), police officers (87.6% male), correctional officers (71.4% male), logging (94.6% male), refuse collectors (91.4%), truck drivers (94.2%), roofers (99.5% male), highway maintenance (98.5%), commercial fishing (100%) and construction (97.4% male); see BLS data here. The table above shows that for the ten most dangerous occupations in 2014 based on fatality rates per 100,000 workers, men represented more than 91% of the workers in those occupations for all of the ten occupations except for farming, which is 76.2% male.
On the other hand, women far outnumber men in relatively low-risk industries, often with lower pay to partially compensate for the safer, more comfortable indoor office environments in occupations like office and administrative support (72.9% female), education, training, and library occupations (74.1% female), and healthcare (74.2% female). The higher concentrations of men in riskier occupations with greater occurrences of workplace injuries and fatalities suggest that more men than women are willing to expose themselves to work-related injury or death in exchange for higher wages. In contrast, women more than men prefer lower risk occupations with greater workplace safety, and are frequently willing to accept lower wages for the reduced probability of work-related injury or death.
Bottom Line: Groups like the NCPE use “Equal Pay Day” to promote a goal of perfect gender pay equity, probably not realizing that they are simultaneously advocating an increase in the number of women working in higher-paying, but higher-risk occupations like fire-fighting, roofing, construction, farming, and coal mining. The reality is that a reduction in the gender pay gap would come at a huge cost: several thousand more women will be killed each year working in dangerous occupations.
Here’s a question I pose for the NCPE every year: Closing the “gender pay gap” can really only be achieved by closing the “occupational fatality gap.” Would achieving the goal of perfect pay equity really be worth the loss of life for thousands of additional women each year who would die in work-related accidents?
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Wal-Mart announced last week that it is closing all of its 102 Walmart Express stores in the US, and 45 of its regular Walmart stores around the country. As Wal-Mart decided strategically which 45 US-based stores to close, “It can’t be a coincidence that Wal-Mart’s scalpel targeted stores in places that have among the highest minimum wages in the country,” explained Jed Graham in his Investor’s Business Daily article yesterday “Wal-Mart Jolts High-Wage Havens: Oakland, L.A., D.C.“:
Oakland, whose $12.55-an-hour minimum wage is currently second to none, lost its one and only Wal-Mart. Los Angeles, which in June approved a gradual hike in the minimum wage to $15 an hour, lost its two Wal-Marts. One of them had opened in Chinatown in 2013, providing residents there a full-service grocery store after decades of trying to attract one. Los Angeles County, which followed the city’s lead in setting a path to a $15 minimum wage, lost a Wal-Mart that opened in 2013 in Altadena, an unincorporated part of the county where the wage hike will apply.
Here’s how SFGate reported the demise of the Oakland Walmart, which closed last Sunday (emphasis mine):
In Oakland, employees and city officials expressed shock, and some speculated that the city’s minimum-wage law played a part in the decision to shutter the store there. The Walmart in San Jose, which also boosted the minimum wage, will shut as well. The two stores in San Leandro, which has no minimum-wage law that supersedes the state’s, will remain open.
“I think it really is a little discouraging,” said Oakland Councilman Larry Ried. “The minimum wage in the city of Oakland played a factor, was one of the factors, they considered in closing the stores.” The loss of Walmart deals a significant blow to Oakland as the giant retailer ranked among the city’s top 25 sales-tax producers.
To help better understand how “Wal-Mart’s scalpel targeted stores that have the highest minimum wages in the country,” consider the map above showing three Walmart stores along a 5-mile stretch of Interstate 880. The northern most Walmart store is in Oakland, where the minimum wage is $12.55, and the other two Walmart stores are in San Leandro where the state minimum wage of $10 an hour applies.
Normally, when a major retailer has three stores along a 5-mile segment of a major thoroughfare and it decides to close one store, wouldn’t the logical choice be to close the store in the middle location so that it could best serve the customers in that area and minimize driving times, ceteris paribus? Seems like that would be the logical decision for a retailer like Wal-Mart, except that in this case the ceteris paribus condition doesn’t hold because the Oakland store is located in a jurisdiction where the minimum wage is $12.55 an hour, more than 25% (and $2.55 an hour) higher than the other two stores in nearby San Leandro where the minimum wage is $10 an hour. Given the reality that Wal-Mart operates on razor-thin profit margins (only 2.8% last quarter), a 25% difference in labor costs for entry-level workers can be the difference between a store that turns a profit and a store that barely breaks even, or loses money.
Bottom Line: Largely due to Oakland’s $12.55 an hour minimum wage law there’s now a lot of suffering there: a) 400 workers at the Oakland Walmart have lost their jobs (except for those who can get placed at another Walmart), b) Oakland residents have lost access to a conveniently located Walmart store, and will now have to drive further to the closest Walmart to get the cost-savings from “everyday low prices” on groceries, clothing and household goods, and c) the city loses tax revenues from one of its largest sales-tax producers. As cities, counties and states around the country continue to raise labor costs for retailers and restaurants with minimum wage legislation, there will likely be more locations like Oakland that find out the hard way that their well-intentioned policies are really “economic death wishes” that act as very effective “business and job repellents.” In reality, the “Fight for $15 [or $12.55]” will more likely be a “Fight for $0” as many of the displaced, unemployed workers at the Oakland Walmart are now finding out.
Related: See CD post from last October: Who’d a-thunk It? Higher minimum wages actually affect a company’s plans on where to expand? about Buffalo Wild Wings plans for an aggressive national expansion of 100 new stores around the country – except for cities like Los Angeles, San Francisco and Seattle with pending minimum wages of $15 an hour.