Question

1. Some people say that there is a “gender pay gap” between men and women in which women are paid approximately $0.78 for every $1.00 earned by men. Where do they get that statistic and is that the best way to compare earnings between man and women? Why or why not? EXPLAIN

Answer 1

The gender pay/wage gap refers to the average wage difference between the renumeration/salary of a man and women. The gender pay/wage gap is represented by percentage or ratio. As per the data for the year 2019, a woman earns 79 cents for every dollar earned by a man. This means that the median salary of man is 21% more than that of women. Though the wage gap has reduced over the years but gender wage gap is still high.

This estimations are done by calculating the median salary for all men and median salary of all women irrespective of the type of job or seniority. Taking median means that half of the men are earning less than the median and half of the men more than the median.

The reason for taking median (usually) and not mean is that the mean is affected by extreme values (one of the properties of mean) and since the men earning more than the median salary are more (in numbers) than the men earning less than the median salary, the results can be skewed.

However, this method of calculation is questionable since it can be argued that men had more skills or education etc. than women. Therefore, another method of calculating the gap is by comparing the renumeration of men and women with similar characteristics like education, skills, experience etc.