Women wage inequality: how is this possible?

Sometimes you read a news article and you immediately think: how is this possible. I’ve just had such an experience, but not because the news was so extraordinary, but because I think there’s something seriously wrong with the numbers.

The news article (on www.nu.nl[In Dutch]) is on a report by Mercer and ADP and the main result is the women earn 11.8 percent less than men do, doing the same job. That is clearly a serious gender inequality, isn’t it? I must admit that at first sight, I think that this number is a bit high, but I’m not an expert.

But when reading further, I gained some confidence in the fact that something is wrong. Only one year ago, according to the report, this wage difference amounted to a whopping 18 percent! I simply don’t believe that this wage difference, for the whole Dutch society, dropped with 6.2 percentage points. To achieve that would require massive changes in the labour market, with many men being demoted and women promoted, and enormous wage increase for women (compared with that of men).

Such enormous changes in wages simply haven’t happend. The interesting point is, is that the researchers know that for themselves: further down in the article, it is mentioned that according to the report, men on average gained a raise of 3.68 percent, compared with the 3.65 percent average raise for women. So, based on these number, you would expect a slightly increased difference between the wages of men and women, instead of such a whopping decrease.

How this is possible, I do not know. Perhaps I delve into the report to find the error (either in the report, or in my reasoning here). But, for now, I leave you with this paradox. Once again, it shows the importance of some common sense on how society works when reading the news, and without any clarification from the researchers, I wouldn’t spend a penny on the report.

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