In the UK, the median hourly pay for full-time employees in April 2023 was 7.7% less for woman than it is for men. In the US, this gap seems much larger, with woman earning 16% less than men in 2022. These statistics, on the surface, may sound like a real problem. But to figure out whether something is a problem or not, you first need to find out why it occurs.

Why does the gender wage gap occur?

The main reason why this gap occurs is because women and men tend to work in different kinds of jobs. Men tend to work in more dangerous jobs than women. The majority of managers and directors also tend to be men. You may argue that this is due to societal upbringing and this should be changed. However, the Scandinavian countries are regarded as the most egalitarian in the world, and the gender pay gap between men and women in these countries is no different from the gender pay gap in other European countries. From this, it is evidential that the differences in pay between men and woman are most likely biological, rather than societal. Higher-paying jobs may tend to favour characteristic traits that are more prevalent in men than women, such as risk-taking.

Apparently, however, women also earn less than men for doing the same job. Modern feminists tend to overlook the other factors, such as the fact that women take more time off for child care and that women are less likely to negotiate for a raise, and claim that this occurs simply due to discrimination. The truth is, in a free market, companies that discriminate against hiring a certain group of people are unlikely to prevail. Companies are constantly competing for the best employees so a company that discriminates against hiring women, or any group of people, will overall have less competent workers and will be at a disadvantage compared to companies that did not discriminate against hiring women. I’m not saying there are no companies that discriminate against certain groups when hiring but a company that does not discriminate will be far more likely to survive and grow. The evolution of companies in a free market is similar to the process of natural selection that occurs during the evolution of species in nature. As a result, there are probably very few, if any, companies that still engage in discriminatory practices. That is the beauty of free market capitalism – your gender, race, or religion will hardly have an effect. You will get paid depending on how productive you are.

The Equality Act 2010

The Equality Act of 2010 states that an employer must pay women and men equally for ‘equal work’. Besides the fact that the free market will already cause men and women to get paid based on the value that they provide, it is also incredibly difficult to prove that discrepancies in pay are due to discrimination and not any of the other various factors.

Laws such as these could actually have a problem in the opposite direction, in that it can lead to discrimination against men. When companies hear about Google having to pay $118 million due to a gender discrimination lawsuit or Goldman Sachs having to pay $215 million, this could cause them to have a slight bias towards hiring women compared to men, to minimize the risk of being hit with a lawsuit. Not only is this obviously bad for the men that are not getting hired for the job they would’ve otherwise gotten, but it’s also bad for society as a whole. This is because the most competent individuals for certain roles will be less likely to be in the given role. In a free market, just as resources tend to be allocated to their most efficient uses, labour will tend to be allocated where the individual is most productive. Laws influencing hiring decisions and pay decisions will prevent individuals from working where they will be the most productive, leading to less overall production and causing a loss to society as a whole. Another situation where this will occur is when Spain enacts its ignorant law requiring that 40% of boards be women. This would lead some men, that would be a better fit, to not get the position.

Conclusion

There are many reasons as to why women and men earn different amounts, such as the fact that women take more time off for child care and that women are less likely to ask for a raise. However, modern feminists tend to ignore these factors and claim that the reason is due to discrimination, which is implausible in a free market. The ‘gender wage gap’ is, like most of the problems that modern feminists complain about, not a real problem.