April 10, 2014
Glenn Kessler, the Washington Post fact checker, gave President Obama two Pinocchios for saying that women earn on average just 77 cents for every dollar that men earn. Kessler makes some valid points as to why this number overstates the gap. First it is an annual number that doesn’t take account of the fact that women are more likely to work part-time and part-year. It is also true that women typically have less work experience because they take time out of the paid labor force.
These and other factors (some of which go in the other direction) would be important items to take into account in a full examination of gender inequality. But has President Obama really committed a two-Pinocchio offense by using a number straight out of Census data without these additional qualifications?
Context is always great, but unfortunately President Obama’s use of the Census pay gap number hardly stands out as an out of context statement by a politician. My favorite in that category was the $1 million spent on a museum of the Woodstock music festival that Senator McCain used as one of his main props in his 2008 presidential campaign. Does anyone think McCain’s complaint about government waste and excesses would have packed the same punch if he told audiences the government had spent 0.00003 percent of its budget on a Woodstock museum? (On this score, why do the Post and other newspapers continue to express budget items exclusively in billions and trillions of dollars when everyone knows these numbers are meaningless to almost their entire readership?)
Unfortunately, making comparisons that don’t convey the full context is a practice that extends beyond politics into the policy world. A couple of years ago, Pew Research Center issued a widely cited study that purported to show growing disparities in wealth between the old and the young over the last quarter century. The study neglected to mention the fact that one of the main contributors to the growth in an age related wealth gap was a switch from defined benefit to defined contribution pensions and the rapid disappearance of retiree health insurance.
In the Pew analysis, a defined benefit pension plan (which most middle class workers would have had in 1984, the base year for the analysis) does not count as wealth, while a defined contribution plan does. Also, workers with retiree health benefits would need to save less to provide for their health care expenses in retirement. These benefits also would have been a form of uncounted wealth in 1984 that would have been available to most middle class workers.
Wealth is also a dubious measure of the well-being of young people. A 30-year old Harvard MBA who has negative net wealth of $150,000 due to student loan debt should not be considered to be in difficult economic straights. What will determine the well-being of young people is the state of the labor market they will face over their working career, whether they have $10,000 more or less in assets by the time they are age 35 will be barely noticeable in comparison.
Anyhow, if we applied the Kessler Pinocchio standard to this Pew study, it would likely score at least a three, if not a four. It is unfortunate that we routinely have facts and numbers given to us out of context, but President Obama, in using standard Census data in referring to the gender pay gap, hardly ranks as one of the bigger offenders in this town.
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