{"id":1041,"date":"2018-05-11T21:18:29","date_gmt":"2018-05-11T20:18:29","guid":{"rendered":"https:\/\/marriott-stats.com\/nigels-blog\/?p=1041"},"modified":"2019-04-24T16:11:19","modified_gmt":"2019-04-24T15:11:19","slug":"7-ways-to-misuse-gender-pay-gap-data","status":"publish","type":"post","link":"https:\/\/marriott-stats.com\/nigels-blog\/7-ways-to-misuse-gender-pay-gap-data\/","title":{"rendered":"Pay Gaps #1 – 7 ways to misuse gender pay gap data"},"content":{"rendered":"

April 2018 was the deadline for submitting gender pay gap results and we now have the first detailed picture of how pay differs between men and women in the UK.\u00a0 A nifty government website can be used to look up pay gap details for any company employing more than 250 employees<\/a> and you can also download the results for further analysis.\u00a0 So what will happen next?\u00a0 Will the data be used properly to inform debate about how men and women are paid or will it be misused for personal and political gain?<\/p>\n

I believe this data can be of benefit to the debate around gender equality but my fear is that to begin with, it will be misused, misinterpreted and reinforce the saying “lies, damned lies and statistics”.\u00a0 So if you want to misuse gender pay gap data, who better to ask that a professional statistician like me who will show you how you can do this by commenting on 7 plausible statements.<\/p>\n

<\/p>\n

    \n
  1. “Women are paid 10% less than men in my company!\u00a0 I am a woman so give me a 10% pay rise now!”<\/span><\/strong><\/li>\n
  2. “Our gender pay gap was 10% last year but this year it is zero.\u00a0 We promised to eliminate the gap and we have succeeded!”<\/span><\/strong><\/li>\n
  3. “My company doesn’t discriminate against women, women are paid 10% more than men.”<\/span><\/strong><\/li>\n
  4. “Company A has no pay gap whilst company B pays men 25% more!\u00a0 B is a disgrace, I will never work for them!”<\/span><\/strong><\/li>\n
  5. “Our gender pay gap is 10% but this is due to the jobs that women prefer in our company being lower paid than men.”<\/span><\/strong><\/li>\n
  6. “If publishing gender pay gap data is a success, we should also require companies to publish their racial pay gap, sexuality pay gap and disability pay gap.”<\/span><\/strong><\/li>\n
  7. “Gender pay gap data is seriously misleading and a pointless bureaucratic box ticking exercise.\u00a0 Let’s get rid of it!”<\/span><\/strong><\/li>\n<\/ol>\n

    This article is my first in a series about the statistics of diversity & inclusion.\u00a0 I have always been interested in this subject for many reasons.\u00a0 Indeed the only bit of student activism I did at university was to help organise an anti-racism week at University of Bath in 1990 and I still have an article that I wrote back then about racism.\u00a0 Even then, I realised that the term “equality and diversity” was an oxymoron since to a statistician equality means strictly equal whereas diversity means variation which are two quite different statistical concepts.\u00a0 Most people though struggle with the statistical meaning of variation and as a result, analysis of diversity data is usually riddled with bad statistics and I am very keen to see this change hence my series of articles.\u00a0 So whilst I will now show you the many ways gender pay gap data can be misused, I am still an advocate for its publication with some modifications but more than anything I want this article to be a call to arms to use gender pay gap data properly!<\/p>\n

    All charts shown in this article are produced by my spreadsheet Gender Pay Gap Data & Chart Tool v1.0<\/a> which you can download for your own use.<\/em><\/p>\n

    <\/h4>\n

    1: <\/span>“Women are paid 10% less than men in my company!\u00a0 I am a woman so give me a 10% pay rise now!”<\/span><\/strong><\/h4>\n

    Prior to the publication of the data last month, I am sure if you had asked a random sample of people to “define the gender pay gap<\/em>“, a majority would have said it measures the difference in pay between men and women for doing the same<\/strong> job.\u00a0 Recent stories about female presenters at the BBC being paid less than their male counterparts<\/a> would reinforce this impression but this is not the definition of the gender pay gap.\u00a0 The difference in salaries between genders for doing the same job is known as Equal Pay<\/strong> whereas Gender Pay Gap<\/strong> refers to\"\" the difference in the hourly earnings (including bonuses) between the median man and the median woman in an organisation.\u00a0 Whilst recent publicity may have increased awareness of the difference between the two terms, I am sure confusion will exist for quite a while so let’s look at the BBC’s figures to understand what gender pay gap means.\u00a0 Amazingly, the BBC are more or the less the national median when we look at the gender pay gap and the gender split among its staff.<\/p>\n

    The government website for gender pay gap data<\/a> allows you to download all the data which I have done.\u00a0 According to the BBC, for every \u00a31 the median man earns, the median woman earns 91p, a difference of 9p or 9%.\u00a0 But this does not mean every woman receives 9p less than a man doing the same job.\u00a0 It only refers to the median man and median woman but what does the word median mean?<\/p>\n

    Let’s look at the example in the graphic below.\u00a0 This shows a company that employs 7 men and 5 women and they are paid per hour (including bonuses) as \"\"shown.\u00a0 To find the median woman, the 5 women first have to form a line in order of their hourly earnings.\u00a0 Then the median woman is the highlighted woman standing in the middle of the line who is earning \u00a315 per hour.\u00a0 To find the median man, the 7 men also form a line in order of their hourly earnings and the highlighted man standing in the middle of the line becomes the median man.\u00a0 Since he is earning \u00a320 per hour, this means the gender pay gap is \u00a35 (=\u00a320-\u00a315) which is 25% of the median man’s hourly earnings and this the gender pay gap figure that this fictitious company would have to report to the government every April.<\/p>\n

    So for the BBC, the median woman is paid 9% less than the median man.\u00a0 Given that the BBC employ over thousands of people, does it make sense to summarise something like this based on 2 employees only?\u00a0 You should be able to work out that provided there are equal numbers of employees of the same gender above and below the median man\/woman, it does not matter how the other employees are paid.\u00a0 If every male employee above the median man was paid \u00a31million per year and every woman above the median woman was paid \u00a3100,000 per year, provided the median man and median woman are paid the same (let’s say \u00a350k pa), the gender pay gap will still be recorded as zero.\u00a0 Once you think of the gender pay gap like this, then it doesn’t take much thought to think of unscrupulous ways to make yourself look better than you are.<\/p>\n

    So can a woman demand a 10% pay rise just because her company’s pay gap is 10%?\u00a0 Obviously, now that you are clear on what a median gender pay gap of 10% means, the answer is no.<\/p>\n

    PS: I hope you spotted the mathematical error in the statement!\u00a0 If a woman is being paid 10% less than she is worth, then she should demand an 11% pay rise.\u00a0<\/em><\/p>\n

     <\/p>\n

    2: “Our gender pay gap was 10% last year but this year it is zero.\u00a0 We promised to eliminate the gap and we have succeeded!”<\/strong><\/span><\/h4>\n

    Suppose the manager of our fictitious company of 12 employees above decides he are concerned about being seen to pay men more \"\"than woman and wants to eliminate it by the time he has to report 2018’s figures, then the simplest way to do this is to sack or outsouce the two lowest paid women.\u00a0 All our unscrupulous manager needs to do is identify the woman whose hourly earnings is the same as the median man and then, under the guise of a voluntary redundancy or outsourcing programme, keep sacking\/outsourcing the lowest paid woman until the median woman is the one you want.<\/p>\n

    I am sure that most employers would never contemplate such behaviour but there is no doubt that some will not be so scrupulous especially when it comes to outsourcing.\u00a0 Is this what we want the outcome of gender pay gap reporting to be?\u00a0 Such misuse of statistics is known as Gaming<\/strong> and almost always occurs when statistics become targets and performance measures.\u00a0 I have to confess I am seriously worried that this could be an outcome of mandatory gender pay gap reporting and it will be hard to detect without requiring companies to publish more data which will incur an additional administrative burden.<\/p>\n

    The other way to be unscrupulous is to publicise your mean gender pay gap this year and next year publicise your median pay gap (or vice versa).\u00a0 Take Manchester United football club.\u00a0 Their \"\"median gender pay gap is 7% in favour of women which sounds like great marketing material for them but all companies are also required to publish their mean gender pay gap and for Man Utd, this is 38% in favour of men.\u00a0 The mean gender pay gap is calculated by working out the average hourly wage (including bonuses) for men and women separately and then expressing the difference as a % of the mean male earnings.\u00a0 So although the chart does not show the mean gender pay gap (for a reason I will elaborate on below), if it did, it would say “For every \u00a31 a man earns, a woman earns 62p.”<\/p>\n

    I think it is a mistake for the government to require the mean gender pay gap to be published and this requirement should be abolished for two reasons, one statistical and one non-statistical.\u00a0 The non-statistical reason is that most people will not realise the difference between the two measures (mean and median) and may think they are the same thing.\u00a0 So again, if we assume that an unscrupulous PR director works at Man Utd, what he (unlikely to be a she!) should do this year is widely publicise the mean gender pay gap of 37% this year and at the same time, proclaim all the plans they have to reduce this gap and then next year after having done bugger all, publicise instead the median gender pay gap of 7% in favour of women and trumpet their “achievement” in eliminating a massive pay gap.\u00a0 Again, I am sure this will happen unless the government abolishes the mean gender pay gap and leaves organisations with only their median gender pay gap to play with.\u00a0 By the way, another scenario would be an unscrupulous Liverpool director publicly berating Man Utd by comparing Man Utd’s mean gender pay gap of 38% with Liverpool’s median gender pay gap of 0.1%, conveniently ignoring the fact that Liverpool’s mean gender pay gap is 78%!<\/p>\n

    The second statistical reason for abolishing the requirement to publish mean gender pay gaps is that it only takes one multi millionaire to heavily distort the mean hourly wage.\u00a0 I am actually surprised that Man Utd’s mean gender pay gap is so small given that they have several multi-millionaire players on their payroll.\u00a0 For most premier league clubs, I would be expecting their mean gender pay gap to be closer to Liverpool’s 78%.\u00a0 Imagine a premier league team with 20 players earning an average of \u00a32m each followed by 200 men being paid \u00a320k each and 200 women being paid \u00a320k each as well.\u00a0 Then the average pay for the 200 women is \u00a320k and the average pay for the 200 men is \u00a3220k a massive mean gender pay gap or \u00a3200k or 91% of the mean male pay.\u00a0 The median gender pay gap though will be zero since the salary for the median man and median woman will both be \u00a320k.\u00a0 Statisticians have long known about how easy it is to distort the mean value and whilst the median can also be distorted, it takes much more work than for the mean which is why I am OK with the median gender pay gap being reported provided it is interpreted correctly.<\/p>\n

    <\/h3>\n

    3: “My company doesn’t discriminate against women, women are paid 10% more than men.”<\/span><\/strong><\/h4>\n

    It is illegal for an organisation to pay men and women differently for doing the same job which is known as the Equal Pay Gap<\/strong>.\u00a0 Differences are in fact allowed provided they solely arise as a result of job performance and\/or length of service but on average there should be no difference.\u00a0 So an organisation making such a claim is in fact breaking the law.\u00a0 Of course, as I have now explained, what is being reported is the gender pay gap based on the median man and median woman, not the equal pay gap.\"\"<\/p>\n

    Unfortunately, it is not difficult for an organisation to break the law on equal pay in favour of men and still have a gender pay gap favouring women.\u00a0 Suppose an organisation has 9 employees doing 3 types of jobs Manager, Engineer and Secretary.\u00a0 Their salaries are shown in the table.\u00a0 On so many measures, especially if this was an unscrupulous STEM company, they could shout out how wonderful they are to women as follows:<\/p>\n