Myth Meet Fact

Don Boudreaux of Cafe Hayek does an excellent job in this post/letter to the editor of the Washington Times, A Hypothesis Easily Tested, Daily in exposing a long running myth about the male/female pay gap.

The long-running myth is that gender discrimination is the or a major cause of the actual gender pay gap — why women on average are paid less than men.

This myth has been around a long-time.  I first remember seeing it decades ago.  Unfortunately, I don’t remember such a common sense suggestion as Don’s.  It amazes me that it’s taken this long for someone to think of this approach and I’m disappointed that I didn’t!

Don suggests that if the discrimination hypothesis is real then businesses should exploit this valuable finding and gain a competitive cost advantage by employing only women at lower pay than equally productive men.

From Don’s letter:

But to those persons who believe that women are indeed consistently underpaid, boy do I have a deal for you!  Start your own firms and hire only women.  If it’s true that women are consistently underpaid, you’ll be able to hire outstanding employees by paying them more than the relative pittances they currently earn, while you still profit handsomely from employing them.