WASHINGTON, January 13, 2018: Is the worldwide gender pay gap real? In general, the answer would seem to be, “Of course.” What’s more complicated, however, are the rarely considered economic reasons behind this perceived injustice. Consider the following Hollywood tidbit:
The recently released Ridley Scott suspense thriller All the Money in the World almost failed to wrap. Without warning, the film’s production ran headlong into the never-ending Hollywood parade of post-Weinstein sex abuse scandals, forcing numerous scenes to be shot over.
Turns out that the film’s original star, Kevin Spacey suddenly had to be replaced with another actor, Christopher Plummer. The reason why? Spacey was dropped from the movie because of ongoing allegations of sexual misconduct, the same allegations that caused Netflix to oust him from his starring role in House of Cards.
Director Ridley Scott said that he wouldn’t get paid for the re-shoots. Nearly all the others involved in the film’s production got little or no pay either. Except for the movie’s top stars, like Christopher Plummer and Mark Wahlberg.
In its January 9, 2018 edition, USA Today reported that Plummer’s and Wahlberg’s co-star Michelle Williams was paid about $1,000 to re-shoot scenes in the movie All the Money in the World. Wahlberg, the film’s remaining marquee name, was paid $1.5 million for each re-shoot. Commenting on the what both papers regard as another example of the gender pay gap, the Washington Post said, “It’s a sad Hollywood tradition.”
Major gender pay gap? Perhaps not.
Each new movie is effectively a new and untried business venture for its producers. They fund the entire production in the hope that the movie will be successful and will return a profit on their investment. Like any business venture, however, there is a clear risk that the movie will not be successful and might even turn out to be a losing venture.
To minimize risk and maximize potential return, the producers find actors and directors with established box office appeal to credibly fit and fill key roles in the new film, the better to attract fans and movie goers to movie theaters once that film is released. The difference in pay among the actors cast in each new film is a direct offshoot of their box office appeal plus the unique characteristics of individual markets.
Moving from Hollywood to sports, top quarterbacks on professional football teams sometimes earn in excess of $20 million per year. The average quarterback salary, which includes starters and back-ups, is nearly $4 million per year. Running backs, the guys who carry the ball into the end zone to score touchdowns, currently boast an average salary of about $1.5 million.
The salary difference is due to
- The value each player has to the team; and
- The number of players qualified to be pro quarterbacks.
Simply stated, a great quarterback can take the team to the Super Bowl, as veteran New England Patriots’ QB Tom Brady has, many times over. There are very few people who can do what Brady does. Running backs are very important, too. But they can be replaced by other running backs with relative ease. A mega-producing star quarterback like Brady cannot.
But consider the NFL quarterback-running back pay issue from another angle. Since most quarterbacks are white and most running backs are black, is the difference in pay between the between the two positions due to racial issues? Is there a racial pay gap? Of course not. It is simply due to the value of the output of each position and the number of individuals who can successfully play those positions.
Similarly, the difference in pay among actors is not primarily due to gender. It is more often related to proven box office appeal, plus the number of female stars relative to the demand for them.
For whatever reason, male stars generally possess more box office appeal than female stars. That’s a major reason why they are worth more and why the current gender pay gap appears so large. In addition, it is likely more difficult to find a very appealing male star than it is to find an enduringly appealing female star. The result, once again is that male stars are usually paid more.
According to the Institute for Women’s Policy Research (IWPR), women in the workforce earn about 20% less than men who do the same job. Although the gap has been narrowing, IWPR estimates it will take another 41 years for the gender pay gap to disappear.
Yet these numbers really have little to do with gender in the end, no matter how loud the trumpet is sounded. Rather, these numbers have to do with the employer’s perception of a given employee’s contribution to the organization.
Moving into the business world, since few of us are likely to become Hollywood stars or champion NFL athletes, while there are very large corporations, like General Motors, that have a female CEO, most large companies are still headed by men. The general reason given is that in order to become a CEO, the primary focus of the worker has to be the worker’s career.
Historically, it is easier for a man to make that kind of commitment than it is for a woman who, many times, necessarily puts family ahead of career. Socially speaking, that’s a good thing for society. However, that makes career choice, prominence and trajectory a very difficult choice for today’s women. More recently, family responsibilities are confronting men with these difficult choices as well.
Even so, employers in the main are mostly blind to gender, though gender pay gap activists may refuse to believe this. The fact is that in 2018, the average employer regards hiring decisions as a matter of finding and hiring the best person to fill a job, regardless of race or gender. For posts on a higher rung, however, when hiring women of childbearing age, gender probably remains a factor, given the clear need for continuity in such a post.
Beginning in the 1960s, women became aware that they had other options in life besides secretary and homemaker. They felt they could balance family with career. As a result, many more women began to enter the workforce. More women sought and earned college degrees, opening up numerous career fields previously closed to them.
Today, approximately 60% of college students are female and only 40% male. That means it is just a matter of time before women not only catch up and close whatever gender pay gap remains. They may eventually be paid more than men, since the college degree usually results in an increase in the value of their output. Holding a degree also means there will be more women than men who are qualified for those coveted top jobs. Perhaps there will still be a perceived gender pay gap. But the gender situations may be reversed
Today, Michelle Williams is paid much less than Mark Wahlberg because the value of her output is less than his when it comes to marquee value and box office receipts. In addition, Wahlberg receives high pay for re-shoots while Williams doesn’t, likely because Wahlberg will miss other potential film opportunities by taking the time for the re-shoots. Williams, however, will risk less valuable opportunities.
In other words, the opportunity cost is considerably higher for Wahlberg than it is for Williams. As such he should be paid more. Although this assessment may seem cold, it is, in the end, almost purely an economic issue, not a gender pay gap issue.