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lawsuit against Sears, based solely on statistical disparities, rather than	on

any woman who claimed that a man of lower qualifications than her own was hired or promoted when she was not. Yet this case went on for years, until it was finally decided in 1988 by the Seventh Circuit Court of Appeals, which pointed out that the E E O C had failed to come up with even "anecdotal evidence of discriminatory employment practices" or any "flesh

and blood victims of discrimination."	The court	pointed	out that	the
E E O C "did not present in evidence	even one	specific	instance	of

discrimination"55 in a company with hundreds of stores from coast to coast. Sears won that case but its legal victory obviously did not stop sex discrimination lawsuits against other companies based on statistical disparities. Employers who were not as large as Sears were in no financial position to fight a federal lawsuit for 15 years, and spend the $20 million that Sears spent defending this case, might well be forced to agree to a consent decree that would brand them in the public mind as guilty of sex discrimination. Moreover, the spread of cases like that, settled by employers not able to afford the cost of fighting through the courts for years, would be enough to convince many observers that sex discrimination was widespread

and was the primary source of male-female economic differences.

The Minority Analogy

Many have analogized the situation of women to that of low-income minorities, explaining income disparities in both cases by employer discrimination and attempting through anti-discrimination laws and affirmative action policies to advance both groups economically. But there are fundamental differences between the circumstances of women and those of minorities which affect both analysis and policy.

As already noted, in analyzing the economic situation of minorities, it is possible to get some idea of how much of the income disparities between minorities and the general population is explained by various factors besides employer discrimination by comparing individuals who are comparable in age, education, and other relevant factors. But while more education, for

82 Economie Facts and Fallacies

example, raises the incomes of both blacks and whites, even if not to the same degree, one of the biggest factors in income differences between women and men— parenthood— has opposite effects on their incomes. Comparing married women with married men does not mean comparing individuals who are comparably affected. Only the never-married women and men are in comparable circumstances, and here women have had comparable or higher incomes than men, years before there were laws or government policies against sex discrimination.

Women and minorities are different in a more fundamental historical sense. Low-income minorities are usually descendants of poorer and less educated people, so that they inherit both a cultural and an economic background that is less helpful to them in trying to rise economically and socially than are the backgrounds of other members of society. Women, however, are not descended just from women. Whatever educational or economic advantages men had in the past, those men were their fathers and grandfathers just as much as the women were their mothers and grandmothers. Todays generation of women inherit whatever advantages their male forebears had as much as they inherit whatever disadvantages their female forebears had— and so do the brothers of today's women. Obvious as this may seem, it is often ignored by those making analogies between women and minorities. One sign of the difference is that female Ph.D.s have long come from higher socioeconomic backgrounds than male Ph.D.s and have had higher test scores,5 6 just the opposite of the situation among blacks and other low-income minorities.

In the academic world, the history and present circumstances of women and minorities are especially different. First of all, female academics have been common far longer than black academics, reaching a peak proportion of all academics back in 1879 that was not equaled again in the next ninety years.5 7 Black professors and administrators were rare in the nineteenth century, even in colleges for black students.5 8 Although an early set of federal guidelines on affirmative action asserted that "women and minorities are often not in word-of-mouth channels of recruitment" for academic positions,5 9 that is certainly not true of women. Women with doctorates have for years received those degrees from prestigious institutions about as

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often as men have,6 0 so that they have long been in the so-called "old boy network" of academic recruitment just like male Ph.D.s.

S U M M A R Y A N D I M P L I C A T I O N S

Among the many factors which influence male-female economic differences, the most elusive is employer discrimination. Since no one is likely to admit to discriminating against women, which is both illegal and socially stigmatized, in principle discrimination can only be inferred indirectly from the disparities between women and men that remain after all the other factors have been taken into account. In practice, however, there is no way to take all other factors into account, since no one knows what they all are and statistics are not always available for all the factors we do know about. What we are left with, after taking into account all the factors that we are aware of and for which statistics are available, are residual differences which measure the upper limit of the combined effect of employer discrimination plus whatever other factors have been overlooked or not specified precisely. That residual is often much smaller than the gross income differences between women and men, sometimes is zero, and in a few instances women earn more than men whose measured characteristics are similar.

The empirical fact that most male-female economic differences are accounted for by factors other than employer discrimination does not mean that there have been no instances of discrimination, including egregious instances. But anecdotes about those egregious instances cannot explain the general pattern of male-female economic differences and their changes over time. Those changes are continuing. While in the period from 2000 to 2005 most women were still holding jobs making less than the weekly median wages, women were also 1.7 million out of 1.9 million new workers earning above the median wages.6 1

While hard data are preferable to anecdotes, even hard data have their limitations. Statistics may not be available on all the factors that determine hiring, pay, or promotions. Nor can the direction of causation always be

84 Economie Facts and Fallacies

determined when the data are available. For example, the effect of marriage on women's economic opportunities and rewards may be estimated by comparing women who seem to be comparable in things that can be measured, but what if women who are more driven to pursue a career are less likely to marry early or perhaps at all? That is not measurable, which is not to say that it is not important. Income differences between less driven and more driven women may be falsely attributed to marriage, when in these cases differences in marriage patterns may be an effect rather than a cause. In other words, it need not be marriage, as such, which accounts for income differences between married and unmarried women.

It can sometimes be difficult to distinguish income differences between the sexes caused by external barriers confronting women and differences caused by choices made by the women themselves. In addition to choices of educational specialties, occupations, and continuous or discontinuous employment, many married women have chosen to allow their husbands' best job opportunities to determine where the couple will live, with the wife then taking whatever her best option might be at that location, even if there would be better options for her somewhere else. Such wives' reduced occupational opportunities in such cases are in effect an investment in their husbands' enhanced occupational opportunities.

This is a special handicap for women in the academic world, where the wife of a man who teaches at Cornell University, for example, will not have a comparable academic institution in which she can pursue her own career within a hundred miles. It would be quite a coincidence if there was an opening in her field at Cornell at the same time when there was an opening there for her husband in his field. In some places, anti-nepotism policies would preclude her being hired, even if there were such an opening. While some professors have sufficient clout to make the hiring of a spouse a precondition for accepting an academic appointment at a given institution, such a precondition can reduce the number and quality of the institutions that will make an appointment to either husband or wife.

A more general indicator of wives' investments in their husbands' earning capacity is the changing ratio of husbands' earnings to their wives' earnings over time. As far back as 1981, one-third of all wives in the 25 to 34 year-

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old brackets had higher earnings than their husbands— but that percentage declined successively in older age brackets, so that less than 10 percent of wives who were age 65 or older had higher earnings than their husbands.6 2 In other words, the passage of time increased husbands' earnings more than the wives' earnings, another indication suggesting wives' investments in their husbands' earning capacity.

Given the numerous factors that impact the incomes and employment of women differently from the way they impact the incomes and employment of men, it can hardly be surprising that there have been substantial income differences between the sexes. Nor can all these differences be assumed to be negative on net balance for women— that is, taking other factors into account besides income. For example, the wives of affluent and wealthy men tend to work less and therefore to earn less. But the wife of a rich man is not poor, no matter how low her income might be. In homes where the income of the husband exceeds the income of the wife, the actual spending of that income cannot be determined by whose name is on what paycheck, and research indicates that the wife usually makes more of the decisions about how the pooled family income is spent than the husband does.6 3 Such ultimate realities are beyond the reach of most statistics— but whatever arrangements wives and husbands agree to between themselves are certainly no less important than what third party observers might prefer to see.

While fallacious inferences can be based on gross income data, the fallacy is not in the undisputed fact of male-female income differences but in the explanation of that fact. Much also depends on whether the social goal should be equal opportunity or equal incomes. As Professor Claudia Goldin, an economist at Harvard, put it:

Is equality of income what we really want? Do we want everyone to have an equal chance to work 80 hours in their prime reproductive years? Yes, but we don't expect them to take that chance equally often.64

Research by another female economist lends empirical support to that conclusion. Sylvia Ann Hewlett surveyed more than 2,000 women and more than 600 men. Her conclusions:

Economie Facts and Fallacies

About 37% of women take an off-ramp at some point in their career, meaning they quit their jobs— but just for an average of 2.2 years. Another substantial number take scenic routes for a while— intentionally not ratcheting up their assignments. For instance, 36% of highly qualified women have sought part-time jobs for some period, while others have declined promotions or deliberately chosen jobs with fewer responsibilities. . . The data show that highly qualified women aren't afraid of hard work and responsibility. But it's hard to sustain a 73hour workweek if you have serious responsibilities in other parts of your

life.65

Chapter 4

A c a d e m ic Facts and

Fallacies

Most universities are nonprofit. There is no bottom line. Did Yale have a good year in 2004? Who knows? Its stock is not traded. Administrators and faculty are not rewarded for increasing profits by reducing costs or improving product quality.

Richard Vedder1

Colleges and universities operate under different incentives and different constraints from those of businesses which must earn enough from the sale of their goods and services to sustain themselves and earn an income for

those who invest in them. Only part of the income that sustains academic institutions comes from the tuition that they charge students. For a major research university, research projects and endowment income can bring in much more money than they receive from student tuition. Harvard's income from its endowment of more than $25 billion is undoubtedly much larger than the tuition paid by its students. Institutions of higher education supporting themselves and earning a return on their investment from the tuition of their students, such as the University of Phoenix, are a recent and very exceptional phenomenon in a field where most colleges and universities are non-profit enterprises.

American universities are usually ranked among the best in the world, based primarily on having some of the best scholars in the world on their faculties— even if many of these top scholars are from other countries. As the British magazine The Economist put it, "many American universities