I've seen a lot of discussion on this sub that "there is no wage gap, it's really an earnings gap" and honestly I wasn't really sure about this so I decided to take a deep dive into the terminology to fact check this claim. The bottom line is that this statement is half true, what is often reported as the "wage gap" is more specifically an "income" gap, based on how the census bureau estimates "income". The census bureau includes non-work incomes such as alimony, child support, dividends, rent received, etc. in their income definition. But factoring out non-wage income does not eliminate the gap and therefore there is a gap in wages. The gap is caused by a number of factors including job choices, hours worked, specializations, etc. but claiming that it does not exist is neither accurate nor factual.

Until yesterday my understanding was definitely incomplete and I've posted some stuff on here in the past with that incomplete knowledge, so for that I apologize, but I'd like to try to correct that with this post.

Wages vs Salaries vs Earnings vs Income

The following uses the Census Bureau's definitions found here https://www.census.gov/programs-surveys/cps/data/data-tools/cps-table-creator-help/income-definitions.html

"Wages" is money gained directly from work. A wage gap simply means that men earn more money from work. A wage gap does not automatically imply a direct comparison between similar hours worked or similar jobs, or any other number of relevant factors. The often reported "wage gap" does generally differentiate between full time employees (35+ hours per week), and factors out workers who don't meet this criteria.

Wages differ from salaries in that wage earners are paid an hourly rate and salaried employees are payed a fixed rate over a longer period. Wages are averaged by the Census Bureau over quarterly or yearly periods so wages are not captured on a per hour basis. If there are 2 wage earners that both earn 60k per year, but one works 50 hours per week and the other works 40, they will be counted the same in the CPS yearly data.

Earnings include wages, salaries, and self employment income.

"Income" as defined by the CPS is customizable and by default includes money from work as well as other sources of income such as investments, rent received, pension withdrawals, benefits, etc.

What is the "wage gap" claim?

Generally when people discuss the wage gap they'r referring to the difference in estimated income between full time working men and women reported by the US Census Bureau's Current Population Survey (CPS).

Here is the relevant data from 2018 from the CPS:

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Median Income Mean Income
Men 57,219 80,399
Women 46,528 60,986
Women's Income as a percentage of men's 81.316% 75.854%

Generally the median number is used, as the mean is skewed by a small number of high earning men, although both are technically accurate average incomes.

How does the CPS estimate income?

This is the part that I misunderstood until yesterday. I originally thought income was synonymous with wages, but that is not true.

Here is the CPS definition of Income:

For each person in the sample who is 15 years old and over, questions are asked on the amount of money income received in the preceding calendar year from each of the following sources:

(1) money wages or salary;

(2) net income from nonfarm self-employment;

(3) net income from farm self- employment;

(4) Social Security or railroad retirement;

(5) Supplemental Security Income;

(6) public assistance or welfare payments;

(7) interest (on savings or bonds);

(8) dividends, income from estates or trusts, or net rental income;

(9) veterans' payment or unemployment and workmen's compensation;

(10) private pensions or government employee pensions;

(11) alimony or child support, regular contributions from persons not living in the household, and other periodic income.

As you can see, the CPS definition includes many sources for income that are not directly job related

The Wage Gap

So it's more accurate to call the 80% gap in median earnings an "earnings" gap rather than a "wage" gap. However, it's still not accurate to use the above information to claim "there is no wage gap". Wages still make up the largest component of personal income even after factoring in all the other sources of reported income.

I don't have the information to factor out all the non-wage income, however it seems pretty clear that factoring out the other sources of income would still leave a gap. For instance women are the primary recipients of alimony and child support. By factoring those out, the wage gap would actually be wider.

Men "EARN" More

The way that this phrase is often used on this sub rubs me the wrong way. Generally when i see this used it's insinuated that men "deserve" more because "earnings" are a worthier source of income than "wages", but I'd argue the opposite is true for the terminology. For example, non-wage earnings include rent received, alimony, child support, interest, etc. or money gained specifically while not working. There are reasons men earn more, but I think insinuating that "earnings" somehow attach a special significance to these non-wage earnings is based on a misunderstanding of the terminology.

Conclusion

The CPS data from which the "wage gap" is measured is an estimate based on many income sources including wages, the primary source of income. Factoring out the other sources of income does not necessarily eliminate or even shrink the gap, but I currently do not have the information necessary to factor those elements out.

Therefore, technically the "wage gap" is an "earnings gap", but that doesn't necessarily mean there isn't a wage gap. The two are very closely related because wages are the primary source of earnings.

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Edit: Since some people are still not understanding, "wages" and "earnings" are established terms with set academic definitions. These definitions are used by primary sources such as the census bureau. Therefore this terminology is important to understand. This terminology can't be changed to fit a different MRA definition, because then used outside the context of MRAs it will not be understood (and within MRA circles there will be confusion since there isnt an MRA dictionary).

Here is an example from the comments to help illustrate:

There are 10 Male doctors and 10 female doctors. The females are all general practitioners while the men decided to specialize. The men average 200k/ yr and the women avg 150k.

Let's say the men hold investings and earn dividends of 50k per year. The women earn child support worth 50k per year.

The earnings gap is 200k/250k (wages+ non wage earnings including child support and dividends) = 80%

The wage gap is 150k /200k (only wages) = 75%

Neither of these numbers cares that the specializations earn more than gen practicion, And neither of these numbers factors out hours worked.

The difference between wages and earnings has nothing to do with career choices or hours worked and everything to do with what type of income gets counted