Question

4. According to neuvoo (an online job search network), the average auto mechanic salary in Canada is $55,038 per year or $28.22 per hour; the average elementary school teacher salary in Canada is $42,900 per year or $22 per hour. Statistics Canada reported that (in 2011) 98% of the auto mechanics in Canada were men, and only 2% were women. On the other hand, 84% of the elementary school teachers in Canada were women, and only 16% were men. Suppose there are 20,000 auto mechanics and 20,000 elementary school teachers. Every teacher is paid the same wage rate, $22/hr; every mechanic is paid $28.22/hr.

a. What is the average (mean) wage rate of all women (across both occupations)? What is the average (mean) wage rate of all men (across both occupations)? What is the gender wage gap?

b. Is this gender wage gap due to discrimination? Why or why not?

Answer 1

a. Average (mean) wage rate of all women = (Number of women teachers*wage rate + Number of women mechanics*wage rate) / (total number of women employees) = (84% of 20,000* $22 + 2% of 20,000* $28.22)/ (84% of 20,000 + 2% of 20,000) = (16,800* $22 + 400* $28.22)/(16,800+400) = ($369,600 + $11,288)/17,200 = $380,888/17,200 = $22.145

Average (mean) wage rate of all men = (Number of men teachers * wage rate + Number of men mechanics * wage rate)/(total number of men employees) = (16% of 20,000 * $22 + 98% of 20,000 * $28.22) / (16% of 20,000 + 98% of 20,000) = (3,200* $22 + 19,600* $28.22) / (3,200+19,600) = ($70,400+$553,112)/22,800 = $ 623,512/22,800 = $27.347

Gender wage gap = (Average wage rate of all men - average wage rate of all women)/ Average wage rate of all men * 100 = ($27.347 - $22.145)/$27.347 * 100 = $5.202/$27.347 * 100 = 19% (approx)

b. Yes, the wage gap suggests discrimination. Here, we can see the higher wage industry (auto machines) is almost (98%) occupied by men whereas, lower wage industry (teaching) is more (only 84%) occupied by women. This, creates difference in the wage rates between men and women. This wage gap can only be decreased by employing 50 % women in all industries.