In “The Wage Gap Starts With Less Knowledge, and Lower Expectations”, the New York Times reports on a 2011 Schwab study where American teens were surveyed. Boys expected a starting salary of $79,700 per year and a mid-career salary of $162,300. The Times provides no data on actual wages in the U.S. A quick Google search reveals that the Bureau of Labor Statistics says that the median hourly wage across all occupations in the U.S. in May 2013 was $16.87 per hour (about $34,000 per year) and the average (mean) wage was $46,440. In other words, absent spectacular economic growth or inflation, the boys are overestimating their likely earnings by a factor of about 4X. Girls, on the other hand, overestimated their likely earnings by a factor of about 3X.
What conclusion does the Times draw from the fact that girls are better at estimating their future earnings than boys? “The girls of America seem to know less about money than boys, …”
Maybe this overestimation thing is a problem with all youth, but it especially seems to be a problem with minority youths – there has been 40 years of relentless “you can be anything you want” propaganda directed at them and they often set their expectations ridiculously high (rap star, NBA player, POTUS, etc.). I’m still not sure whether they believe this themselves or they are spouting the answers they think you are expecting to hear. Working class white youths don’t have this kind of propaganda directed at them so I think more of them understand that “anything you want” is qualified by talent, intelligence, connections, luck, ability to pay for education, etc. so they are more likely to end up working at Dad’s plumbing and heating business than as quarterback of the Patriots or as a brain surgeon.
that is a classic. What would Larry Summers think?
In reality, the girls and the boys may be equally realistic in estimating their future income. According to advocates for women, they earn about 77 cents for every dollar that a man makes. If this statistic drives the expectations, regardless of whether it’s factual or not, then you would expect women to have lower expected future income than men. 3X is 75% of 4X. That’s very close to 77%.
>According to advocates for women, they earn about 77 cents for every dollar that a man makes.
These are the same advocates that say 5 out of 4 college women are raped. You have to take these numbers with a grain of salt. If Walmart or McDonalds (or even GM or Microsoft) could lower its labor costs by 23% without any loss in quality, don’t you think that they would do it in a minute?
Walter: Excellent point. Of course, I have covered this before, e.g., in http://philip.greenspun.com/blog/2014/04/08/should-the-sec-make-it-illegal-for-public-companies-to-employ-men/
The Times deserves to be picked on for the tone of outrage based on barely comprehending some report or other… though you are being a bit unfair –
1) I would allow for expectations of children to be above the actual overall (mediocre) mean, in which case girls’ expectations are close to the top execs, marketing and sales managers salaries. So boys are still way off, girls are pretty close but not 3X-4X.
2) The Schwab study also reports boys claiming to know more about credit cards, 401K etc. So on the one hand the boys knowledge reporting by the Times is based on more than the salary expectation, on the other I find boys’ claims of more knowledge laughable so maybe girls are just more honest too.
I thought I just looked this up last week and the actual median income for US workers was $27,000 per year. Doesn’t seem to match up with your numbers. Maybe my numbers include part time workers? (but should they be included?)
Possibly the teens are using numbers accounting for inflation? 🙂