But that doesn’t mean policy is perfect. The current Primer Minister already has demonstrated she has a very limited understanding of economics, and now she’s proving her lack of knowledge by imposing a version of “comparable worth.”
In a column for the New York Times, Anna Louie Sussman lavishes praise on this misguided scheme, which would give politicians and bureaucrats the power to decide that certain professions are systematically underpaid based on the share of female workers.
…a New Zealand law aimed at eliminating pay discrimination against women in female-dominated occupations…provides a road map for addressing the seemingly intractable gender pay gap. …Instead of “equal pay for equal work,” supporters of pay equity call for “equal pay for work of equal value,” or “comparable worth.” They ask us to consider whether a female-dominated occupation such as nursing home aide, for instance, is really so different from a male-dominated one, such as corrections officer… What is at stake is…a societywide reckoning with the value of “women’s work.” How much do we really think this work is worth? But also: How do we decide? …In effect, New Zealand is engaged in a countrywide effort to…fundamentally rethink the value of the work typically done by women. But where equal pay processes are relatively straightforward, pay equity, when done properly, challenges us to think deeply and objectively about a job and its components. …To negotiate the New Zealand social workers’ settlement, for instance, a working group composed of union officials, delegates from the Ministry of Children, social workers and employer representatives undertook a comprehensive assessment… Unions in New Zealand are currently pursuing over a dozen public sector claims, covering, among others, library assistants, clerical workers and customer-facing roles.
Simply stated, if women were systematically underpaid, investors and businesses would reap enormous profits by by setting up female-only firms to take advantage of pay differentials.
For what it’s worth, the New Zealand legislation mostly seems to be a back-door way to funnel more pay to bureaucrats.
New Zealand has, so far, been able to take the steps it has because the government pays for these wages. It’s not yet clear when, or whether, these efforts will work their way into the private sector. The vast majority of New Zealand’s businesses are small, with some 95 percent of firms employing fewer than 20 people. …proponents of pay equity say arguments about affordability miss the point. “Employers are not entitled to make even small profits on the backs of underpaid women,” said Linda Hill, a member of the Coalition for Equal Value, Equal Pay, a group of feminists who have worked in different fields on this issue for years. “Businesses that can’t pay fair wages aren’t viable businesses.”
Wow, Ms. Hill must be the New Zealand version of Hillary Clinton (who, when asked about the potential impact of the 1993 Hillarycare legislation, infamously and dismissively said that “I can’t be responsible for every undercapitalized entrepreneur in America”).
By the way, Ms. Sussman likes the idea of imposing comparable worth in the United States, which she explicitly acknowledges is the opposite of free markets.
In America, where state support for gender equality has never been less robust, pay equity’s financial obligation will likely fall on individuals. Are we willing to pay more, say, at the grocery store, or to the home health aides who look after our elderly? Are we willing to re-examine the assumptions embedded in what we have been told are “free markets” for labor?
P.S. For those who want to fully understand the economics of “comparable worth,” read this superb report by one of my colleagues from grad school, Professor Deb Walker.
P.P.S. New Zealand was not included in the study I wrote about last week, so it’s unclear how much bureaucrats already are overpaid.
While capitalism is the only system to produce mass prosperity, I actually support free enterprise more because it is a moral system based on voluntary exchange. The various forms of statism, by contrast, are based on government coercion.
But non-coercion is not the only moral reason to support capitalism. I also applaud that free markets penalize racism and sexism. Simply stated, narrow-minded people are going to lose business to ethical competitors and forego income if they make choices based on animus rather than what makes economic sense.
This doesn’t mean an end to racism and sexism, but it certainly suggests that systemic and pervasive discrimination is very unlikely without government intervention (such as the Jim Crow laws that created government-enforced racism).
This is why I’m naturally suspicious of the claim that there’s a gender pay gap.
Mark Perry and Andrew Biggs of the American Enterprise Institute summarize the issue, pointing out that wage differences reflect personal choices and economic realities
…the 20% gender wage gap is actually a tiresome statistical myth that persists in the face of overwhelming evidence to the contrary. …The reality is that men and women make very different career and work choices, and frequently play very different family roles, especially for families with children. While gender discrimination undoubtedly occurs, it is individuals’ choice – not discrimination – which accounts for the vast majority of gender differences in earnings. …Compensating wage differentials are differences in pay that are designed to attract employees to jobs that otherwise would be undesirable. …The undesirable aspects of certain jobs can range from the mundane to the gruesome. For instance, men have longer average commute times to their jobs than women. In the U.S., the average male spends 33 more hours commuting to work each year. How much extra pay would you demand to spend the equivalent of four additional eight-hour days sitting in traffic or on a bus riding to work? …men are also much more likely to be injured or killed on the job. Economists have long found that, all else equal, more dangerous jobs pay higher average wages than safer jobs. And the 20 jobs with the highest occupational fatality rates are on average 94% male and 92.5% of workplace fatalities overall are men.
Writing for the Hill, Christina Hoff Summers of AEI issues a challenge that left-feminists are unable to answer. They never even try.
Everywhere we hear that for the same work, women only make 77 cents for every dollar a man makes. Think about that. If it were true, why wouldn’t businesses only hire women? Wages are the biggest expense for most businesses. So, hiring only women would reduce costs by nearly a quarter — and that would go right to the bottom line.
She points out that academic research repeatedly had debunked the claim that there is systemic discrimination that requires government intervention.
…this claim has been debunked over and over again. …The 23-cent gender pay gap we often hear about is simply the difference between the average earnings of all men and women who work full-time. It does not account for differences in occupations, positions, education, job tenure, or hours worked per week. When economists account for these relevant factors, the wage gap narrows to a few cents. By now, even feminist wage gap activists agree — at least when pressed.
Speaking of academic evidence, the Wall Street Journalopines about some recent research from Harvard economists.
Progressives claim that the pay difference between men and women is caused by sexism that government must redress. But a new study offers compelling evidence that the choices and priorities of women account for much of the disparity. The study examined data from the Massachusetts Bay Transportation Authority because it is a union shop with uniform hourly wages in which men and women adhere to the same rules and enjoy the same benefits. Workers are promoted based on seniority, not performance. Male and female workers of the same seniority have the same options for scheduling, routes, vacation and overtime. Under such rigid work rules, even a sexist boss or manager would have little ability to give men preferential treatment. Yet even at the Transportation Authority, female train and bus operators earned less than men. To explain why, Harvard economists Valentin Bolotnyy and Natalia Emanuel looked at time cards and scheduling from 2011 to 2017, also factoring in sex, age, date of hire, tenure, and whether an employee was married or had dependents. They found that male train and bus operators worked about 83% more overtime hours than their female colleagues and were twice as likely to accept an overtime shift on short notice. …The study ratifies the common-sense observation that men and women often have different priorities, and the best way to accommodate them is through the marketplace, not the untender mercies of government.
Notwithstanding all this evidence, some journalists are willing to publicize nonsensical numbers. Here are some excerpts from a column by Annie Lowrey in the Atlantic.
Do women earn…a shocking 49 cents on the dollar, as calculated by the social scientists Stephen Rose and Heidi Hartmann in a new analysis published by the Institute for Women’s Policy Research? …According to Rose, …the most accurate way to compare women’s and men’s earnings is to take the career-long view. “When you look at all women versus all men over time, the gap is 51 cents,” he said, referring to the 15-year figure. …What might help close this wide, long earnings chasm? Rose and Hartmann suggest…paid family leave and child-care subsidies…public-policy changes would give women more control over their working lives, and would help foster a more equitable workplace. And that would be good for everybody.
I’m guessing Ms Lowrey knows this study is tripe because she seeks to preserve her credibility by noting that pay gaps basically disappear when using honest numbers.
The most common way to measure the gender earnings gap is to look at how much women working full-time and year-round make, and compare it with what men working full-time and year-round make. …That number has some significant shortcomings, researchers have long argued. Women work different kinds of jobs than men do and have different levels of work experience, too. …Comparing apples to apples and oranges to oranges, women earn close to what men earn: Women in similar workplaces with similar titles and similar credentials make pretty much what their male peers do, whether they are fast-food employees making close to the minimum wage or corporate executives making hundreds of thousands of dollars a year.
But she doesn’t explain why the study is garbage.
To understand that, we’ll turn to Carrie Lukas, who debunks the IWPR numbers for National Review.
The study claims that the wage gap has been woefully understated, and that in reality women “earn just 49 cents to the typical men’s dollar, much less than the 80 cents usually reported.” How did they come to this jaw-dropping conclusion? Simple. They have redefined the “gender wage gap.” They are no longer looking at full-time workers, or even at consistent part-time workers. Rather, they are comparing the earnings of all women and all men who worked at any point during a 15-year period. More than four out of every ten women took more than a year out of the work force during that period, which was nearly twice the rate of men. As a result, women, on average, earned a lot less. That’s hardly a shock. …IWPR is misleading readers with the suggestion that the “wage gap” is really 49 cents on the dollar. …those who care about women’s economic advancement should seek to build an awareness of the very real consequences of the choices women make they decide what to study, which fields to enter, and how to plan their work lives so they can make informed choices.
Let’s close with this video from Ms. Sommers, which includes some rather amusing information about hypocrisy in the Obama White House.
P.S. Since I mentioned the previous administration, it’s worth noting that one of Obama’s appointees to the Council of Economic Advisers refused to defend the White House’s absurd claim that women only got 77 cents for doing the same work as men.
P.P.S. Given its track record of shoddy and biased output, is anyone surprised that the Paris-based Organization for Economic Cooperation and Development is pushing dishonest gender pay data?
But I want to call attention to the part of the discussion that started a bit before the one-minute mark. This is the point where I expressed concern about Donald Trump’s proposed parental leave entitlement.
I’ve written about Trump’s childcare scheme, but that’s a different intervention than what we’re talking about today.
Government-mandated paid parental leave is just as misguided childcare subsidies. It may even be worse. Let’s look at some details.
The Wall Street Journal is unimpressed by Trump’s plan to expand the welfare state.
Mr. Trump’s budget would require states to provide six weeks of paid family leave for new mothers and fathers, as well as adoptive parents. States would have “broad latitude to design and finance” the benefit, which would be delivered through unemployment insurance. States would be forced to work out how much to pay parents, whether to ban a beneficiary from working during the leave, and dozens of other details. The budget says the program will cost the feds $25 billion. The cost is offset in theory by reducing waste and abuse in unemployment insurance. The left is naturally panning the plan as stingy. …Once an entitlement is codified it expands. Proponents note that underwriting the benefit requires only a tiny increase in taxes, or some other levy on businesses. But wait until Democrats double or triple the duration of the leave, which they will do as soon as they are in power. The idea that Republicans can propose a cost-effective entitlement is delusional… The left chants that every industrialized country in the world offers some form of paid family leave—even Oman!—but one reason European countries have inflexible labor markets and higher unemployment is because they make hiring more expensive.
And James Pethokoukis of the American Enterprise Institute agrees that if Republicans start the program, Democrats will expand it. But his citation of some academic research is the best part of his article.
…how could the left not be secretly thrilled? Even if Trump’s bare-bones plan doesn’t become law, it sets a sort of precedent for Republicans supporting paid leave. And should the plan pass Congress and get signed by Trump, it establishes a program that future Democratic presidents and lawmakers can expand. …A 2017 study, by UC Santa Barbara economist Jenna Stearns, of maternity leave policy in Great Britain found that…there’s a tradeoff: Expanding job protected leave benefits led to “fewer women holding management positions and other jobs with the potential for promotion.” Likewise, a 2013 study by Cornell University’s Francine Blau and Lawrence Kahn found family-friendly policies…also “leave women less likely to be considered for high-level positions. One’s evaluation of such policies must take both of these effects into account.” …In a classic 1983 paper on mandated benefits like paid leave, former Obama economist Lawrence Summers explained businesses would offset higher benefits with lower pay or hiring workers with lower potential benefit costs. You know, tradeoffs.
Amen.
And this is why even a columnist for the New York Times has pointed out that self-styled feminist policies actually are bad for women.
Christina Hoff Sommers of the American Enterprise Institute decimates the bean-counting feminist “paycheck fairness” legislation being considered by the Senate. Republicans presumably know this is a bad idea, but one can only wonder whether they will do the right thing and block this initiative that at best will be a boon for trial lawyers and at worst will lead to massive government intervention in employment markets. Here’s an excerpt from her New York Times column.
…on the Senate’s to-do list before the November elections is a “paycheck fairness” bill, which would make it easier for women to file class-action, punitive-damages suits against employers they accuse of sex-based pay discrimination. …the bill…overlooks mountains of research showing that discrimination plays little role in pay disparities between men and women, and it threatens to impose onerous requirements on employers to correct gaps over which they have little control. …proponents point out that for every dollar men earn, women earn just 77 cents. …there are lots of…reasons men might earn more than women, including differences in education, experience and job tenure. When these factors are taken into account the gap narrows considerably – in some studies, to the point of vanishing. A recent survey found that young, childless, single urban women earn 8 percent more than their male counterparts, mostly because more of them earn college degrees. Moreover, a 2009 analysis of wage-gap studies commissioned by the Labor Department evaluated more than 50 peer-reviewed papers and concluded that the aggregate wage gap “may be almost entirely the result of the individual choices being made by both male and female workers.” …The Paycheck Fairness bill would set women against men, empower trial lawyers and activists, perpetuate falsehoods about the status of women in the workplace and create havoc in a precarious job market. It is 1970s-style gender-war feminism.
Christina Hoff Summers of the American Enterprise Institute does a masterful job debunking the feminist notion that discrimination is responsible for wage differences between male and female workers. I’ll just add one observation, which is that genuine discrimination is very costly. If an employer wanted to discriminate against women (or any other group), that would mean deliberately making inefficient choices. This, in turn, would reduce the competitiveness of firms with discriminatory hiring practices. In other words, the market penalizes people who do the wrong thing. This doesn’t mean there is no discrimination. It does suggest, however, that market forces are the right solution, not coercive intervention by government:
Today is Equal Pay Day. Feminist groups and political leaders have set aside this day to protest the fact that women’s wages are, on average, 78 percent of men’s wages. …The American Association of University Women (AAUW) has enlisted supporters to wear red “to represent the way the pay gap puts women ‘in the red.’” There will be rallies, speak outs, mass mailings of equity e-cards, and even bake sales featuring cookies with a “bite” taken out to represent women’s losses to men. …this holiday has no basis in reality. Even feminist economists acknowledge that today’s pay disparities are almost entirely the result of women’s different life choices—what they study in school, where they work, and how they balance home and career. …In January 2009, the Labor Department posted a study prepared by the CONSAD Research Corporation, “An Analysis of the Reasons for the Disparity in Wages Between Men and Women.” It analyzed more than 50 peer-reviewed papers. Labor Department official Charles E. James Sr. summed up the results in his foreword: “This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.” …Women are not as ready to sacrifice their deep interests in, say, history, psychology, or public policy—“all in order to fix, sell, or distribute widgets” or “to spend the best years of [their lives] planning air conditioning ductwork for luxury condos.” Men also work longer hours and are more willing than women to take dangerous but well-paid jobs as truck drivers, loggers, coal miners, or oil riggers. …And of course women are much more involved with babies than men. According to a 2009 Pew Survey, “A strong majority of all working mothers (62%) say they would prefer to work part time . . . An overwhelming majority [of working fathers] (79%) say they prefer full-time work. …American women are among the freest, best educated, and most self-determining people in the world. It seems unsisterly for NOW or the AAUW to suggest that they are being hoodwinked into college majors, professions, or part-time work so they can spend more time with their children.
The Kiwis got rid of all agriculture subsidies and farmers benefited.What is at stake is…a societywide reckoning with the value of “women’s work.” How much do we really think this work is worth? But also: How do we decide? …In effect, New Zealand is engaged in a countrywide effort to…fundamentally rethink the value of the work typically done by women. But where equal pay processes are relatively straightforward, pay equity, when done properly, challenges us to think deeply and objectively about a job and its components. …To negotiate the New Zealand social workers’ settlement, for instance, a working group composed of union officials, delegates from the Ministry of Children, social workers and employer representatives undertook a comprehensive assessment… Unions in New Zealand are currently pursuing over a dozen public sector claims, covering, among others, library assistants, clerical workers and customer-facing roles.
Simply stated, if women were systematically underpaid, investors and businesses would reap enormous profits by by setting up female-only firms to take advantage of pay differentials.
International Liberty 