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The Folly of 'Equal Pay' Laws

April 30, 2009

By Diana Furchtgott-Roth

WASHINGTON - In order to raise women's pay, feminists have long espoused the discredited theory of comparable worth, under which employers pay workers based on the supposed "worth" of their job rather than by supply and demand. With Senator Arlen Specter's defection to the Democratic Party, bringing Democrats closer to a veto-proof majority in the Senate, comparable worth might just become law.

On Tuesday New York Congresswoman Carolyn Maloney, chair of the Joint Economic Committee, held hearings on pay differences between men and women. The occasion was Equal Pay Day—the day of the year, according to feminists, when all women's wages, allegedly only 78 percent of all men's, "catch up" to what men have earned the year before. The story is that women have to work those extra months to get their fair share.

According to Mrs. Maloney, "we have considerable work left to do before women earn equal pay for equal work." Yet a GAO report, released at the hearing, found only a seven-cent pay gap between men and women working in the federal government. This seven cent gap was calculated even without accounting for work experience outside the federal government—surely a significant determinant of income. GAO concluded that "our analysis neither confirms nor refutes the presence of discriminatory practices."

The latest figures show that comparing men and women who work 40 hours weekly yields a wage ratio of 87 percent, even before accounting for different education, jobs, or experience, which brings the wage ratio closer to 95 percent. Many studies, such as those by Professor June O'Neill of Baruch College and Professor Marianne Bernard of the University of Chicago, show that when women work at the same jobs as men, with the same accumulated lifetime work experience, they earn essentially the same salary.

Of course, not everyone is paid the same. Some people are paid less than others because of the choices they make about field of study, occupation, and time on the job. Compared to men, women tend to choose more college majors in the lower-paid humanities rather than in the sciences, and take more time out of the workforce for child-raising.

The Equal Pay Act of 1963 already requires equal pay for equal work, and the recently-passed Lilly Ledbetter Fair Pay Act changed Title VII of the Civil Rights Act to allow workers to argue that their current compensation flows from discriminatory decisions made years back, with no statute of limitations.

But Mrs. Maloney wants still more, and she is a cosponsor of the Paycheck Fairness Act, which would allow women to sue for unlimited compensatory and punitive damages. It would encourage class actions by requiring workers who do not want to participate to opt out, rather than opt in, a radical change from conventional law and practice. The Equal Employment Opportunity Commission would collect data on the race, sex, and wages of workers to test for and prevent discrimination.

At the Joint Economic Committee hearing, University of Massachusetts economics professor Randy Albelda testified that since women pick different occupations, the government needs to raise the wages of these occupations to get rid of the pay gap, particularly wages of caregivers, such as nurses, who are employed through federal, state, and local government funds.

The American Association of University Women's Lisa Maatz, a former Maloney staffer, testified "It's not that we don't want women to be nurses. But why aren't we paying them what they're worth?" She added, "We need to look at how we pay people, what we value and what we don't."

What these witnesses are saying is that the government needs to be setting wages, rather than leaving this valuable function to the private sector, because the private sector does not do the right job. It's not fair, said Ms. Maatz, that secondary school biology teachers earn less than scientists—even though high school biology teachers get more vacation, finish their days earlier, and do not have to produce lengthy research papers as a condition of promotion.

Consider a large firm such as Chevron. Would it have to pay clerical workers, mostly women, as much as it pays refinery hands, mostly men? With such "equality," who would be willing to work at the distant, more dangerous jobs in the refinery?

Into how many categories would the EEOC divide hospital jobs? Bank jobs? Insurance jobs? Wages change constantly and job classifications are imperfect, and can be changed. Employers might not know the race of workers—and are prevented by other laws from inquiring.

Although Congress has never enacted comparable worth, a few states, such as Washington and Minnesota, have done so on state and local government operations. The extra funding for increased women's salaries comes from the taxpayers and does not cause the governmental entity to go out of business. Requiring private businesses to adopt comparable worth would raise costs of hiring, hurting women's opportunities.

For better or for worse, our economic system rewards workers on the basis of how much employers willing to pay for their service. There is no other measure of a job's "inherent value."

American women are winners, although it's hard to believe from the Equal Pay Day rhetoric. They earn over 57 percent of BA degrees and their unemployment rate in this recession, at 7 percent, is lower than that for men, at 9 percent. Perhaps it's the men that need help.

Original Source: http://www.realclearmarkets.com/articles/2009/04/the_folly_of_equal_pay_laws.html

 

 
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