Thursday, September 23, 2010

The Senate's Equal Pay Act: Legislating Wage Descrimination Despite Women Choosing To Accept Less Pay

One of the legislative items that the current democratically controlled Senate would like to pass before the election season ends is S.3772 or otherwise known as the "equal pay bill" or "paycheck fairness bill." While the Senate seeks to pass the bill with the good intention of ensuring that people receive the same wages regardless of gender, the evidence justifying the passage of this legislation is very slim. 
There is growing evidence that the wage gap between men and women occurs for reasons other than intentional wage discrimination on the basis of gender. Perhaps the most solid evidence for this is the United States government itself. The U.S. Labor Department contracted with CONSAD Research Corporation to review of more than 50 existing studies as well as a new economic and statistical analysis of the pay gap. The results of the review was laid out in the report titled , "An Analysis of Reasons for the Disparity in Wages Between Men and Women." In the summary of that report, CONSAD made this observation about the causes of the pay gap: 
"Economic research has identified numerous factors that contribute to the observed difference between wages paid to women and wages paid to men, commonly called the gender wage gap. Many relate to differences in the choices and behavior of women and men in balancing their work, personal, and family lives. These factors include, most notably, the occupations and industries in which they work, and their human capital development, work experience, career interruptions, and motherhood. Other factors are sources of wage adjustments that compensate specific groups of workers for benefits or duties that disproportionately impact them. These factors include health insurance, other fringe benefits, and overtime work."
In the full length report, CONSAD explains that they were able to reduce the pay gap from approximately 20% to about 5% when they controlled the various factors that may contribute to the wage gap. CONSAD explains, in the summary of their findings, that even with taking in various factors for the pay gap, there is no detectable and tangible proof of wage discrimination:
"report demonstrates that it is not possible now, and doubtless will never be possible, to determine reliably whether any portion of the observed gender wage gap is not attributable to factors that compensate women and men differently on socially acceptable bases, and hence can confidently be attributed to overt discrimination against women."
In other words, they cannot state with confidence or certainty that there is any proof of any actual or intentional wage discrimination on the basis of gender. The Labor Department agreed with CONSAD's conclusion that the gender pay gap is the result of wide range of factors rather than any overt sex discrimination. As a result, the Labor Department made this statement with regards to any legislative attempt to correct wage discrimination that may not exist: 
The “raw wage gap should not be used as the basis for [legislative] correction. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of individual choices being made by both male and female workers.”
American Association of University Women (AAUW) Educational Foundation published a report in 1997 came to the same conclusion:
"After accounting for all factors known to affect wages, about one-quarter of the gap remains unexplained and may be attributed to discrimination."
Steve Chapman, writing for explains that the AAUW report is essentially admitting that "that three-quarters of the gap clearly has innocent causes—and that we actually don't know whether discrimination accounts for the rest."
It appears that the common thread behind the wage gap can be attributed to the choices women make in how they will get compensation for their services. In many cases, it is women themselves who create their own pay gap, even in employments fields where women make up the majority of the industry. For example, women dominate the veterinarian business and yet there is evidence that females earn less than their male counterparts. One study reveals that the pay gap for female vets is the result of intentional trade off that they choose to make. Women choose to take less pay in exchange for solidifying their relationship with their clients. 
"Analyzing the pricing patterns of 536 veterinarians, the study found female vets charged needier clients less than more affluent clients, while male vets set their prices regardless of a client's situation.
The female veterinarians -- about one-third of the total group -- adjusted their prices because they cared more about their relationships with their customers than did the men, the study said.
The vets were asked to respond to a hypothetical scenario involving a 12-year-old dog with advanced kidney failure. The vets could offer treatment options to the hypothetical client, described either as a "young professional" or an "elderly widow." The female vets tended to charge the widow less.
In larger veterinary practices, however, female veterinarians charged higher prices, as they took into consideration the needs of their co-workers as well, the study said.
"Women ... take into consideration their customers, and they take into consideration their associates," Gilly said.
"For women, their relationships with customers matter, their relationships with people they work with matter, and it doesn't seem to matter for men," she said. "Men just price the same, regardless."
The study seems to mirror the results of another study in which they found same results of pricing patterns among female mortgage lenders. They found that women made $575 less per loan than their male counterparts. 
Micaela Z. Shaughnessy, a female vet who blogs about women in the veterinarians industry has her own theory for why women charge less than men for the same services. She thinks that a woman's sense of compassion might be her own worst financial enemy.
Studies clearly show that men and women make different business choices when dealing with clients. In these studies, no one is forcing the women to take less pay. They're making that choice themselves. They make a trade off of less pay to solidify client relationship whereas men don't. Men charge the same price regardless of the client's condition.
Regardless of why women who are in the position to state a price for their services will often charge less than men, the conclusion is clear: women, knowingly or unknowingly, choose to accept less pay. However, a legitimate criticism of these kinds of studies is that one cannot take the results of a study that used a small pool of people and that they cannot make apply these studies that are based on women who own their own service-related businesses and say that it applies to positions where the salary is determined by another person or persons. 
However, that criticism lacks merit because in fields where a woman's pay is determined by someone else, women often to fail to negotiate for an increase in pay whereas men have no difficulty in asking for more money. Pink, a women’s business magazine, did a study on women and negotiating for salary in the work place and this is what they discovered: 
"Nearly half of 2,400 women surveyed did not ask for a raise, additional benefit or promotion in the past 12 months. And alas, they’re missing out, because 72 percent of those who asked got what they wanted, according to the survey."
The article states that the reason for the pay disparity isn't due to intentional sex discrimination but that women's failure to negotiate for a salary increase may partly be due to a mix of gender and social upbringing speaking, women are more likely to be passive then men and society teaches women to wait whereas boys are taught to be aggressive and get what they want. However, through training and education, women can learn to ignore arbitrary cultural rules and improve their negotiation skills. 
Another example of a trade off that women make is that women will accept less pay in exchange for stability. MoneyWeek's Editor-in-chief Merryn Somerset Webb 1997 article gives us the explanation:
"We’re trading pay for stability and, we hope, understanding. Someone with children who isn’t entirely sure she can keep coping with full time work; who knows for sure she can’t cope with the upheaval of changing jobs (something you often come to after laying down pay ultimatums); who would quite like to have another baby; and who feels a bit guilty about wondering how her toddler is doing at play group during boring meetings both wants and needs to keep her employer sweet. 
Ask for more money? No way. Move jobs to bump up her salary and give up years of accumulated maternity benefits (stay at a good company for five years plus and you can get 6 months of full pay)? No way."
The interesting thing about her explanation is that she thinks women make this trade off with the hope that it will pay off in the future when a nation faces a economic downturn in that employers will prefer to layoff men and keep women on the job precisely because women are cheaper: 
"I think a lot of women also rather hope that taking a little less out of the pot protects them: that being cheap means they’ll be last out of the door when tough times come – surely, we think to ourselves, they’ll fire all those expensive men first. Women working in the City may be about to find out if that was a good bet or not."
And boy have women made the right bet. The trade off ultimately worked.
For the first time in the American history, more men are out of work than women. They even gave this historical phenomenon a name: mancession. The New York Times noticed this trend in February of 2009 and became a hot topic during the summer of that year. The Atlantic, in July of 2009, cited a statistic that "eighty percent of job losses in the last two years were among men." In August of 2009, Professor Mark J. Perry, who teaches economics and finance at the School of Management at the Flint campus at the University of Michigan pointed out in his blog that the trend could be traced back to December of 2006. However, some people even questioned whether or not the mancession was real. Despite the minority who question this phenomenon, it is real and it still is an ongoing economic issue. Some people think the mancession is now slowing down and others think the trend is reversing in which they're calling it a "He-covery."
Getting back to the Senate's goal of passing S.3772. 
This law will not benefit women because they're making laws on a form of discrimination that cannot be clearly accounted for in any study. Moreover, Congress is forcing  people to provide or accept equal pay despite the fact that men and women freely make their own decisions about how much or less pay they will negotiate for. This tactic is familiar. Congress recently passed a law forcing people to accept ObamaCare even if millions of people intentionally choose to go without health care. You cannot make choices for yourself. Congress will make your choices for you. We will tell you how much pay you will get. We will tell you you need health care. We will tell you to keep stimulus money even if you want to pay it back.
Moreover, they're attempting to right a wrong that on a host of factors that are beyond legislative control. A government cannot control individual choices, free market forces or social conditions. It can only squash them.
However, there is a more pernicious consequence of this law. Christina Hoff Summers, in her New York Times opinion editorial, Fair Pay Isn’t Always Equal Pay, explains: 
"Some of the bill’s supporters admit that the pay gap is largely explained by women’s choices, but they argue that those choices are skewed by sexist stereotypes and social pressures. Those are interesting and important points, worthy of continued public debate.
The problem is that while the debate proceeds, the bill assumes the answer: it would hold employers liable for the “lingering effects of past discrimination” — “pay disparities” that have been “spread and perpetuated through commerce.” Under the bill, it’s not enough for an employer to guard against intentional discrimination; it also has to police potentially discriminatory assumptions behind market-driven wage disparities that have nothing to do with sexism.
Universities, for example, typically pay professors in their business schools more than they pay those in the school of social work, citing market forces as the justification. But according to the gender theory that informs this bill, sexist attitudes led society to place a higher value on male-centered fields like business than on female-centered fields like social work.
The bill’s language regarding these “lingering effects” is vague, but that’s the problem: it could prove a legal nightmare for even the best-intentioned employers. The theory will be elaborated in feminist expert testimony when cases go to trial, and it’s not hard to imagine a media firestorm developing from it. Faced with multimillion-dollar lawsuits and the attendant publicity, many innocent employers would choose to settle.
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 for a society that should be celebrating its success in substantially, if not yet completely, overcoming sex-based workplace discrimination." 
I want women and men to be paid equally. I just don't want the government to do it. No government intervention is needed. Government intervention usually makes the problem worse. Christina Hoff Summers, I'm sure, is a traditional feminist who wants equal rights with men. Its clear that even she recognizes that this is a bad bill.

No comments:

Post a Comment