There is a interesting article on CNNMoney.com called Obama flunks Econ 101 that discusses the new Fair Pay Act sponsored by a number of senators including Barack Obama. The premise of the Fair Pay Act is to rid Americans of the current pay gap between men and women. The act indicates that the pay gap is due to discrimination against female workers and proposes legislation to end such discrepancies. However, the author disagrees with the premise of this legislation noting that the pay gap is not due to gender discrimination, but rather to clear differences in the working habits of male and female workers. Including the fact that women are in the workforce for shorter periods of time, work fewer years overall, and work in jobs that simply pay less than those predominantly serviced by men, for example computers and engineering.
“More precisely, of women aged 25-44 with young children, more than a third were out of the labor force; of those women who did have jobs, 30% worked part-time. (The comparable numbers for men were 4% out of the labor force and 2% working part-time).” If women are out of the workforce for extended periods of time, the author contends that they are going to miss out on the raises and promotions of their male counterparts. Interestingly the article focuses less on this than on the fact that women simply choose jobs that pay less.
“The pay equity activists insist that O’Neill (and other economists, most of whom agree with her on the basics) miss the point, which is that the discrimination is not so much against individual women as against women’s work. Women are more likely to be in jobs that are dominated by women, such as elementary school teacher and librarian; men in jobs dominated by men, such as engineers and plumbers. And men’s jobs, on the whole, pay more.”
The author concludes that women are choosing to move into professions that pay less than men. She notes that although social workers and parole officers require similar levels of skill and responsibility, they do not by nature pay the same salary. If a woman wishes to earn more the author notes that she could choose a higher paying job, and that the woman’s choice to work in a lower-paying job cannot be considered discrimination.
She notes that if discrimination were the deciding factor, then the pay gap would not be shrinking. She points to studies that suggest otherwise. Since 1979, as more women have entered and stayed in the labor force for longer periods, the pay gap has narrowed, from 63% then to 81% now. Over the same period, according to the BLS, women’s earnings have grown much faster than those of men. Women who work part-time actually make more than men who work part-time; and never-married women make almost exactly as much (96.7%) as never-married men.
According to the author the Fair Pay Act, co-sponsored in part by Barack Obama, “would create criteria determining whether a given job is dominated by one sex; employers would have to send the EEOC every year a listing of each job classification, the race and sex of those holding such jobs; how much they are paid; and how such pay was determined. The goal of all this is to ensure that people in “equivalent” jobs are paid similar wages.”… And who would decide what is equivalent? The federal government, of course. Forget the price signal: Congress is on the job!
Whether you agree with the author or not the article is an interesting read.