Fair Pay Act of 2007: "Unconscionably Ridiculous"
Greg Mankiw discusses "A Comeback for Comparable Worth" on his blogs and cites this Fortune Magazine article "Obama flunks Econ 101: As co-sponsor of a bill that would bureaucratize most of the labor market, the presidential hopeful is flirting with a very bad idea."
The issue here is the Fair Pay Act of 2007, introduced by Tom Harkin (D-Iowa) in April (Illinois Sen Barack Obama is one of 15 co-sponsors), and which intends to correct the wage differentials between men and women. From the Fortune article:
"To the Fair Pay Act's backers, the simple fact that women make 81% of men's full-time earnings is in and of itself proof of discrimination, past and present. Only a pig-headed sexist would argue otherwise."
Well, of course it's not that simple. Fortune cites this BLS report from September 2006, which does show on Table 1 that for the general population, and unadjusted for any important variables that contribute to differences in earnings, women's median weekly earnings ($585) are 81% of men's earnings ($722). But here are a few interesting details from the BLS report:
1. Controlling for just marital status, and looking only at those workers who have "never married," women earn 96.7% of what men earn. Not much of a pay gap there.
2. Controlling for age, and looking at the age group 25-34, women earn 89.1% of what men earn. For older age groups, the pay gap widens. For example, women in the 35-44 age group make only 75.6% of men, as might be expected due to motherhood and child raising.
3. Looking at "median hourly earnings" on Table 9, female workers with a bachelor's degree or higher make 99.6% of what men earn with the same education. No pay gap there.
4. Looking at union workers in Table 9, female union members make only 78% of male workers, compared to female workers not represented by a union, who make 88.2% of male wages! What about "workers' rights" for union women? Help us out Walt G!
The Fortune article concludes: "The Fair Pay Act is, in short, madness. And it is troubling that Obama has associated himself with this kind of legislation - a position that has the feel of a pander to the feminist left. It is certainly not sound economics."