Wednesday, June 06, 2007

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."


At 6/06/2007 9:08 AM, Anonymous Anonymous said...

Are you comparing male union autoworkers to female union autoworkers? I can send you a copy of our local agreement. There is only one pay scale per position. I've never seen a union pay scale differentiate between gender or race for the same position. That’s one of the selling points of a union.

I don't doubt a male union autoworker makes more than a female union communications worker. Or that union male skilled trades make more than a union female production worker. But, that's a different issue entirely.

At 6/06/2007 10:57 AM, Anonymous Anonymous said...

On the other hand, don't most union pay scales respect seniority over proven ability?

A more able young woman would make less than a less able older man in a union shop.

In a non-union shop, the more able young woman may make more than the less able older man.

At 6/06/2007 1:07 PM, Anonymous Anonymous said...

Actually, the pay scales do reflect ability and merit. Sanitation and skilled trades are usually the lowest and highest pay scales respectively and they are both ability and merit based.

If, however, ability and merit are equal, seniority is often the impartial tie breaker. This beats the "good ole boy" method that would otherwise happen. You don't believe that salary positions are doled out with ability and merit as the main criteria over networking. Do you?


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