The color of a fair paycheck

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The first piece of legislation President Obama signed into law helps inch forward the struggle for economic equity. The Lilly Ledbetter Fair Pay Act won't undo historically entrenched income gaps, but it will expand the timetable for workers to sue based on pay discrimination by gender, race, national origin or religion.

The campaign surrounding the legislation focused on gender discrimination--highlighted by the story of Ledbetter's legal challenge to the pay gap between her and her male coworkers. But fair pay ties into racial equity as well. Here's an index from the Center for American Progress:

77 cents: Amount an average woman earns for every dollar the average man makes.

56 cents: Amount an average unmarried woman earns for every dollar an average married man makes.

81 cents: Amount an average Black woman earns for every dollar an average African-American man makes.

74 cents: Amount an average Latina woman earns for every dollar an average Hispanic man makes.

66 cents: Amount an average Asian woman earns for every dollar an average Asian man makes.

63 cents: Amount an average white woman earns for every dollar an average white man makes.

Some interesting factoids from the National Committee on Pay Equity on women of color:

"Among full-time, year-round workers, Black women with Bachelors' degrees make only $1,545 more per year than white males who have only completed high school. ...

"In one year, the average Latina woman working full-time earns $17,837 less than the average white man does. Over a 30-year career, that adds up to $510,000!"

William M. Rodgers III recently explored the Black-White earnings gap as a product of myriad economic challenges that impact Blacks especially, but also, increasingly, all working-class Americans. As the economy sinks, the issue of economic inequity is taking on more nuanced shades.

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Your presentation of the wage gap fails miserably. If it were possible to hire women for only 77% of the wages of men, and if women were as productive and innovative and process-oriented as men, then most anyone could become a millionaire within days. Payroll is often the largest expense in an enterprise, and if you could cut that expense by 10-23%, you would enjoy a condition of market advantage. Unfortunately, no one has been able to achieve such market advantage by hiring only women. The reason is that the wage gap, as presented, is a myth. If the wage gap were real, then then the challenge to hire a female staff would have already been accepted. Since the challenge has not been accepted, we can rightfully conclude that some measure of data is missing from the analysis. Quite likely there are significant costs associated with female hires that are not associated with male hires. Once these costs are backed into the analysis, the wage differential will surely disappear. The market always rewards arbitrage, it is the easiest way to get rich and to achieve dominance.

If you feel that I am wrong, then tomorrow go to any company and tell them that you can save them up to 23% on labor costs. Present your plan to fire all the men and to replace them with women at 77% of the previous wage rate. You will only charge a nominal 5% fee for your implementation services. Watch as they laugh at you and mock your ignorance (and be sure to visit as many female CEOs as they will surely educate you on the realities of the day). If you cannot do such, then you are not prepared to accept that the wage rate is real. For who would turn down the opportunity to make 5% of a company's total wages? I approach companies all the time and they buy my services. They buy because I sell legitimate advice. I do not pander the whims of feminists who care not for reality, but for attention. I wish you well and dare hope that you take this most simply of axiomatic challenges.

Far be it from me to pit feminist drivel against the water-tight contention that the wage gap would be offset if "women were as productive and innovative and process-oriented as men." But the issue here goes beyond whether market forces do a fine job of setting the price of labor according to pure merit and productivity. One could argue that every disparity marks an equilibrium at which the price for which people are willing to work (or, in the case of systemic disadvantage, must accept in order to survive) matches what employers believe is their relative value--a process vulnerable to a spectrum of subjective biases and exploitation. The labor market already reflects this.

But the purpose of the legislation is to ensure something different, from a civil rights standpoint: that workers have adequate legal recourse if they were unjustly denied compensation for labor comparable to that performed by higher-paid peers who happened to be the right gender or color.

>>Far be it from me to pit feminist drivel against the water-tight contention that the wage gap would be offset if "women were as productive and innovative and process-oriented as men.">But the issue here goes beyond whether market forces do a fine job of setting the price of labor according to pure merit and productivity.>One could argue that every disparity marks an equilibrium at which the price for which people are willing to work (or, in the case of systemic disadvantage, must accept in order to survive) matches what employers believe is their relative value--a process vulnerable to a spectrum of subjective biases and exploitation. The labor market already reflects this.>But the purpose of the legislation is to ensure something different, from a civil rights standpoint: that workers have adequate legal recourse if they were unjustly denied compensation for labor comparable to that performed by higher-paid peers who happened to be the right gender or color.

The purpose of the legislation is to expand the power of the state. There is already sufficient recourse for workers. Moreover, workers voluntarily agree to their wages and are not forced to work. They do so voluntarily, and they have the option of trying to force a contract upon their employer; a contract that would gaurantee pay parity. Any violation of any such agreement would constitute fraud.

Unfortunately, most people who support idiotic laws, such as fair pay, are economic illiterates. They have never heard of Bastiat and know not of Praxeology or how to evaluate incentives. The effect of this law will be to hurt women. We can expect this law, over a period of 5-20 years, to result in more offshoring of jobs, more investment in automation technology (to reduce headcount), few fulltime hires and more contract labor, and more elaborate HR hiring agreements that doom people to a designated position. Billions will be spent to mitigate the fraud cases that are certain to arise as people look to the court for false relief upon false claims. It is sad that those who profess a desire to help women would turn their heads to the truth. By failing to accept the truth that no wage gap exists, the supports of this bill are certain to bring harm to women. This world cannot be socially engineered without great consequence.

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This page contains a single entry by published on January 29, 2009 1:27 PM.

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