Friday, August 19, 2005

Not comparable worth again?!? 

Hugh Hewitt mentions a Washington Post article on John Roberts' advice to the Reagan administration to oppose comparable worth measures, which the Post headline calls "anti-woman". See also Captain Ed, who calls Roberts views correct. It's worth remembering what the debate was, and worth discussing from Minnesota since we were at one time ground zero in the debate.

The comparable worth debate arose because we discovered that men and women like jobs in different occupations. The gender gap no doubt exists, but this study done by the Clinton Administration in 1998 argues that, based on the evidence economists have gathered, job choice differences between men and women -- including decisions to work full-time, occupation and education, account for a little more than half the gap of about 28 cents (that women earn $.72 for each dollar a man earns on a job). The unexplained portion, some will argue, is discrimination. That's one possible explanation, and no doubt some of it does happen. But, for example, the previous post describes how some pay discrimination comes from customers rather than employers. Are you supposed to legislate for that? Do I require bars to hire fat men to serve drinks to compensate for customers preferring thin females?

The comparable worth story argues that because women choose different jobs and suffer discrimination, we need to have some way to equalize pay between female-dominated and male-dominated jobs. The State of Minnesota requires public employees to be paid comparably. Here's an explanation of the system.
A policy to establish pay equity usually means: 1) that all jobs will be evaluated and given points according to the level of knowledge and responsibility required to do the job; and 2) that salary adjustments will be made if it is discovered that women are consistently paid less then men for jobs with similar points.
The result of this has been to keep state employee wages high, and I would argue has kept wages in state jobs in outstate Minnesota near Twin Cities levels (the differential is under five percent for state jobs versus about 20% for private sector jobs.) Nobody's wage ever goes down in comparable worth, just up. As a result, turnover in state jobs is much lower -- you get many more lifers in the system.

For a prosperous country, fluid labor markets are needed, lest we become Europe. Comparable worth makes labor markets more rigid. And to think that you can assign points to decide salaries is equally wrongheaded (and rather Euro, too.) What determines your value to a firm is the value of what you produce, not your points.