Obama's Economic War on Womenby Gregory Cummings
Mises Daily, November 27, 2012
With the re-election of President Barack Obama, it is
increasingly evident that the tax eaters outnumber the taxpayers in
America. From food stamps to free cell phones, President Obama has
achieved significant political success by putting more and more
Americans on the government dole. During his recent re-election bid,
this effort included considerable pandering to women voters.
Chief among his focus on women's issues is the so-called equal-pay-for-equal-work campaign. In a
speech for the campaign, President Obama said,
The very first bill I signed into law as president was the Lilly
Ledbetter Fair Pay Restoration Act. It was a big step toward making sure
every worker in this country, man or woman, receives equal pay for
equal work.
While it is true that a wage gap between the sexes does exist, common
sense and empirical evidence demonstrate that this difference is due to
the various individual choices that men and women make with regard to
compensation and labor-force participation. It is not caused by sexist
employer discrimination.
However, the lack of need has never compelled government to stop
passing laws. In the same speech, the president goes on to say, "Thanks
to this law, we're one step closer to fair pay for all Americans, but
there's still more work to do."
No, there isn't it. Instead of correcting an alleged injustice,
additional equal-pay-for-equal-work legislation will only
institutionalize wage controls, which neuter the market allocation of
resources. Tragically, women, the targeted beneficiary of this supposed
government beneficence, will become the primary casualty in the
resulting chaos.
The Wage-Gap Illusion
The standard refrain of spurious equal-pay-for-equal-work advocacy is
that women are paid only 77 cents for every dollar a man earns. It is
noted that "this alleged unfairness is the basis for the annual Equal
Pay Day observed each year about mid-April to symbolize how far into the
current year women have to work to catch up with men's earnings from
the previous year."
[1] The president blames this wage gap on the deleterious actions of male-chauvinist-pig employers:
In this economy when so many folks are already working harder for
less and struggling to get by, the last thing they can afford is losing
part of each month's paycheck to simple and plain discrimination.[2]
Also, according to the president, as quoted in the
Huffington Post,
Right now, women are a growing number of breadwinners in the
household. But they're still earning just 77 cents for every dollar a
man does — even less if you're an African American or Latina woman.
Overall, a woman with a college degree doing the same work as a man will
earn hundreds of thousands of dollars less over the course of her
career. So closing this pay gap — ending pay discrimination — is about
far more than simple fairness.[3]
The truth of the matter isn't so sinister. As Thomas E. Woods, Jr.,
senior fellow at the Ludwig von Mises Institute, eloquently articulates,
much of the wage gap can be explained by differences in labor-force
participation between men and women:
Many women who enter the labor force are aware that at some point
they will have to interrupt their careers, probably for a matter of
years, to take care of their children. Naturally, then, women are more
likely than men to seek jobs with slow obsolescence rates that allow
them to take time off without finding that their skill or knowledge has
become outdated by the time they resume their careers. Married women
tend to seek flexible working hours to accommodate their schedules. Many
work only part time. Many would like to work near their homes. And so
on.
These requirements place some restraints on what women are likely
to earn vis-à-vis men. For one thing, such highly paid occupations as
law and medicine are extremely difficult to leave and re-enter after a
multi-year absence. Second, since many women seek the job criteria
listed above, the result is a great many women competing for the narrow
range of jobs that fit these criteria. Somewhat lower wages in these
jobs are merely a reflection of supply and demand — the only rational
way of allocating labor efficiently. [4]
In addition, the wage statistics used to calculate the gender wage
gap only take into consideration direct wages and not total employee
compensation. Wages, when viewed from a total-compensation perspective,
include various employer expenditures such as health and dental
benefits, vacation entitlements, retirement contributions,
employee-purchase-discount programs, commissions, conferences and
events, licensing fees, and parental-leave supplements, among others.
Not unexpectedly, "research indicates that women may value non-wage
benefits more than men do, and as a result prefer to take a greater
portion of their compensation in the form of health insurance and other
fringe benefits."
[5]
As Christina Hoff Sommers, resident fellow at the American Enterprise
Institute, explains, these conclusions are illustrated by the best
available empirical findings:
One of the best studies on the wage gap was released in 2009 by the
U.S. Department of Labor. It examined more than 50 peer-reviewed papers
and concluded that the 23-cent wage gap "may be almost entirely the
result of individual choices being made by both male and female
workers."…
What the 2009 Labor Department study showed was that when the
proper controls are in place, the unexplained (adjusted) wage gap is
somewhere between 4.8 and 7 cents.[6]
Woods reinforces this point:
It turns out, incidentally, that single, never-married women of
comparable education and experience and who work full time have the same
incomes as their male counterparts. The so-called wage gap completely
disappears once we stop comparing apples and oranges. Diana
Furchtgott-Roth, President Bush's chief of staff for his Council of
Economic Advisors, makes this point in Women's Figures: An Illustrated Guide to the Economic Progress of Women in America. So have many, many other economists who have bothered to study the data (and use common sense).[7]
Equal Pay and No Work
Of great concern to women (and all citizens) should be the temptation
on the part of government to attempt to legislate away the alleged
gender wage gap through equal-pay-for-equal-work legislation. For such
government action, instead of benefiting women, would cause rampant
female unemployment in the same way that legislated minimum-wage
requirements contribute to increased unemployment of low-skilled
workers. The reasoning is simple. First, the documented differences in
productivity owing to varying labor-force-participation patterns
(accompanied by mandated equal wages) would make it more cost effective
to hire men as opposed to women. Second, if women receive equal direct
wages and increased indirect benefits (such as maternity-leave
supplements, for example) it will also be more cost effective to hire
men instead of women. The net effect is increased female unemployment.
Professor Walter Block illustrates this in his delightfully provocative book
The Case for Discrimination:
As well, contrary to the self-styled feminists, there is nothing
intrinsic in a job that makes it worthy of compensation. Crucial in any
determination of wage rates is the demand on the part of consumers for
the service supplied.
Right now, for example, the skill, effort, responsibility, and
working conditions of dentists are such that they receive high
compensation.
But were a cure for tooth decay to be uncovered tomorrow, their
wages would plummet without any discrimination whatsoever in these
objective measurements in the performance of dentists.
Further, any proposal that artificially raises the salaries of a
given calling beyond its productivity level threatens it with
unemployment. But equal pay enactments are always couched in terms of
raising female incomes, never reducing those of males.
As such, they threaten to price women out of the market, in a
manner similar to what has already happened to young people, who have
been rendered less employable by minimum wage laws.[8]
In addition, equal-pay-for-equal-work legislation increases the susceptibility of innocent employers to frivolous lawsuits.
[9]
Consider the example of an employer in the X industry who currently
employs one male employee at $50,000 per year. Because the X industry is
ultimately subject to the sovereignty of the consumer, shifting
consumer desires will influence such things as sales and the available
supply of workers. Changing market conditions may necessitate the hiring
of an additional employee at a reduced salary of $40,000. In the
presence of equal-pay-for-equal-work legislation, the employer in our
example would be wise to hire another male employee. Were the employer
to hire a female employee, regardless of whether or not she is the most
qualified person for the position or willing to be employed at the
reduced salary, he would subject himself to significant liability in the
form of a potential pay-discrimination lawsuit, even though no such
gender discrimination exists. There would be no such liability
associated with hiring another male employee. This, too, would
exacerbate female unemployment.
Paradoxically, while equal-pay-for-equal-work legislation is proposed
in the United States in order to protect women workers, it has been
used in South Africa as a means of protecting white unionists from the
competition of lower-paid black workers.
[10] It cannot simultaneously achieve both goals.
The Free Market Punishes Discrimination
It is important to note that if the unexplained gender wage gap of
4.8 to 7 cents is caused solely by employer discrimination and not other
factors, it will be rapidly eliminated on the free market. As Professor
Block explains,
The mythical "sexist pig" employer would soon go the way of the
dodo, courtesy of market forces. If he were stupid enough to hire a male
when he could have employed an equally productive female for less money
(because of the pay "gap"), his gender-blind competitors would hire
her, and price him out of the business.[11]
The increased demand for female workers would drive women's wages
higher. Alternatively, the reduced demand for male workers would drop
men's wages lower. The end result would be a tendency toward equilibrium
and the disappearance of the gender wage gap. Voila! Problem solved.
Government Enables Discrimination
On the other hand, because the government does not engage in economic
calculation and is not subjected to the profit-and-loss test of private
industry, there are no free-market forces at work counteracting
possible gender discrimination on the part of public employers. Despite
the fact that gender wage discrimination violates the Equal Pay Act of
1963, there is an increased risk of such discrimination in government.
Amusingly, as the president continues his pretentious crusade toward
"equality," a gender wage gap has been noted in the Obama White House.
All of President Barack Obama's employees may not be treated
equally in the White House, as recently released financial records show
that female employees earn significantly less than their male
counterparts.
Using the 2011 annual report of White House staff salaries that was
submitted to Congress, an $11,000 difference is clear between the
median female employee salary and the median male employee salary.
This news comes on top of continued criticism — of both President
Obama and prior presidents — that women are underrepresented in the
White House. [12]
Conclusion
President Obama believes in a discriminatory gender wage gap caused
by unscrupulous employers. He is in favor of passing additional laws to
mandate equal pay for equal work. In essence, President Obama is
peddling affirmative action for women. The notion that government
compulsion is necessary to elevate women from second-class status should
be seen for what it is: a degrading insult to women and an obvious
falsehood. As has been previously demonstrated, no special treatment is
required in order for women to get ahead. In fact, "Census data from
2008 show that single, childless women in their 20s now earn 8 percent
more on average than their male counterparts in metropolitan areas."
[13]
When it comes to women's issues, as with all other issues, the path
of liberty is at once the most prosperous and compassionate choice.
Don't let anyone, not even the president, convince you otherwise.
Gregory Cummings is a pharmacist and certified diabetes educator.
He has owned and operated his own retail pharmacy business since 2009.
An alumnus of Dalhousie University in Halifax, Nova Scotia, Cummings
received his bachelor's degree in pharmacy with distinction in 2008.
He lives in Sault Ste. Marie, Ontario, with his girlfriend and pet dog.
See his
website.
Send him
mail. See Gregory Cummings's
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Copyright © 2012 by the Ludwig von Mises Institute. Permission to
reprint in whole or in part is hereby granted, provided full credit is
given.
Notes
[1] Christina Hoff Sommers,
"Wage gap myth exposed — by feminists," American Enterprise Institute for Public Policy Research, November 5, 2012.
[2] Diana Furchtgott-Roth,
"Women's Figures: Second Edition, An Illustrated Guide to the Economic Progress of Women in America," American Enterprise Institute for Public Policy Research, November 6, 2012.
[3] Bernard Whitman,
"52 Reasons to Vote for Obama: #23 Equal Pay for Women," HuffingtonPost.com, November 10, 2012.
[4] Thomas E. Woods, Jr.,
"The 'Pay Equity' Racket," the
Free Market, November 4, 2012.
[5] CONSAD Research Corporation. (2009).
An analysis of the reasons for the disparity in wages between men and women. (GS-23F-02598, Task Order 2, Subtask 2B). Pittsburgh, PA. November 5, 2012.
[6] Christina Hoff Sommers,
"Wage gap myth exposed — by feminists."
[7] Thomas E. Woods, Jr.,
"The 'Pay Equity' Racket."
[8] Walter Block,
The Case for Discrimination, p. 215.
[9] For this point I am indebted to Peter Schiff.
[10] Block,
The Case for Discrimination, p. 189.
[11] Ibid., p. 205.
[12] Meghan Keneally,
"Women paid significantly less in Obama White House than their male counterparts," Mail Online, November 5, 2012.
[13] Christina Hoff Sommers,
"The case against the Paycheck Fairness Act," American Enterprise Institute for Public Policy Research, November 5, 2012.