The Case against Another Round of Workplace Regulation

The battle against over-regulation, sadly, seems to be never-ending.

Proponents of more government regulation in the workplace have launched a new effort under euphemistic labels of Paycheck Fairness, Fair Pay, and Equal Pay. It's hard--but not impossible--to oppose Paycheck Fairness, especially when you examine the details.

Congress and state legislatures are being urged to advance "paycheck fairness" by adopting the specific concept of "comparable worth" in setting pay scales. It's a bad idea.

The case for comparable worth is based on a striking but misleading statistical comparison: on average, women are paid less than men. Women's median annual earnings were 74 percent of men's in 1997. It is tempting to conclude that this 26 percent gap is due almost entirely to discrimination.

However, numerous factors come into play in the determination of wages and salaries--and they are not always the same for men and women.

For example, on average, women have less work experience than men, because women are more likely to leave their jobs in connection with childbirth and child rearing. Many women favor occupations that minimize overtime and allow flexible work hours because of caring for children.

The Disappearing Gap

In recent years public policy and private actions have reduced if not removed workplace barriers to women. We would thus expect to find the pay differential between men and women becoming narrower in younger groups. This is what is happening.

In the youngest working groups, the pay gap has almost disappeared, especially for men and women of comparable education and experience. Women aged 16 to 29 typically earn 92 percent of men's earnings. Women aged 27 to 33 who have no children now earn on average 98 percent of the wages of childless men of the same age. Some pay gap.

Women have made substantial progress in fields requiring higher education. More women now receive college degrees than men. In 1970, 39 percent of psychologists were women; by 1998, it was 62 percent. In law, women's share increased from 5 percent to 29 percent; in public relations, from 27 percent to 66 percent.

Among entrepreneurs, women now start businesses at twice the rate of men. The number of women-owned businesses more than doubled between 1987 and 1997.

Comparable Worth: A Subjective Enterprise

Yet all this has not prevented advocates of more regulation from pushing legislation designed to eliminate the 26 percent wage "gap." The comparable worth approach attempts to do this by a process that focuses on determining the inherent "worth" of a job, with no reference to the marketplace.

Determining the "comparable worth" of two jobs turns out to be a subjective enterprise. When the neighboring states of Iowa and Minnesota attempted the task, Iowa ranked a secretary above a laundry worker, while Minnesota ranked the laundry worker higher. Minnesota rated a "data entry operator" higher than the other two jobs, and Iowa rated the data entry operator lower than the other two. Other states show comparable anomalies.

Ignoring Reality

The serious adverse effects of the "comparable worth" approach can be seen where it has been used most extensively--the public schools. In the typical case, a school district pays two teachers with a given amount of seniority and education the same, regardless of the subject taught. After all, is a chemistry instructor more "worthy" than a hygiene teacher? Perhaps not in the subjective world of comparable worth. But schools compete with other employers for would-be teachers, and the result of comparable worth is predictable: surpluses of gym teachers and chronic shortages of science teachers.

Advocates of "Paycheck Fairness" should be reminded of the obvious: Pay discrimination because of a person's sex is illegal. The progress that has been made in the workplace makes another round of government regulation unnecessary, if not counterproductive.

Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University in St. Louis.

For more information ...

Women's Figures: The Economic Progress of Women in America. Are women victims in the marketplace? Hardly. Women do quite well in a free economy. (Independent Women's Forum, 1999, 3pp.).

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