EDITORIAL: Bad laws depress wages of women
Tuesday
was Equal Pay Day. Equal Pay Day is a holiday celebrated in some
corners of an American subculture known as the “Establishment Media.” As
Easter has the Easter Bunny and Christmas has Santa Claus, Equal Pay
Day has its make-believe creature: the myth that women make 79 cents for
every dollar a man does for the same job.
That
figure amounts to a lie because it compares the average lifetime
earnings of all full-time men versus women across the country,
regardless of job, skill level, hours worked, or career choices. Adjust
for these factors, and the pay gap shrinks almost to a vanishing point.
It stands to reason, if employers could get away with paying women less
for the same amount of work as men, then there wouldn’t be an unemployed
woman in the country.
The small pay gap that does exist is grounded in part in bad policy.
Policymakers
seem set on making it more expensive to hire women by imposing mandates
on anyone who hires them. Such mandates, whether they put employers or
taxpayers on the hook, create a hiring bias against women, depress
women’s wages, and result in fewer women reaching managerial positions.
For
instance, some countries and some U.S. states require employers to
grant paid parental leave. Congress is considering multiple bills to
make a national paid parental leave bill. Such laws inevitably create a
fiscal liability for employers who hire women of childbearing age. As
Obamacare architect Jonathan Gruber put it, women bear “100 percent” of
the economic burden.
Democratic
proposals to make employers cover the cost of paid leave obviously
function as taxes on anyone who hires a woman. For any employer,
Democratic paid maternity leave proposals mean at some point getting one
worker for the price of two. But Republican proposals to draw the funds
from Social Security suffer a similar flaw. They do not eliminate all
of the added costs associated with employees who take those months off.
The employer must still cover the employee’s benefits during leave, and
less efficient (and likely less competent) temporary employees must be
hired. In the meantime, the women taking leave are encouraged to be out
of the workforce, where they accumulate less human capital and face
lower lifetime wages as a result.
The
Republican paid-leave proposals aren’t as harmful. Women in
high-skilled industries, such as tech and finance, probably wouldn’t be
harmed much by them. But women seeking employment at smaller, less
profitable companies, who are disproportionately lower-income to begin
with, will face increased discrimination in the hiring process as
employers factor in the possibility they are hiring someone they’re
going to lose for a few months in the coming years.
When
Sen. Bernie Sanders complains America is the only nation in the
Organisation for Economic Co-operation and Development without mandatory
paid parental leave, he misses the flaws of those proposals. Studies of
European paid-leave plans demonstrate that even when the policies are
gender neutral, women still take the overwhelming majority of time off.
And since 1970, the average length of paid leave in the eurozone has
tripled to more than a year. One result: The average OECD nation has
just 4.4 percent of women in managerial positions, compared with nearly
15 percent in the U.S. In fact, America has almost achieved gender
parity in managerial positions.
The
free market has acknowledged that when companies can afford it,
independent paid-leave plans are powerful incentives for attracting the
finest, young talent. As Vanessa Brown Calder at the Cato Institute has
found, private paid leave “has grown three- or fourfold over 50 years
and continues to grow,” indicating that the free market and an
increasingly prosperous society will adopt expanded paid leave in a
manner that doesn’t harm young working women or increase the pay gap. In
the meantime, policymakers’ meddling can only make things worse for
women in the workplace.
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