Page 425 - The Principle of Economics

CHAPTER 19 EARNINGS AND DISCRIMINATION 433
IN THE NEWS
The Recent Push for Comparable Worth
OVER THE PAST SEVERAL YEARS, THE IDEA OF comparable worth—sometimes called pay equity—has made a comeback among some political leaders.
Labor and Women Push for Equal Pay for Equivalent Work
BY MARY LEONARD WASHINGTON—Nobody says men and women shouldn’t get equal pay for doing the same job. But what’s brewing now is a big push nationally by the president, organized labor, and women’s rights groups to level the gender playing field on wages for different but equivalent
work.
In a strategy session today, Senator Tom Harkin, an Iowa Democrat who has been the lonely champion for pay-equity legislation since 1996, will meet with John Podesta, the president’s chief of staff, and other officials on ways the White House can boost his bill this year. Yester- day, the AFL-CIO launched a nationwide campaign to pass comparable-worth bills in 24 states, including Massachusetts.
What’s going on here? Trying to de- termine comparable salaries for jobs tra- ditionally held by men and women is an old idea, discredited by some economists as unwieldy, if not downright dumb. They wonder who can and will decide the eco- nomic value of a riveter versus a nurse, the comparable pay for a probation offi- cer and a librarian, the equivalent pay for an auto mechanic and a secretary.
Many see pay equity, even if it is dif- ficult to enforce, as the only remedy for wage discrimination, a problem that per- sists for women, even as they have earned advanced degrees, climbed the corporate ladder, and plopped their chil- dren in day care while pursuing full-time jobs in large numbers. . . .
“For too long, working women have been seething while politicians have re- mained silent,” said Karen Nussbaum, director of the AFL-CIO’s Working Women’s department. “Pay equity can right a long-standing wrong.” . . .
Diana Furchtgott-Roth, a resident fel- low at the American Enterprise Institute, says there are plenty of reasons why men and women earn different wages—senior- ity, job risk, and market demand for cer- tain skills—that have nothing to do with discrimination and would not be erased by “cockeyed” pay-equity laws. She said when you compare men and women with the same qualifications doing the same jobs, women earn 95 percent of men’s salaries.
“Comparable worth is certainly mak- ing a comeback,” Furchtgott-Roth said, “and I believe it’s because feminists who supported Clinton through the Lewinsky mess are demanding a political payoff. I don’t see any Republican support for these proposals.”
SOURCE: The Boston Globe, February 25, 1999, pp. A1, A22.
The theory of the labor market we have developed in the last two chapters ex- plains why some workers earn higher wages than other workers. The theory does not say that the resulting distribution of income is equal, fair, or desirable in any way. That is the topic we take up in Chapter 20.
N Workers earn different wages for many reasons. To some extent, wage differentials compensate workers for job attributes. Other things equal, workers in hard, unpleasant jobs get paid more than workers in easy, pleasant jobs.
N Workers with more human capital get paid more than workers with less human capital. The return to
accumulating human capital is high and has increased over the past decade.
N Although years of education, experience, and job characteristics affect earnings as theory predicts, there is much variation in earnings that cannot
be explained by things that economists can measure. The unexplained variation in earnings is
Summary