Sunday, May 03, 2009

Problems With "Equal Pay For Equal Work"

Seems like I'm spending an awful lot of time responding to Amanda Marcotte these days, but she keeps saying things which I feel the need to address. This time around it's an offhand comment about pay disparities between men and women:

Ginsburg often sounds like she’s howling at the winds in despair, as she should, because she’s sitting on a court that now thinks that women’s right to get paid the same as men for the same work is debatable, as is the notion that women are adult human beings who can make decisions about their own health without paternalistic male strangers telling them they’re too stupid to know what they’re doing.

Amanda is referring to Ginsburg's dissent in Ledbetter v. Goodyear, though the decision in that case didn't address a fundamental right to equal pay. Rather, it turned on the interpretation of an 180 day statute of limitations in the Civil Rights Act of 1964. The overall outcome of that case was pretty shitty all-in-all, but the ultimate blame for that rests with the people who drafted the Civil Rights Act. More importantly, the appropriate fix is to change the law, which Congress did shortly thereafter via the Lilly Ledbetter Fair Pay Act. The Supreme Court would have done more harm than good by trying to go beyond what seems to have been a pretty open-and-shut case of statutory interpretation.

More to the point, the whole notion of "equal pay for equal work" has some fundamental problems. If you assert that women should receive equal pay as men for doing the same work this position logically presupposes that all men doing the same job receive roughly equal compensation, but that presupposition is clearly false. For example, I'm an engineering manager in charge of a bunch of engineers, mostly male, many of whom do equivalent work. There are wide pay disparities within this group, the most extreme case of which involves a 50% difference in compensation.

What does it mean to call for pay equity in such a situation? If I've got men making $60k and $90k for doing the same job what should I pay a woman in a similar situation? I can pay her $60k, which is equitable in the sense that she has male colleagues making the same amount, but she'll still be making 50% less than other male colleagues. Or I can pay her $90k, which eliminates the complaints about bias against women, but if I adopt a rule which says that all women get paid at the top of the pay scale I open myself up to charges that I'm biased against men. What is the correct behavior in such a situation?

One answer is that we should eliminate the disparities altogether and just pay everyone the same thing, but then we're left with the problem of determining what constitutes a "fair wage"? There's no good answer to this particular problem; any attempt to set a fair wage becomes an exercise in arbitrariness. Ultimately a thing is worth what someone is willing to pay for it; wages are no different from anything else in this respect. And, lest I be accused of being unduly fixated on theory, a fixed wage rate is unworkable from a practical standpoint as well.

Suppose that I, as the employer, decide to split the difference and pay $75k. How do I compete with employers who have decided to pay people $85k? Can I hire someone who offers to do the job for $65k? And so on... the system breaks down so quickly its barely even worth considering.

It seems inevitable then that there will be pay disparities among men who do the same job. This is due, in part, to fluctuations in the labor market; labor is cheaper to purchase at some times than at others. This is also due to the fact that cash is only one form of compensation; people will require more or less pay for the same actual work due to the idiosyncrasies of their personalities. It follows from there that we should also expect pay disparities between men and women.

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