Pay 'Equity' and 'Transparency' vs. Free Choice

Business writer Suzanne Lucas makes a great point about a piece of conventional "wisdom" that is completely wrong: that women make only 80 cents on the dollar overall for the same work that men do. (This is not to say that workplace discrimination against women is nonexistent or shouldn't be addressed...)

I've contested this point before and Lucas makes quick work of it, so go there if you disagree or need a refresher. That's not my focus.

What's really good about her piece is that she goes a step further than most commentators who question that 80% figure: Most times I see someone make this argument, they say something that boils down to Women spend less time than men at work due to common choices and expectations surrounding child-rearing: It is wrong not to account for this lost experience and workplace seniority when comparing pay.

This is true, and Lucas explains it better and more succinctly than I. But then she explains that many proposed solutions would interfere with one's ability to make such choices in the first place:

The famous and the anonymous envy each other too quickly. -- Me (Image by Anh Tuan To, via Unsplash, license.)

What is true that women tend to work in lower paying positions. They hold 58 percent of jobs that typically pay less than $11 an hour. Additionally, women work fewer hours than men do. The Bureau of Labor Statistics notes: "Even among full-time workers (those usually working 35 hours or more per week), men worked longer than women -- 8.2 hours compared with 7.8 hours." That adds up over a year.

Women also are more likely to have caregiver responsibilities. Now, we can argue that that is a societal problem that we should fix by encouraging men to care for children or aging parents. But it's not any business's problem to encourage couples to make different decisions. Do you want your boss telling you if your spouse can stay home with the kids or requiring you to drop your flexible schedule? (Women tend to prefer flexibility over money, when given the choice.) [links omitted, bold added]

This is a valuable point, and one that our mixed economy probably makes hard to discern in the first place: People have become so used to assuming that capitalism (individual choice protected by the government) needs to be "fixed" by government controls (which are the government improperly infringing on individual choices) -- that they fail to consider how a problem could be addressed without government coercion.

My only beef with Lucas is that she doesn't apply her observation consistently. This we see in the form of her support of another a commonly-proposed solution, government-coerced "transparency" about what everyone is being paid:

Representative Alexandria Ocasio-[Cortez] (D-NY) also addressed a better solution than a new legislation, although she wasn't specifically speaking to this solution. "The pay gap and the wage gap persist through secrecy."

If you want to stop pay discrepancies, then make sure everyone knows what everyone else in the company earns. The only people who benefit from salary secrecy are bosses. Be open, and you'll reduce discrimination in all areas. [original link omitted, link above added]

I can see openness about some things helping combat discrimination, but I can't support the government forcing anyone (directly or indirectly) to be "open:" If someone's choice to work more or less than average deserves protection, so does someone's decision to share (or not) their salary -- or (as an employer) to be able to choose whether to share salary information. (Ocasio-Cortez's 2019 proposal would have shielded people from prosecution for breaking such agreements.)

Lucas voices support for such coerced transparency, but I think she is wrong to do so for the same reason she opposes government dictating work schedules: It is a person's right to enter a contract with some terms undisclosed or to insist on one whose terms are open to the public just as it is to choose time over money.

Having said that, lots of people think that a business should basically post everyone's compensation publicly. Under capitalism, individuals would be free to contract with each other on those terms if they wanted to. And if that did in fact lead to a happier and more equitable workplace, such arrangements would become popular simply on the basis of the competitive advantages they would offer if that were true.

-- CAV