As Kay said below, today is Fair Pay Day, and so it seems appropriate to share my thoughts.

The first thing to address on Fair Pay Day is what exactly Fair Pay is. At its most basic, it means equal pay for equal work. In simple terms, the implication is that a man and a woman, doing the same job, should get roughly equal compensation. And so discriminating hiring practices, discriminating promotion practices, firing women because they’re pregnant and so and so forth are violations of this principle. And, fortunately, this principle is enshrined in the law. This doesn’t mean that it isn’t under fire. The Supreme Court, in Ledbetter v Goodyear, made it much more difficult for women to file pay-discrimination suits. This case, which said that a woman had to file a suit 180 days after the discriminatory payment decision was made, made it functionally impossible to sue employers because it’s only after a pattern emerges of women not getting a fair shake at series of raises or promotions that it becomes obvious that pay discrimination is happening. The Court did, however, open the door to Congress making the statute more amenable to women suing under it. So despite the Court’s horribly reactionary decision, Title VII and the Equal Pay Act, which protect women from pay discrimination for the same work, are still on the books and can be strengthened by Congress, and probably will be if a Democratic president is elected.

But the principle of Equal Pay, notwithstanding the Court, is not what today is traditionally meant by “fair pay.” Instead, it’s about Fair Pay. The term Fair Pay does not traditionally describe equal pay for the same work, but the actual pay gap between men and women. And the pay gap is real. According to the Bureau of Labor Statistics in 2006, women earned 81 cents for every dollar men earned. To give some historical perspective, in 1979, women were earning 63 cents on the male dollar. So the question becomes, is this gender gap ipso facto unfair, and if so, what are we to do about it?

Most advocates for Fair Pay say that the gap is the result of two trends. One is that women are paid less because of their tendency to drop out the workforce due to pregnancy and motherhood. This means that more women drop out of the labor force in their most productive years or go to part time, which drives their hourly and total wages down. Because women tend to flock to careers that allow them to have more flexible schedules - teaching and nursing are good examples - the wages in those jobs tend to be low. There’s also the fact that women “pick” certain career paths. For example, men make up a huge majority of the highest paying college majors, while women are predominate in the liberal arts. Adding up these three factors – fewer hours, fewer years in the work force and different career paths - June O’Neil found that 97.5% of the wage gap could be attributed to their aggregate effect.

The second factor that Fair Pay supporters point to is systemic sexism in how society values certain occupations. They see the fact that nurses, teachers and receptionists get paid less not as evidence that, due to the productivity of their work and the supply and demand of labor, they get paid less than plumbers, but instead due to deep institutional injustices directed against women. The principle is not “equal pay for the same work” but “equal pay for equivalent work.” Their remedy for this in the 1970s, when the concept of fair pay first emerged, was that the government would measure the “worth” of each profession, and declare which ones would be equal. So if nurses and plumbers in a hospital were doing “equivalent” work, then they would have to be paid the same.

The problems with the old-school, Comparable Worth approach are obvious. We know from Hayek, as well as from the historical failure of central planning, that government is not very good at determining market imputs, to make them fair or to achieve any other goal. There is simply too much that goes into a payment decision, that the government couldn’t possibly say what’s fair for a specific job. This bureaucratization of the labor market would inevitably distort it, making it harder for women to get jobs in specifically female professions like teaching and nursing because the wages were at above a market equilibrium level. When wages are artificially forced too high, employers hire fewer people. There could also be the problem of the wages for certain productive or societally useful work getting “equalized down” so that its wages could be “fair” compared to “equivalent” woman’s work. If doctors were mandated to get paid less, or oil rig workers, we would have fewer people entering these professions. It’s been very rare where the market hasn’t, on average, done the best at determining aggregate utility.

Because of the myriad practical and political problems with Comparable Worth proposals, as they were called, Fair Pay advocates have come up with new ideas. The most widely supported Fair Pay proposal these days is the Fair Pay Act. The Act, which was co-sponsored by Barack Obama, would be based around class action suits which would claim that women were getting underpaid for equivalent work, within the same company. For example, under the Fair Pay Act, social workers could sue to get equal pay with Parole Officers, or nursing assistants would be equal pay with plumbers in a hospital. The Act would ask courts to evaluate whether jobs’ “composite of skill, effort, responsibility, and working conditions are equivalent in value” and then rule that a company would be engaging in sex discrimination by paying the majority female workers less. The Act also would prohibit lowering the pay of one class of workers to make the pay equal.

But while the content of the Fair Pay Act is quite different from past comparable worth proposals, it still rests on the same assumption - that gaps in pay are not the result of the free functioning of the labor market, but instead is the result of the variety of sexist factors. For example, the concept of a “family wage”, whereby women in traditionally female jobs are paid less because it’s assumed they have husbands who are also working. The Act’s advocates also claim that women are steered into lower paying jobs because women are more likely to take time off for pregnancy and childrearing.

There are certain pay-gap facts that are undeniable, the most obvious being the existence of it. So what are we to do? The Fair Pay Act, despite its vast improvements over Comparable Worth, still retains some basic flaws. If the pay patterns that result in women earning less are the results of society wide problems such as women being more likely to take responsibility for raising children, then intervening at such a late stage is probably only going to distort the labor market. If employers are worried that if they hire nurses, they will have to pay them at an above market wage, they’ll hire fewer nurses. And if the factors that drive women into nursing are still present, then Fair Pay won’t accomplish much at all.

But the wage gap is still a problem, so what are we to do? In my view, we keep doing the same things that we have been trying to do for decades. The first thing we must do is eliminate, or alleviate, the motherhood penalty. Since much of the gap can be attributed to fewer hours, fewer years in the work force and different job choices among women, it’s unclear if trying to intervene so late in the game will do much, especially considering the distortions it brings. But what all those three factors have in common is motherhood. So we ought to be doing all we can to make it so mothers can participate in the work force. This means more paid maternity leave, more paternity leave, more child care, more pre-K and doing the slow, hard work of trying to change social norms so that more men will stay at home. This also means that, a la Linda Hirshman, more women ought to work full-time and insist that society and family life adjust to their preferences. As far as getting more women into higher paying jobs goes, there need to be more grassroots efforts for woman to get interested in the sciences and math. The evidence that inherit aptitude is responsible for the dearth of female engineering majors is weak, especially compared to the role that assumptions about women’s ability and the intimidating atmosphere that competitive, functionally all-male academic programs can provide.