ED 258 865

AUTHORTITLE

REPORT NOPUB DATENOTEAVAILABLE FROM

PUB TYPE

EDRS PRICEDESCRIPTORS

IDENTIFIERS,

ABSTRACT

DOCUMENT RESUME

SO 016 522P

Walker, Deborah '

Value and Opportunity: Comparable Pay for. ComparableWorth. Series on Public Issues No. 10.ISBN-0-86599-020-48420p.; For related 'documents, see SO 016 513-527.Public Issues, Center for Free Enterprise, Texas A&MUniversity, College Station, TX 77043 '($2.00).Viewpoints (120)

'MF01/PC01 Plus Postage.-Capitalism; *Controversial Issues (Course Content);'Employment Practices; *Equal Opportunities NOobs);*Feminism; *Government Role; Higher Education;Instructional Materials; Labor Economics; *SalatyWage Differentials; Secondary Education; SexDiscrimination

,

*Comparable Worth'

4

In this booklet, one of a series intended to applyeconomic principles to major social and political issues, an argumentis presented against comparable pay for comparable worth' policies forwomen. Separate subsections present opposing viewpoints on thiscontroversial issue aswell as an examination of whether legislationhas been a "friend" or "foe" to women's equality, a discussion ofways in which the government discriminates in the private and publicsectors, and reasons why,both feminists and women in general shouldencourage the reduction of government intervention. In 'conclusiom itis argued that it is consumers who place a veilue on women's. sobs andwho thus ultimately decide their wages. It'follows that women must bewilling to gain skill and/or education requirod to move into theareas that consumers value more highly. (LH)

************************************************************************ Reproductions supplied by EDRS are the best that can be made *

* from the original'document. *

***********************************************************************

0

j.

U.S. DIPAATMINT OF EDUCATION

NATIONAL INSTITUTE OF EDUCATION

. EDUCATIONAL RESOURCES INFORMATION

CENTER (ERIC).'[This document has been reproduced OS

received horn the person or,organization

originatIng rtMinor changes have been made to Improve

reproduction quelitV

Point3 of view or opirvons stated in this docu-

ment do not necessaity represent official NIE

position or policy.

"PERMISSION TO REPRODUCE THIS

MATERIAL HAS BEEN GRANTED BY

TO.THE EDUCATIONAL RESOURCES

INFORMATION CENTER (ERIC)."

F

The SE.RIES ON PUBLIC ISSUES is publish4d by the Center for Education and Research jnFree Enterprise, TexasA&M Universit The piirpose of the series is to apply simple,wellotesti.,d'economic print iplei; to the! major social and political isities of tile day. The viewsexpressed in the series are those of the authors and do not necessarily reflect the opinions ofthe staff, directors and advisers of the Center for Free Enterpeises or the administrationor

. . i!

Regents of Texas A&M University.' ..... . .

,. .The Series on Public Issues is edited by Dr. Sire zar Pejovich 'a..na by Dr. Henry Det,h1off.Address all correspondence to Public Issues, Center for Free Enterprise, Texas A&M Univer-sity, College Station, TX 7703. . ' ,

. .

BOARD OF DIRECTORS

Lawrence D. White (Chairman)Fort Worth; Texas

Carl F. Raba, Ph.D.(Vice Chairman)San Antonio, Texas

Keith L. Bryant, Ph.D.Dean, Colkige of Liberal ArtsTexas A.SLM University

Dean c. COrrigan, Ed.D.Dean, C011ege EducationTexas A&M University

Thomas R. FrymireDallas, Texas

H. 0. Kunkel, Ph.D.Dean, College of AgricultureTexas A&M UniSiersity

William H. Mobley, Ph.D.Dean, College of Business Adm.'Texas A &M University

Robert li. Page, Ph.D.,Forsyth Professor of EngineeringFoos A&M University

Herbert G. SchiffDallas, Texas

Mayo j. ThompsonI iooston, 'texas

A

It

Ex- Officio Directors

I vibe I.. AppeltI louston, Texas

L;relyI oil Wirth, lex),11111tam V \loge, Ph 1)\ nt C hon. ellor for A,,,hlt.micProri.unsIr ,as :\,CLN1 v System

1.1

3

NATIONAL ADVISORY BOARD

Maurice AcersDallas, Texas . .

H. E. "Eildiu" ChilesFort Worth, Texas

Edwi'n Feulner, Ph.D.'Washington, D.C.

Rawles FtilghamDallas, Texas

Honorable Phil Gramm, Ph.D.Washington, D.C.

John H. Moore, Ph.D.Stanford, California

Robert D. Tollison, Ph.D..Washington, D.C. .

H. B. ZachrySan Antonio Texas

CENTER FOR EDUCATIONAND RESEARCH IN

REE ENTERPRISE

DirectorSvetozar Pejovich

Associate DirectorL.awrence C. Wolken

Rex. 1. Grey ProfessorS. Charles Matrice

Series Production DirectorMarilyn ardenne

Administrative AssistantJudy Roessner

J

0

Series on Public Issues No. 10

Published by the Center for Education and Research in Free Enterprise, TexasA& M University, College Station, Texas.

IISBN 0-86599-020-4Copyrights, 1984. Ail rights reserved.

Reprinted from Policy Analysis No. 38, May 31,1984, by permission of the CATOInstitute.

4

O

O

Introduction ,, .

i ... t..! are fi'W, if any, men who would qualify:for the position of Playboybo -v; and there areffew, if any, women who would qualify for thepo. . ,n of male lead in a motion picture. However, there are many otheroccupations in which gender may be irrelevant. People in these jobs includenurses, trucic drivers, lawyers, secretaries, and economists. Why is it, then,that these jobs are each characterized by a disproportionate number ofmales or females? And why do' many female-dominated occupations com-mand lower wages than do male-dominated occupations? .`''

During the past two decades, .many feminists have answered thesequestions with one word: discriMination. They have felt that the onlyappropriate means for bringing about change and equality for women inthe work forceihas been government regulation. The 1960s were charac-terked by one law after another, each seen as a step toward betteringwomen's position in the labor force. 10963, for example, Congress passedthe Equal Pay Act4requir. g equal pay for the same work. Title VII of theCivil Rights Act, passed i 1964, prohibiteaemployers from discriminatingagairst women.

Fklinists in the 1980s, though, are stating that these regulations havenot been effective because women on average still earn approximately 59percent as much as men do, and are largely concentrated in certain types ofjobs. Members of the 13,1siness and Professional Women's Foundationblame this "lack of progress" on poor enforcenientwpf the regulations and .:on "the imprecise language of the Equal Pay Act." The organization alsoclaims that "Segregation of 'men's robs' wpd 'women's jobs' has been abarrier to successful litigation and batgaining fbr equal pay for women.,"Because the jobs o.f both sexes are not identical, it .has been difficult todemonstrate the discriminatory basis of women's wages."I

Tissue of the '80sTo deal with this, many \feminists are focusing on what Janet Gray

itayes, former mayor of San Jose, California, calls the "issue of the '80s;"'vial pay for work of comparable worth. The concept of comparable worthdiffers from that of eillial pay"for equal work notonly in definition'but alsoin how it would affect vomenif it ere passed into law. Equal pay for equal%,\

work deals with paying a woman the same wage as a man, or anotherwoman, who is doing exactly the sane job. Comparable worth focuses onpaying an entire profession or occup tion the same wage rate as a secondprofession or occupation; both of w ich are determined by some outsideauthority to be of the Same worth o value to'an employer.

.

dr,

S

The proposed method of determining this Worth or valueof .a job is ajob-evaluation point system. Under such a system a certain number orpoints are awarded for different job criteria, such as skill, effort andresponsibility required by the job, as well as working conditions under,which the job is performed. Those jobs with the_same number of points aredetermined to be of equal worth.

,Advocates of the point-system method, therefore, claim that each '166has an intrinsic value to an employer and that it is possible to objectivelydetermine this value. In a recent court decision, die American Federation ofState, County and Municipal Employees' (AFSCME) won a major lawsuitagainst the state of Washinaon, Using a point system similar to fhe onedescribed abve, AFSCME introduced evidence that positions such as thatof clerk-typists should.be paid the sanie.wage rate as that of warehouseworkers. Judge Jack Tanner ruled th4,t wages in "female occupations" beincreased, not that wages in "male oc6upations" be lowered.

In other court cases, nurses employed by the city of Denver have arguedthat they should be paid as much as city tree- trimmers;2 and jail matrons inOregon have argued that they should be paid the same wage as maleguards.3 The nurses and jail matron]; like the AFSCME typists reliedon the argument that their jobs are automatically valued lower thanmale-dominatW jobs simply because they are female-dominated jobs.Their argument implies, therefore, that if the occupatiops of clerk-typist,; nurse, and jail matron were predominantly male, the wages for theseoccupations would' be higher.

1eA recent report prepared for the L qual Employment Opportunity Com-mission (EEOC) by the Committ on Occupational Classification andAnalysis concludes that' a

gt .

our judgment is that there is substantial discriminationin pay. Sipecific instances of discrimination are-neither

. , easily identified nor easily remedied, because the wide-spread concentration of women and minorities into low -paying jobs makes it difficult to distinguish discrimma-

, tory from nondiscrimin ory components of compensa-tion. One approach, whi heeds further developmentbut shows some promise, is o use existing jOb evaluationplans as a standard for comparing the relative worth ofjobs.3 t,

Do jobs really have an intrinsic value irrespective of the market thitt can be\, determined by using job- evakiation systems? One useful way to examine

this question is to consider exactly how the value of, a job (or a wage) isdetermined.

When a person values something more than he values something else, lifis simply stating a preference for A over B. (l am aware of the possible sexistconnotations carried by "he, "his," and "him," but I prefer this simplifieduse of English to the cumbersome "he and she," "his and hers," etc.) An

6

a

employer values the labor of his employee more than he values the wage hepays. The employee, on the other hand, Valdes. the wage more than he- values his time and effjrt. If this were ,not the case, trade between theemployer and employee would not take place. When trade does take place,both people feel they are better off; they have traded something of less,.value for something of greater value. Each of them has subjectively deter-mined that the trade was worthwhile at that particular time and underthose particular circumstances.

How do the employer and employee determine their respective. values?Values are always determined in the individual, unique minds of men and.women. A person will value one thing over another because he feels it giveshim greater utility .that is,satisfaction or usefulness. This satisfaction orusefulness may not ,seem right or appropriate in the .eyes of anotherperson. Right or wrong, though, one's notion of value guides one's actionsand deter ines one's goals. These goals may change as a person changeshis value )f something. '

Thing arid people do have intrinsic characteristics, but even these areviewed and valued differently by different people. Objectively, for exam-ple,,,,4aintipg by Picasso is just a piece of canvas with paint on it. Subjec-tively, however, this same canvas may be viewed and valued as a greatwork of art, It is important to remember that values are always determined\./SUbjeCtiVelY.

Do jobs, then, really have an intrinsic (objective) value? Or can the valueof.any job only be determined subjectively, depending on the circumstan-ces? Given that the value of a job can change at any time and differs fromperson to person, jtklbs have subjective characteristics.

Consider the situation of a man stranded on a deserted island. The daybefore he was stranded, his circumstances and ideas may hav%led him tovalue the services of a tailor very highly. However,.once he is stranded, heno longer cares if his tlothes fit well. He may now be Willing to trade theservices of fifty tailors for those of one boat builder. As a consumer, theman stranded on the island has determined the value he place* on theservices of a boat builaer, as well as his value of any person the boat buildermight employ.

As entrepreneurs beco e alert to the changing values of consumers,they will shift their factors of production ,labor, capital, land to bestsatisfy these consumers. Therefore, those factors most valued by consu-mers will also be valued highly by the entrepreneurs. If, for example, agreat number of sailboats were suddenly demanded (valued), the boatbuilder's employees who are trained in making sails would become more.valuable to consumers and to.the employe and they would commandhigher wages. Employers, therefore, cannot simply set rates at whatever4level they desire. Rather they must be constantly alert to the changingvalues of consumers.

However, not only do wage differentials between jobs reflect the values

3

sP

7

., <# .# .

consumers plaCe on the contributions work4;:,irs make to the final product,but they also depend upon the scarcity of tlualfied workers relative to the

, demand for their contributions. Employees who. have skills, experience,abilities, .rd contributions needed by an entrepreneur and who are alsoscarce relative to Cleirand will be paid higher wages.

.Wage differentials` between men and women are not the consequence of

women being inherently less productive than fnen. The differentials exist'because women, 1/411 comparison, generally have less educAtion and fewer .

skills and are higher risks for employers". For example, those women whoentered the tkork force in the 19.50.s were generally more educated thantheir male cOuwerparts. Since then, however, as more and more wtoenhave entered the work force, the average level of education for wo-fking

wohen has fallen behind the average level for men.5Men do not leave their jobs to have ctildren and are less likely than

women to leave their jobs to care for their children. la addition, men arealess likely to move if their spouses are forced to relocate for professionalpurposes. All of these 'are reasons why, turnover rates for mOri are lowerthan turnover rates for women. one study using Department of Laborreports estimates that the r3edian number of years menistay ont,thir jobsexceeds that for women by 77 to 100 percent.0 .

.

Differences in wages between nen and women can also be explained by.other' factors. Men are usually physically stronger thin women and theytend to work in jobs that have a higher probability of physical harm.Becau4e of this increased risk to the employee, these jobs command higherwages.' .

.,With a comparable-worth policy, what would hapOen if supply and

demand conditions were to drive up the wages in one particular occupa-tion? For example, with regard to the A FSCME v. State of Washigton decision,

if there is a sudden shortage (relative to demand) of warehouse workers inWashingvn, causing wages to increase at a greater-than-normal rate,should clerk-typists automatically receive the increased wage simply 'because their occupption is determined to be of comparable worth?

Through the use of prices, the competitive process enables marketparticipants to learn about, available opportunities. As consumers' tastesand preferences change, prices change to reflect, the new choices the .consumers are making. As thurices of consumer products change, wages

in' the labor market change. Workers, like entrepreneurs, are always at themercy of consumers, and prices are'the signals that to l i I market partici-pants how products, seivices, and ultimately workers...a e valued in theni a rket.

Wage rates in turn provide information to people who are deciding on anoccupation. An occupation demanding a high wage rate means that con-sumers value the job and that there is a small supply of workers relative todemand. The incentive to enter this occupation'truld be high. Acomparable-worth policy would cause great distortions in\this information:

`,..

4

1

A high wage rate may simply mean that the occupation is determined to beof comparable worth to a different, high- payiflg occupation. People wouldthen have incentives to enter and train for/occupations where thero,isalready an ample supply of worker's. The result would be over-supply ofworkers in some occupations and under-supply in others.

One popular argument against permitting the forces of supply anddemand to set wages is stated by EEOC consultant Ruth.Blumrosen. Shecontends that prevailing wages are a product of other employers' priordiscriminatory practices.$ But entrepreneurs are concerned only with thepresent and the future. The'value of something yesterday has no meaningto them today. They value the factors of production, including labor,available in the present in accordince with these factors'anticipated serv-ices in the future production of consumer goods. This is because entrepre-neurs are always acting in th`e present to prnduee results in. the future.

Some feminists also claim that many w en should not be subject tochanges in market supply and demand. 1 he EEOC repoit explains that"while the opportunity to move out of segregated job categories may bewelcome to many women, many others, who have invested considerabletime in training for their jobs, demand wage adjustment in 'women's jobs'rather than opportunities toiwork in other jobs."°

In other words, many women feel employers should be forced to demandwhatever skills, experience or abilities these women may already have.This would be the same'as forcing c nsumers to purchase products they donot want simply be'cause these p ducts are already on the market. If thiswere the case, entrepreneurs ould have little incentive to create new,more innovative products; con umers would have to buy What the produc-ers already are selling.

This is precisely the effect a comparable-worth policy would have uponwomen. They would no longer have the incentive to better themselves, tolearn new skills that are actually in greater demand. With this lack ofincentive, wage rates would be likely to decrease rather than rise. Forexampi,?, the judge in the AFgCME 'v. State of Washington case ruled thatwages to "female occupations"'be increased. This decision is likely toincreatke the incentives of women to continue entering these "femaleoccupations" and therefore create an oversupply in these joys.

Many feminists, in effect, are saying to women, !'Stay, where you are."This kind of advice, though, only reinforces the idea that women areunambitious and less capable than men. The very women who are trying toshed this iv are actually demonstrating that they agree with it byarguing that women will "never get anywhere" without the help ofgovernment.

a

5

r. 9

Government: Friend or Foe?Any reliance on government to increase women's position in the labor

force is ironic, in that analysis shims that government legislation, althoughwell-intentioned, has not always been helpful to women. Historically,legislation has restricted Women from entering certain occupations forseveral different reasons. During the early 1900s, women were bannedfrom working in establishments that sold liquor so that immoral anddisorderly situations would not develop. Women:also were prohibited fromworking in mines and at night jobs to prevent "unregulated mingling ofmen and women" in dark places.lo "Specific evil effects of long hours onchildbirth and female functions" was the basis for restricting the number ofhours women could work.11

The job-related regulations were initially seen as helpful to women.Most of them, however, proved to be just the opposite. One female econo-mist realized this very early. In -1900 Sophonisha P. Breckinridge wrote:

Such legislation is usually called "protective legislation"and the women workers are characterized as a "protectedclass." But it is obviously not the women who are pro-tected. For them, some of this legislation maybe a distinctlimitation. For example, the prohibition against work inmines or against night work may very well so limit theopportunities of women tp find employment as to resultin increased congestion land decreased wages in suchother occupations as are open to them. . . . But no oneshould lose sight of the fact that such legislation is notenacted exclusively, or et/en primarily, for the benefit ofwomen themselves.12

Even in recent years there has been protective labor legislation that' -vlimits the hours, rest periods, minimum wages, occupations and duties ofWomen. Such legislation often has kept women out of well-paying jobs orhas made women less valuable to employers.13- Some of these restrictions,however, are not as easily seen as those in effect at the turnof the century.Consider the following three examples.

First, women with children, constantly confront government-madeobstacles. Because of laws prohibiting them from operating businessesfrom their homes, they are not able to work and care for their children atthe same time. Ironically, the very industries that are most highly regulatedare those in which "female jobs" dominate. For exami+, the apparel andcraft industries, in which wbmen could easily be highly productive at home,are highly regulated by the restrictive Fair Labor Standards Act.14

Also, as women make new choices to enter occupations that will takethem away from hothe, the market will meet their demands by supplyingdifferent types of institutions that enable them to do 901 One of theseinstitutions is the day-care center. Unfortunately, those who demand

la

L

. P

day-caretenters may find them in sh4frt supply. There are so many regula- .tions That must. be complied with to operate a day-care center that manyvotild-be entrepreneurs simply cannot go into this business, This puts arestriction not only on those who are willing And able to supply theday -care centers but :also on those women who demand them..

Second, certain regulations.with which employers must comply make itmore expensive fothem to hire women than to hire men. In many statesemployers must pay pregnant women benefits under statewide temporarydisability insurance laws. under the affirmative action order for service

,and supply contractors, employers must undertake the cost of setting goalsand timetables for promoting ,m;norities and women.

Third, those'women who accept the notion that discrimination is ,theirmain barrier to entry into many jobs must ask themselves the folloWingquestion: Does government involvement increase or decrease the incen-tives for employers to discriminate against women? The answer is twofold.Not only does government action increase the likelihood of discriminationin the private sector of,our economy but it actually promotes discrimina-tion in the public sector.

The Private SectorTo understand how the government promotes discrimination in the

private sector, one must first realize that discrimination is costly to anyprofit-maximizing firm. For employers to discriminate on any basis, theymust spend more time searching for employees who do not have thecharacteristics the employers consider undesirable. A firm will have tochoose between discrimination or higher profits (because of lower costs).This statemen' kolds true because even a slight cost advantage can mean A-very substantii. competitive edge for those firms who do not discriminate.

the government taxes income or profit, it gives every firm an addedincentive to choose discrimination and other amenities over higher profitsin )rder to avoid higher taxes. 4.

Laws that fix wage rates at certain levels for the purpose of benefitingworkers create side effects, including discrimination. When a minimum-wage law is imposed, many new job applicants enter the market hoping toget paid this Wage rate. This activity creates a surplus of people searchingfor jobs and allows employers to be discriminatory at a very low cost.15Furthermore, many of the job applicants whose skills are not worth theminimum wage to employers will not be hired at all For reasons discussedearlier, many of these applicants will be women.

Restrictive licensing by the government limits the number of licensesavailable in a partiailar occupation. It may also increase the likelihood ofdiscrimination. When the number of licerlses available is less than thenumber of applicants in the particuiar labor market, the wage rate is forced

1

to a higher level than would exist without the licensing requirement. Thishigher wage attracts more applicants to the labor market, and becausethere are more potential employees to choose from, it aOin creates asituation in which discrimination by employers is considerably cheaper.ln

Although managers in both private and public sectors have (*finiteincentives to increase the number of prerequisites available to them, thereare several built-in market mechanisms.in the private sector thework .

against these incentives. For example, profit sharing in many private firmsincreases the probability that managers'will maximize profits, not perqui-sites (including discrimination). If managers do decide to increase theiroperating costs by discriminating, this less profitable.management will bereflected in the stock'price of a corporation. A low price may mean thepotential for a large capital gain, and this will increase the possibility thatthe company will be taken over by those who feel they can manage thecompany more efficiently.l7 The new owners will fire the discriminatingmanagers and hire more productive, profit-maximizing managers. A com-petitive market for corporate control, as well as a competitive manageriallabor market, both' work as checks-on the discriminating behavior ofprivate managers. None of these checks, however, exist in the publicsector.

The Public SectorBecause public- sector managers are not subject to market competition

in which survivial depends upon making a profit their incentives aredifferent. They must show that they are needed by the public. The mosteffective way to show this, they believe, is by spending greater and greateramounts of money. The main incentive for these managers is to increasethe size of their budgets. In each budget period, therefore, they have agreater incentive to spend more money so that their budgets will beincreased during the next period. This will allow them not only to showthat their existence is "necessary" to the public welfare and to bestow agreater amount of public benefits, but also to indulge their own preferen-ces, which may include employing men instead of women. With thisincreased incentive to spend more money, then, there is also an increasedincentive to discriminate.

As economist Thomas Sowell notes, "Discrimination levels in colleges,universities, hospitals and the government itself were, in past eras, greaterthan in competitive industries at the same time."18 It is interesting to notethat suits based on the comparable-worth issue have been initiated bywomen who are-in some way employed by the government or by nonprofitinstitutions. These women include the nurses employed by the city ofDenver, librarians working at the University of California, employees of

12

4

4

a

ithe city of San Francisco, clerical workers at the University of NorthernjaiLmat rims employed by the county of Washington in Oregon, and

clerk-typists employed by the State of Washington.This fact is not Surprising. These women indeed may have been subject

to discrimination. They are not working under private sector managers,where market incentive systems would protect thejn, to a great degree,frem discrimination.

The Rationality of the MarketShould not both feminists and women in general encourage the reduc-

tion of government&intervention?as well as the growth of the privatesector of our economy? Most legislation will only decrease women's free-dom in thelabor force. This iosf of freedom will affect women far moreseverely t ha9 any discriminatory practices by employers. Most women area

,not consciously asking for special favors; they are simply asking for theopportunity to prove that they can contribute to society in way that havebeen traditimally reserved for men. Whenever government gives oppor-tunity to some, it is always at the experme of others. The unhampered)market, in contrast, gives opportunity to everyone and even encouragesthe discovery of more chillenging, more exciting and greater opportunities:

Women are individuals each of whom has unique aspirations anddesires. The freedom and opportunity that the market offers a womanenables her to choose her own, individual path in life. No woman can becoerced to work for a particular boss, even if she hatreigneda contract to doso. A competitive market process would provide endless alternativeemployment opportunities even t ough they may mean a cut Ray. Alabor force controlled by the state,( ough, would mean the ab1/4 timnIt ofany choice an empl ..yee could make s to an employer. As ecor. ';t F. A.Hayek notes: "That the freedom of the employed depends upon exist-ence of a great nunib.r and variety of employers is clear,when considerthe 6ituation that woild exist if there were only one employer namely,the state. . ."1)

Even withouj having completely eliminated discrimination, ari unham-pered market, over time, would tend to equalize wage rates betweenequally productive men and women. This tendency shows the importanceof "a great number and variety of employers." Assume a discriminatingemployer pays his inie employees $10 per hour and his female employers$5 At. hour for doing the same work. If no other job opportunities existedin the market, the women would have to accept this wage disparity or stop

..working.Precisely because the employer discriminates, however, hi creates an

opportunity for othq entrepreneurs to enter the market and provide the

1

'ad

I.

9

same product or service at a lower cost.-0 When a second employer entersthe market, he will hire all women at a wage rate higher than $5 per hourbut lower than $ to pet hour and therefore,have lower costs than the firstemployer. The women working for the first employer will move to the newemRloyer at the higher wage rate. The discriminating employer either willbe fbrced to lower the wage rate he pays to his employees (now all men)until these rates are equal to the wages of the second employer or will beforcedout of business..

Nevertheless, the market's ability to create opportunities and to gener-ate and spread information is far superior to that of the state, if indeed thestate has the ability at all. It is superior because of the market's competitivepi ocess. As entrepreneurs compete for consumer approval, they are com-pelledio continually create new opportunities, not only for themselves butalso for consumers and people in or trying to enter the work force.Each time an ,..ntrepreneur seizes an opportunity and provides the consum-er with a better r roduct or service, he is also providing new opportunities inthe labor market.

It is true that the government provides women with some jobs thatotherwise would not have been available to them. Again, though, whenone looks beyond the immediate effect of government granted opportu-nity, one sees a different story. In the market there is always a tendency forthe most productive people available for a job to be employe il in that job.When an employer must hire women to meet hiring quot"uirements,he must search to find women as qualified as the men now employed. Inmany cases this is not possible, and less qualified personnel are hired:Thisshi will mean lower profits, less corporate growth, and eventually, per-

INt , reduction of personnel. When such down-turns occur, women arethe first to be let go. Not only are the government-granted opportunitieslost, but many more are also lost because the company did not grow and_prosper as it otherwise might have.

This situation would also occur if, because of comparable-worth regula-tions, employers were forced to increase the wages of some employeesbeca 1 i se their jobs were determined to be of the same value as jobs alreadycommanding higher wages. These inC`rtased wages would mean additionalcosts to employers. One consulting firm in Philadelphia, which producesjob-evaluations systems, estimates that increasing wage rates to eliminatewage disparities between "female jobs" and "male jobs" would cost $320billion in added annual wages throughout the American eNnomy.21Employers may or may not be able to pass these added costs on to consum-ers. Unless their values change, consumers will not be willing to pay higherprices for the products and services an employer is offering. Therefore, theemployer absorbs these costs; again' the company will not expand as itmight have and may even be forced to reduce its business and lay offemployees.

10

14

0'4

If employers can pass these costs on to their customers, the ultimateburden of the comparable-worth laws would rest .upon consumers. Allconsumers in fact would be subsidizing women working in "felnale jobs."

A further cost to consumers mould be what economists call "rent seek-ing." Instead of developing their own skills in order to improve theirproductivity and pay, workers would have an incentive to spend their timeand effort trying to influence whatever government agAtcy determinesthe worth of a job. Resources would be diverted from productive use tolobbying, which is a negative-sum gan.eger the entire society.22

..

An Alternative DirectionFeminists peed only to glance back into the history of the United States

to see what oppcirtunity means and how it is created. Why did milliOns ofimmigrants from many different religious and etlfnic backgrounds come tothe United States? Because it was the land of opportunity, where everyonEwas equal,in the eyes of the law and anonymous in the eyes of the market.

Equality and anonymity meant, and still mean, that the market looks atindividual human beings. It does not care if a person is a woman, a Jew or ablack. It cares only that the person is able to perform a particular job betterthan any other applicant for the job, taking into consideration the costs offinding the best applicant. Tathe market, people are anonymous so long asthey satisfy the ultimate economic arbiter, namely the consumer. To citeLudwig von Mises: "The point of view fr9on which the consumers choosethe captains of industry and business ifexclusively,their qualification to'adjust production to the need§of the consumers. They do not bother aboutother fea tu%es and merits'."23 The market is the most efficient creator of ,

r oppoi (unities for women.Mos, woMen ask not only for opportunity but also to be seen as individ-

uals: Unfortunately, some women want to be judged as individuals, and atthe same time, be given special consideration as a group. What thesewomen are actual advocating, then, is a collective ideology. They are

Aiim

ignoring the/rdc:rt t--there are differences not only between men andwomen but among women themselves, and that these differences will bevalued accordingly in the market. In some'cases the fact that someone isfemale williopen many doors for her that are closed to a man.

If feminists want to learn why some womenare segregated into certainoccupations, they should not simply leap to the conclusion of "discrimina-tion and call for further legislation. They should take an alternativedirection and look for further explanations. In the eyes of consumers, onegender may be seen as better than the other at performing certain jobs. Forwhatever reasons, women are choosing certain occupations, such as nurs-ing and waitressing, and they may very well be proud of the work they are

, ti

15ti

.1.

. ,

doing. If they are not satisfied with the wages they receivefor their chosenwork, they must &Wile that consumers are the ones who place a value ontheir job and who are ultimately cfetermining their wages. If they want toreceive higher wages, they must be willing to gain skill andlor educationrequired to move into those occupations that consumer.; value morehighly.

Many feminists claim that wypten have failed to progress because ofdiscrimination and because it Ono difficult to prove that discriminationexists. But it is even more difficult to determine how many doors ofopportunity these feminists haveclosed, not only to themselvei but also toothers, because they have used goverrictient in their attempt to achieveequality. Outright discrimination by an employer will eventually bedetected by market particip ?nts looking for new opportunities, but thechoices taken away when the government intervenes in any market inter-ai.:ion may never be discovered. These feminists should be analyzing theirown past actions; they may find that such actions have.contributed to theeasons why many women are not where they want to be.

Summary .1.Wage rates are ultimately determined by thesubjective values Of consum-

ers. These values can ne*,er be objectified by usinNob-evaluation pointsystems. Only individual consumers can compare the worth of a job withthe worth of any other j0.42. They do this whenever they choosto buy oneproduct over another. Through their actions in the market, consumerssignal employers as to which employees they value highest. Theseemployees will rightfully command higher wages.

A comparable-worth policy would mean a great reduction in consumersovereignty. Any information the market would provide through changesin prices and wages would be greatly distorted. The economic consequen-ces, therefore, would be severe shortages in some occupations and an

excess supply in others. Overall economic activity would decline not onlybecause of these market distortions, but also because many women whocould have made innovative and creative contributions to the economywould be deprived of the incentive to do so.

If many women are trying to gain the opportunity for individual choice, acomparAble-worth policy, or any other government legislation, is not the

answer. Women's opportunitieanil choices depend upon the amount offreedom they have. Only an unha pered market will provide them withthe individual choices they desire aid the freedom to pursue them.

12 1 6

01

FootnotesC. atherr`tt+ Seldon et .11,1'111.0(1in tion," Lipid Pay for Work of Comparable Worth; An Annotated

nib tharts!, (Clin:ago: Atiwstantibrary Association, '1982), p. 3.

V. City and County of Denver, 17 FEP 900, D. Colo. 1978.

'County of ailiington v. Gunther, LW 2175, September 11, 1979,

+Committee on Occupational Classification and Analysis, Women, Mirk. and Wages: Equal Paytat 1,1b, al Equal t ',due (Washington, D.C.: National Academy Press, 1981), p. 91. The sa trtalso t, onctudes (p. 92) that "we haY,e not been able to make any assessment of what the sy aland t'l ontttnic consequences may be of implementing wage policies based on the princip ofequal pay for lobs of equal worth."

'Vivienne Killingsworth, "Labor; What's a Job Worth?" The Atlantic (February 1981), . 17.

"Elisabeth M. Landes, "Sex Differences inrages and Employment: A Test'of the SpecificCapital I lypothesis," &vomit Inquiry (October 1977), pp. 523-538.

4

......,. .

'Cotton Mather Lindsay, Nina P4 for Comparable Work:An Economic Analysis of eto Antidis-Ni:,1, ,,,,,,,,,,thon Doi nne (Coral Gables, FILb,lw and Economi<enter, University o tami, 1980),

pp. 20-21. ,. 1..y \ '

"Ruth G. Blumrosen, "Wage Discriminatioti, Job SegregatiOn, and Title VII of the Civil i-Rights Act of 19o4,"liniversity of .Michigan JournA of Lam Reform 12 (Spring 1979): 307.

''Conunittee (*ti Occupational Classification and Analysis, p. 2.

' IoSophotusha P. Brecknridge, "Legislative Control of Women's.Worltz Journal of PoliticalLioninni 14 (January 1000): 107. ,

II ludith A. Baer, I be Charm) of Protection: The Judicial Response to VSmen's Labor Legislation (West-port, t onn.. Greenwood Press, 1978), p. 58. 1

I: Breckinridge, pp. 107-8. /I 'loan Kennedy TaylVr,,"Protective Labor Legislation," in Freedom. Feminism, and the State, ed.

Wendy L. MyElroy (Washington, D.C.: Cato Institute, 1982).

I.IDay id R. Henderson, "Free the Women," Policy Report, Vol. 3, No. 11 (November 1981), p.Ii. ,,,

1 '1 !Yum.. Sowell, .klarkivaln7 Minoritie, (New York: Basic BookskInc., 1Q81), p. 42. .

1-Sowell. p 43. ( , ,I Ivory Marne. "Mergers and the Market for Corporate Control," Journal ot Polit?! Ltonomy

I April 1%5), p. 113. -y

I'Sowell. p. 47. .

-II riedriy h A. Hayek, 1 he Cait,taution at 1.tberty (Chicago: The University of Chicago.. ress,.,

1%0). p. 121. \ ..As I A I layek agalA notes: "The ex isteiv.of a multiplicity of opportunities for employ -

ment ultimately depends on the extstelice.irf tndtpendent individuals who can take theinitiative in the y ontinuous process of re-formirig and ,redirecting organizations." Hayek, p.121.

'e

' lake Lamar, "A 'lordly but Knotty Question," lime, February b, 1Q84, p. 30.

"Peter (..erinani;:. "Comparable Worth - Par; The High Cost of Policy," IferrtageI .,,,,,Lahm Ila,t,,,:ioundo. March 2, 1Q84.

I udycig von MISCS, I I unhm Awn. 3d ed. (Chicago: I leery Regnery Company. 1%3), p. 313.

BEST rep" AAILABLE13 17

!'

Selected Center PublicationsIn an effort to reach as broad a spectrum of readers as possible, the

Center for Free .Enterprise publishes numerous .resAcch monographs,other papers and occasionally a full length book. The foll mingisa partial

Q

Research Monograph Series1 he research monograph se s is designed to provide intrepretati" of

technical articles appear in scholarly journals. The monographs oftenare useful for teachers who aNddressing current economic issues in theclassroom.1. The Economics of Industrial Democracy: An Analysis of Labor Participation in the

Management of Business.Firms, by Eirik G. Furubotn. .

2. International Price Stabilization and the Less Developed Countries: Lessons from His-

tory, by John R. Hanson, II.3. Distortions in Official Unemployment StatiStics: Iniplications for Public Policy Mak-

ingl by Kenneth W. Clarkson and Roger E..,Meiners.4. Profitability of Major Oil Companies: Normal kturns or Windfall Profits? by

Gerald D. Kelm:Barry D. Baysinger, Roger E. Meiners and Gary D.l.ibecap. 4

5. The Inflationary Impact of Labor Unions, by Dwight Lee.b. The Foundata ns of Free Enterprise, by John W. Mien, David G. Armstrong and

Lawrence C. Wolken.7. The Exploration and Colonization of Splice, by Lawrence C. Wolken.Series on Public Issues 44

The series on public issues has been designed for use by high schoolteachers and the general public. The authors in the series use commonlyaccepted economic principles to help reader,s increase their understandingof complex economic, political and social issues.1. Are We Running Out of Everything? by S. Charles Maurice and Charles W.

,Smithson.2. he Mmintion WaA Laws: Who Benefits, Who. Loses? by Margaret JaAe Hobson

and S. Charles Maurice. ;Japan: rhe A lodernization of an Ancient Culture, by Lawrence C. Wolken.

4. The Overpopulation Myth, by Thomas R. Saving.5. Entrepreneurship: A U.S. Perspective, by Henry C. Dethloff and Keith L.

Bryant, Jr.o. Karl Marx. in One Lesson 11818-18831. by Steve Pejovich.7. Poilttion in America: The Troubli with Trash, by S. Charles' Maurice and

Charles W. Smithson.A. Is the Market Fair? by Gerald Keim.O. Inflation: Causes and Cures, by Thomas R. Saving.Other Publicationsthe Fionomic Respon,ibility of Government, by Milton Friedman and Paul A.Samuelson ($1.00).T he Politial Economy of Federal Government Growth: 1q59- P478, by jc.mes T.

Bennett and Manual H. Johnson (Paper-$4.95, Cloth-$12.95).10., unaamenfos de hi Libre Empreqi. by Johi W. Allen, David G. Armstrong andLawrence C. Wolken ($1.00) (Spanish ,ersion of The Foundations of FreeEnterptisei. 1

',-1 8

The Americaln free enterprise system traditionally rests on three premises: the rightof owuership, contractual freedom and limited government. ThOe premises generatepreditThble iniman beltavior, onsistent 'with liberty d e ficiency JAW, the4merican free eliterprise system produces a standard of iving ant degree of personalfreedom that no other system (or country) has been abL to ttPlicate.

The purpose of the Center for*Education and Research in FreeEnterprise i to enhance public understanding of i ividu libertyand the American Free Enterprise system through educati com-munity.involvement and research.

O

$

Pr

t.. itta, AtC; \1 l'fiReNity and any of its sponsored program.; is open to qualified individualsregarkilis of rate. kolor, religion, Set, age, Ilational orgin or eduLationally-unrelated ha`ridicaps.

.

Biography of the AuthorDeborah Walker is a reseal h fellow at the Center for the Study of Market Processes atGeo?,3e Olson Lin:versify.

Published by the Cato Institute, Policy Analysis is a regular series7,valuating government '

policies and offering proposals for reform. Nothing in Policy Analysis should be construed -

as lleCeSSA rill/ reflecting the t,iews of the Cato Institute or as ay attempt to aid or hinder the

passage of any bill before Congress.Conte the Cato Institut; for reprint perission,Additional copies of Policy Analysis are $2.00 each ($1.00 in bulk). To order, or for a

complete listing of available studies, write for Policy Analysis, Cato Institute, 224 Secod

St. L. Washington, a C. 2403.

g

2.00

2

4