Tuesday, October 17, 2017

Libertarian Critiques of the Gender Gap

In response to yesterday's post, a reader put to me that the gender pay gap "is for the most part a myth and has been debunked by many economists," citing an article by Steven Horwitz.  I try to keep an open mind, so let's take a look at Horwitz's article.

First, in analyzing the oft-discussed ballpark figure that women earn 80% of what men do to perform the same work, Horwitz has this to say (emphasis added mine):

First, if the critics are claiming that the 80% number means that when men and women with the exact same skills and experience and preferences do the exact same work that women get paid 80 cents for every dollar men do, they are wrong. That is not what the 80% figure shows. 
Rather, that number is the ratio of female to male wages among full-time workers, across all kinds of jobs and regardless of the skills and preferences of the workers. That 80% is an aggregate – it is not an apples-to-apples comparison of men and women doing the same work. Thus, the claim that women get paid 80% of what men do for the same work is a myth.  (Foundation for Economic Education)

As our reader also says, "You can’t compare janitors to maids and management positions in different industries as if they were the same."  And that's true.  It would be wrong to compare the earnings of a Chief Executive Officer and a Chief Operating Officer, or a heart surgeon and an ophthalmologist, for instance.  So Horwitz is likely right in that the 80% aggregate misses the mark somewhat.

But what about janitors and maids?  According to the Bureau of Labor Statistics, in 2016 (source here), janitors earned about 22% more than maids on the average, and janitors are were likely to be men than women (and vice versa for maids).  Is their work substantially different, or are they market substitutes

This New York Times article cites numerous studies which found that as women entered certain occupations, average pay decreased, whereas when men entered certain occupations, the opposite occurred - "even after controlling for education, work experience, skills, race and geography."  This seems to have occurred even when an "apples-to-apples" comparison is done, in this case with regard to the specific occupation of ticket agent (emphasis added mine):

A striking example is to be found in the field of recreation — working in parks or leading camps — which went from predominantly male to female from 1950 to 2000. Median hourly wages in this field declined 57 percentage points, accounting for the change in the value of the dollar, according to a complex formula used by Professor Levanon. The job of ticket agent also went from mainly male to female during this period, and wages dropped 43 percentage points.

The same thing happened when women in large numbers became designers (wages fell 34 percentage points), housekeepers (wages fell 21 percentage points) and biologists (wages fell 18 percentage points). The reverse was true when a job attracted more men. Computer programming, for instance, used to be a relatively menial role done by women. But when male programmers began to outnumber female ones, the job began paying more and gained prestige 

... even when women join men in the same fields, the pay gap remains. Men and women are paid differently not just when they do different jobs but also when they do the same work. Research by Claudia Goldin, a Harvard economist, has found that a pay gap persists within occupations. Female physicians, for instance, earn 71 percent of what male physicians earn, and lawyers earn 82 percent. (New York Times)

Now, maybe those lawyers are engaged in different types of law work - some are real estate attorneys, some are litigators, etc.  But ticket agent... how many different types of ticket agent are there, really?

To be fair to Horwitz, he doesn't dispute that discrimination effects the gender pay gap - just that it doesn't account for most of it:

The consensus of the economic studies is that there is still about 3 to 5 percentage points of the 20 percent, or roughly 15 to 25% of the gap, that cannot be accounted for by economic differences and that might well be due to discrimination. (Foundation for Economic Education)

(By contrast, one study cited in the NYT piece comes to the conclusion that "pure discrimination may account for 38 percent of the gender pay gap.")

It's worth noting that Horwitz cites "economic studies" but doesn't actually provide links to, or even the names of, any actual economic studies.  I'm not denying he is referring to actual studies, but it would have been nice to know what they were.

Horwitz notes several times that is a fan of markets, and states in his conclusion that insufficiently "free" markets might be causing distortions that allow discrimination to flourish.  "The less rivalrous the market, the more you find forms of power, including that stemming from bias, can express themselves."  Maybe.  It's also possible that markets are often not rational, no matter how badly the Austrian school / libertarians generally might wish otherwise.  

That said, it's also possible that the studies cited in the New York Times article above are also tarnished by bias - that those studies were constructed with the belief that discrimination does in fact explain most of the pay gap.  That gender discrimination is persistent and looms large in peoples decision-making seems like a less crazy premise to me than that markets are efficient and rational.

Horwitz and Claire Cain Miller, the author of the NYT article discussed above, agree on much.  Both seem to concur that socialization may be largely responsible for the gender pay gap, in that women are often deterred from childhood for pursuing higher-paying work that is typically performed by men, and that the prospect of raising a child puts many women off from undertaking careers which obligate long hours - stereotypically "men's work", which tends to pay much more.

Horwitz clearly has, in the end, good intentions, and his piece is well worth reading in its entirety.  His lack on specificity on the studies he cites, and the fact that other studies directly contradict his "apples-to-apples" claims calls into question who has the better studies.  But mostly, I must say I disagree with Howitz here (emphases added mine):

Working through voluntary processes and the institutions of civil society to reduce sexism seems a far more congenial option than using policy. I also think that the long-standing liberal concern with the dignity and growth of all individuals should make us want to address the sexism that remains in our culture. This is a set of issues on which we can agree with progressive feminists – working together to change the culture is a better solution than trying to regulate labor markets in ways that are not necessary. (Foundation for Economic Education)

Au contraire - I suggest that if, as just a beginning, paid parental leave was not also offered, in equal amounts, to men and women, but that both men and women were obligated to take that leave, and furthermore, if working longer hours was actually deterred or even disallowed by law, you might see regulated labor markets come to change culture, rather than vice versa.  I also suggest that congeniality should be at the least of our concerns where labor rights are concerned, and that attempts to "change culture" absent law are often doomed to failure - the perennial back and forth of the modern day culture war.

But whether culture is the determinant of, or the byproduct of, the social economy is a vast topic for another day.  For now, I simply suggest you read Horwitz's piece and Miller's piece as well.

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