Gender Discrimination and “Equal Pay for Equal Work”

Employment is nothing more than a trade of money for work. Two parties trading with each other should be able to do so on whatever voluntary terms the two parties agree to. So, if an employer and female worker both agree to a certain trade (a certain pay for a certain work), any government intervention or regulation of that pay is morally wrong because it violates the freedom of those consenting adults. Also, it is morally wrong for one trading partner (woman) to use physical force and the threat of violence (enforceable government laws) to impose their will on the other trading partner (employer). In this case, it is wrong for a woman to physically force an employer to pay her more than the employer wants to, although mutual bargaining is allowable. Of course, this does not only apply to female workers with respect to employers; the requirement to not initiate aggression applies to all human interactions.

We all (hopefully) know that it is wrong according to our personal morals for people to irrationally discriminate based on sex, race, etc. Yes, sexism is wrong. But, that is not the point. Here we are only talking about legality and the role of force. I am not advocating for private sector employers to pay women less (I wish for them not to), I am advocating the legality of such an action if it is voluntary to all involved parties. Any trade must be voluntary for both parties; any violation of this is immoral. Besides it being immoral, it is also counterproductive and produces negative consequences. Let’s visit the consequentialist arguments against so called “equal pay for equal work” laws with regard to gender discrimination. Some people think that it’s a good idea to force employers to pay women equal to men for the same job positions. I will describe two reasons that this actually hurts women who are job searching, although there are more reasons.

1.       Consider that there are some jobs that men and women can do about equally well on average. Also consider that there may be some jobs that women do better than men, and some jobs that men do better than women. This should be pretty obvious, unless you think that men and women are exactly the same in every respect, which is stupid. Let’s first focus on a job position that men can generally do better than women (or, maybe the man just has more training and experience). If an employer is hiring, he may be considering a woman versus a man for consideration. If there was a government law that forced him to pay a man and woman the same, then he knows that regardless of the productivity of either candidate, he will have to pay them the same amount. Because of this, he would obviously hire the man since men are generally better at this particular job. He has no incentive to hire the woman because he would have to pay them the same anyways. This “equal pay” would actually make it extremely difficult for the women to get hired in this particular job. But, in a free market, the woman can competitively offer her work at a lower price if she chooses. If she is only 90% as productive as the man in this job, then she might offer to get paid only 90% of the usual pay to men. Now, the employer would consider the woman for hire even though she may be less productive, because he could also pay her less. In this way, the “equal pay” law would actually hurt women’s chances of making a living, but the free market creates conditions for them to get hired.  The above example could also be applied to the opposite circumstance because there may be some jobs where the woman is more productive than the man, but that’s obviously not our focus with the current topic.

2.       Now let’s consider the more interesting case involving real sexist discrimination. Let’s assume that there is some employer that is a sexist pig that thinks women are inherently inferior in nearly every respect. Let’s say he’s considering a woman versus a man for hire, and that both men and women can do this job equally well, so the only reason for not hiring the woman would be prejudice. If there was a government law that forced him to pay a man and woman the same, then this wouldn’t change the fact that he would obviously still pick the man for hire. After all, he’s not interested in hiring women that he thinks are naturally inferior, and why would he ever hire a woman if he could hire a man at the same price? So, in this case, an “equal pay” law would render this woman jobless with zero pay. But, in a free market, the woman can offer her work at a lower price than the man, if she chooses. If so, then despite the fact that this employer isn’t generally interested in hiring women, at least he now has an incentive to hire the woman because her labor is less costly than the man’s. Then she would have some decent chances of getting a job at this particular place.

Many people may have good intentions when considering violating the free market and forcing “equal pay for equal work” laws, but intentions are worthless compared to the actual effects of those laws. Like usual, statists only see the direct apparent results of a law without recognizing the unseen indirect consequences. A good rule of thumb is that if you want to help a group of people make a better living, then don’t make it more difficult for them to get hired by making them more expensive to potential employers.

As a side note, it’s important to know that the “gender pay gap” of women getting only 75% as much as men is mostly a myth that has been thoroughly debunked by economists. There is very little evidence of any significant pay discrimination from prejudice, as is evidenced and explained in this other post. But, regardless of whether or not the problem significantly exists right now, that doesn’t change the fact that the candidate solution of an equal pay law still does more harm than good. Moving on…

You may be wondering, “Your analysis is only focused on new hiring processes and women who are job searching and don’t have a job yet. Sure, they may be hurt, but, what about the women who already have the job in question? They are already hired, so an equal pay law would help them by giving them a higher income.” My answer: Yes, for a woman who is already hired at the job they want, an equal pay law might increase their pay at that particular job, if they can keep that job (the higher payroll costs could cause the employer to lay-off some women or decrease future hiring). But, any such benefit is easily outweighed by the harm done to women who are job searching (as described earlier), and for several reasons: 1. An economy is always changing, and people need the ability to move from job to job. So, even if a woman gets a higher pay from the law at a certain job, then if that business closes or she gets laid off or if the woman simply wants to change jobs or companies for any reason, then she would be in the job search status again, putting her right back in the bad positions already described earlier where the law would make it difficult for her to get hired. 2. The negative effects of the law would still exist for all new hiring processes for women. Over time, the generation of women who already had jobs when the law was passed would die away, along with the benefits of that law. All future generations of women have to go through the job searching process, where the law hurts them. 3. An equal pay law would presumably be aimed at addressing significant existing prejudice in a society. If a society has a lot of this prejudice in man-run businesses, then it’s likely that most women are not employed in the first place or are at jobs that they do not want, and it’s likely that only a small fraction of women are actually at jobs that they do want. In such a scenario at this early stage in the cultural evolution of a society, most women are in the job seeking status, not already hired at the job they want. Since the equal pay law only helps women who are already at their desired job and able to keep that job, and hurts women who are job searching, the law would result in more harmed women than benefited women. 4. Regardless of the level of prejudice in a society (even for “enlightened” cultures), the principle of “diminishing returns” in economics always applies. As the number of dollars a holder has increases, each additional dollar has less value and utility to the holder. So, the value of each dollar increases if you have less of them. This means that a decrease in money for a poorer person is more harmful than the benefit of the same increase in money for a richer person. An equal pay law only puts more money into the hands of women who already have a job and some money, while it hurts women who have no money or jobs and who are job-searching. So, the law helps women who are richer and harms women who are poorer. The net effect tends to be that the harm done to the poorer women is greater in severity than the benefits given to the richer women. The bottom line is that helping some (even many) women who already have jobs is outweighed by the harm of keeping some (even a few) women out of work entirely. For all of the above reasons, the law causes a great net harm.

There are also free market mechanisms that tend to drive and incentivize companies to pay women appropriately, as long as govt stays out of the way to allow these mechanisms to work (govt often gets in the way, which is why progress for women in the workplace can sometimes be slower than it could be). An example is the profit incentive mixed with competition. If Company A is irrationally sexist and won’t hire women, but Company B is not, the marketplace will gradually favor and reward Company B over sexist Company A. This is because of basic supply and demand. If Company A only hires men, they have only about half the prospective workers to choose from, which means a great decrease in the supply of prospective workers to choose from. This decrease in supply raises the cost of labor per employee for Company A. But, Company B has many more prospective workers to choose from, giving it more leverage when offering pay. This huge increase in the supply of labor for Company B decreases its cost of labor per employee, allowing it to out-compete Company A.

Here’s another mechanism. Let’s say both companies are hiring women, but sexist Company A pays women very low wages compared to men, but Company B pays both sexes equally on average and pays only according to actual productivity of the worker. As women are searching for a job, they will tend to choose to work for Company B instead of Company A because Company B pays them better. This allows Company B, with more employees, to expand its operations more rapidly than Company A because women won’t be going to Company A if they have Company B to work for instead. Also, highly productive female workers would tend to go to Company B as Company B would want to hire the more productive ones, leaving the less productive female workers to Company A. This, once again, would allow Company B to be more productive and out-compete Company A. All of these mechanisms incentivize employers to offer rational pay to people, regardless of sex, in order to be a more successful business. Being an irrationally sexist business would tend to decrease that business’s performance, causing it to gradually die away and be overtaken by more rational businesses. As long as there’s a free market where govt isn’t blocking these mechanisms, a business can choose to be either profitable or irrationally prejudiced, but not both. They usually choose profits, and that’s a good thing.

Even if we did pass an “Equal Pay for Equal Work” law, how could it be accurately and fairly enforced? The government is not knowledgeable or capable enough to come into every business, evaluate every employee, understand the job at hand, and then judge whether or not two people have equal work performance. What if there is a job position where men and women on average perform equally, but a particular man happens to perform better than a particular woman. Logically, the employer would want to pay this man more than that woman, but he may be outlawed from doing so if the government incorrectly thinks that this particular woman performs equally to this particular man. What if there was a pay dispute between a male and female cook at a restaurant because one is paid more than the other even though they have the same job title? In order to determine equal work performance to justify equal pay, should the government send in agents to taste-test the soup to see if they both could perform equally well in making delicious soup? Ludicrous.

You may be upset in the above examples where the free market still provides the possibility that a woman can get paid less due to discrimination. But, the alternative of using an equal pay law makes things even worse. And, realize how social and economic progress work. When these women in the above circumstances get into the workplace (although they may start out with less pay than men), this gives them the starting point and foothold to be able to make even further progress over time and to demonstrate to their colleagues and employers that they indeed can perform just as well as men in a certain job. This gradual exposure to empirical truth is the witness that causes people to change their attitudes to a certain group of people. And, the next generation of women then stands on the shoulders of the previous generation, making even further progress than before. Also, free market mechanisms gradually solve these problems, as discussed earlier. Free speech also plays a significant role in changing people’s minds and attitudes towards a group of people. These are how people gradually improve their standard of living; and sometimes it takes a generation or so. Unfortunately, there is no magic switch to eliminate all prejudice in a society overnight.

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