Daniel J. Mitchell

President Obama and many other leftist politicians are running around the nation claiming that supposedly greedy employers are deliberately choosing to reduce their profits.

They’re not actually making that specific claim, but that’s what they’re asserting, for all intents and purposes, when they claim that women are not getting equal pay for equal work.

Inaccurate, but nonetheless clever

If genuine and pervasive sexism existed, then non-discriminatory employers could dramatically reduce labor costs – and therefore dramatically increase profits – by getting rid of overpaid male workers and hiring women. Does anyone really think entrepreneurs and business owners are willing to sacrifice big profits simply because of anti-women animus?

That’s what Obama would like us to believe. And he wants the government to have the power to second-guess the decisions of private businesses. Heck, he probably would like to make America like Europe, where there are efforts to impose gender quotas.

And one of his chief economists tried to back up the President’s claims. Here’s some of what Ashe Schow wrote on the issue for the Washington Examiner.

While detailing executive actions President Obama plans to take Tuesday regarding equal pay for women, Betsey Stevenson, a member of the White House Council of Economic Advisers, said very defiantly that…women… continue to make less than men. …“They’re stuck at 77 cents on the dollar, and that gender wage gap is seen very persistently across the income distribution, within occupations, across occupations, and we see it when men and women are working side by side doing identical work.” That sounds awfully specific. Stevenson certainly sounds like she’s saying men and women doing the exact same job are earning very different pay.

Ms. Stevenson certainly was trying to be a loyal employee.

But then something very unusual happened. A journalist actually asked a real question.

And Ms. Stevenson, who obviously didn’t want to make herself a laughingstock to her colleagues in the economics profession, was forced to admit that the President is peddling nonsense.

…as soon as Stevenson was actually questioned about the statistic by McClatchy reporter Lindsay Wise, the White House adviser crumbled, admitting her earlier comments were inaccurate. “If I said 77 cents was equal pay for equal work, then I completely misspoke,” Stevenson said. “So let me just apologize and say that I certainly wouldn’t have meant to say that.” …Don’t expect Obama to admit any of this as he travels around the country continuing to claim that women don’t earn as much as men.

So why did Ms. Stevenson quickly back down? Well, perhaps she is familiar with the work of Christina Hoff Sommers, who has explained that men and women do get equal pay when you adjust for career choices, labor supply, and other factors.

There’s lots of evidence that the supposed sexist pay gap is a political weapon rather than economic reality.

Mary Perry and Andrew Biggs of the American Enterprise Institute just wrote a very thorough debunking of the pay gap myth for the Wall Street Journal. Here are some of the key passages, starting with an explanation that the pay gap largely disappears when you make apples-to-apples comparisons.

…the numbers bandied about to make the claim of widespread discrimination are fundamentally misleading and economically illogical. …Men were almost twice as likely as women to work more than 40 hours a week, and women almost twice as likely to work only 35 to 39 hours per week. Once that is taken into consideration, the pay gap begins to shrink. Women who worked a 40-hour week earned 88% of male earnings. Then there is the issue of marriage and children. The BLS reports that single women who have never married earned 96% of men’s earnings in 2012.

Wow. No wonder Steve Chapman wrote that the left’s pay-gap rhetoric is “a myth resting on a deception.”

But there’s more.

Risk is another factor. Nearly all the most dangerous occupations, such as loggers or iron workers, are majority male and 92% of work-related deaths in 2012 were to men. Dangerous jobs tend to pay higher salaries to attract workers. Also: Males are more likely to pursue occupations where compensation is risky from year to year, such as law and finance. Research shows that average pay in such jobs is higher to compensate for that risk.

Finally, Perry and Biggs seal the argument by pointing out that discrimination doesn’t make sense in a competitive market.

…gender-disparity claims are also economically illogical. If women were paid 77 cents on the dollar, a profit-oriented firm could dramatically cut labor costs by replacing male employees with females. Progressives assume that businesses nickel-and-dime suppliers, customers, consultants, anyone with whom they come into contact—yet ignore a great opportunity to reduce wages costs by 23%. They don’t ignore the opportunity because it doesn’t exist.

By the way, this does not mean that discrimination doesn’t exist.

I’m sure there are still some employers who let sex or race play a role in their decisions. But such people are not only immoral, but also stupid. They are giving up potential profits to indulge their own insecurities.

And other employers will take advantage of their foolishness.

In other words, the free market is the best way to fight discrimination, not government intervention.

P.S. Walter Williams explains that racial and sexual profiling sometimes makes sense.

P.P.S. I explain that anti-discrimination laws can boomerang against intended beneficiaries.

P.P.P.S. There is real evidence that tall people and attractive people are paid more, though I nonetheless argue that government is incapable of addressing this issue.

P.P.P.P.S. For those who are genuinely worried about discrimination, particularly against minorities, the real issues to address are Social Security and government schools.


Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.
TOWNHALL FINANCE DAILY

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!