The pay equity settlement is unfair to fair employers

My objection to the $2 billion pay equity settlement is an employer can live a morally upright life, hiring on merit, paying the most he can while still staying in business, and still be successfully sued. Their good names are blackened forever.

The court case and the pay equity bill before Parliament are not about anything the retirement home employers did wrong. They paid the going rate. The case was about what was paid in other industries based on the contentious concept of comparable worth.

The notion that the same job should not pay different rates because of sex is a question on which all agree. Comparing pay in a job to jobs in other industries because more men work in them requires many leaps in reasoning that is less to do with justice and is more about ideology and economics.

The most obvious of which is the extent to which you accept the market setting wages. That is a different dispute to someone being paid a different pay in the same job because of their sex.

Employers hiring on merit is a basic practice of any business who wants to survive in competition. Not hiring the best regardless of sex and race sacrifices profit for bigotry.

Anyone suggesting that the immorality of the market is open and shut was watching the other channel when the Berlin Wall fell and extreme poverty dropped by two thirds in China, India and elsewhere since 1990. The market has at least an arguable case as an acceptable way to set wages.

Many tweet their moral contempt for the market on a smart phone that would have cost many millions of dollars to make when the Berlin Wall fell, and they would not give up the Internet for life in return for $1 million. Are we all millionaires just because of the digital economy?

Adam Smith wrote that matters of distributive justice can only be resolved if people distance themselves from the grubby particulars of their own positions in particular disputes. This evolved into John Rawls arguing that the justice of social institutions should be tested from behind a veil of ignorance where people don’t know their particular place in society or their individual talents.

Rawls argued that a society is fair if you would not mind turning up anywhere in it at random. Inequality is OK if the poor are looked after better than in a more equal society. It is better to be poor in a rich society than poor in a poor society. Rich societies can afford generous welfare states.

Behind Rawls’s veil of ignorance, most would easily agree on equal liberty, equal opportunity and all jobs to be filled on merit. Would agreement on having a market economy be just as quick?

Strong competitive markets do not favour one individual over another. They harness self-interest to generate massive wealth, widely distributed. The income of the poorest, along with the whole of society, benefit from competition in a market economy. Behind the veil of ignorance, not knowing where we will turn up at random in a society, rational people would support competitive markets.

The market delivered the Industrial Revolution. Yesterday, today and every day, 200,000 plus people escape extreme poverty in developing countries because of the spread of capitalism. Yes, this involved inequality and markets determining wages but living standards increased 30-fold since the dawn of the Industrial Revolution; life expectancy doubled since 1900.

OK, you do not have the luxurious life of billionaires, seven of the top eight were self-made I might add. Oddly enough, you probably enjoy a better life than John D. Rockefeller did 100 years ago. Rockefeller lived in a big draughty house with lots of servants. Cars were primitive as was medicine. No refrigerators, washing machines or other domestic appliances we take for granted. Running water, much less safe tap water were brand new inventions at best.

The living wage in New Zealand is set high enough to afford mobile phones, the Internet, overseas holidays and Sky TV too. All beyond the reach of Rockefeller despite his billions.

Would you step into a time machine to go back to the good old days of the 1970s before Rogernomics? You must leave everything from your iPhone to cheap international travel at the door, knock a few years off your life expectancy, and watch two TV channels with no VCR. How many remember what a VCR is? I would pack a few recently invented medicines to ever contemplate stepping back in time to the good old days before neoliberalism no matter how much money was waiting for me at the other end.

Even the biggest critics of neoliberal New Zealand only go so far as to claim that the good old days of the 1970s was an egalitarian paradise except if you were female, Maori or gay. That is two-thirds of the population! The good old days were a very boy’s own good old days.

The road to a more just society is still full of trade-offs. We should have a hard head as well as a soft heart. The case for the pay equity settlement and against the market setting wages is not open and shut.

If I was to spend $2 billion more in the health sector, distributive justice would mind me to spend it on Pharmac and hospital waiting lists. Mental health workers want a flow on of the pay equity settlement. I would spend that money on hiring more mental health workers, not paying the existing ones more.

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.@XTOTL claim that women & Maori being screwed by neoliberalism since 1984

Toby Morris claimed in an inequality graphic on thewireless.com in 2015 that subsequent to the 1980s economic reforms, the rich got the income of the rich double while the incomes of the majority of New Zealanders was largely static. He then claimed that

in short, regular Kiwis were screwed, especially women, Maori and Pacific Island communities

Figure 1 shows that real household incomes increased pretty much evenly across all 10 income deciles between 1994 and 2013, ranging between 40 to 50%.

Figure 1: Real household incomes (BHC), changes for top of income deciles, 1994 to 2013


Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014).

The figure below shows that since the end of the recession in the early 1990s, there has been rapid income growth including from Maori and Pacifika, at least 50%, if not 70%.


Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2016. Ministry of Social Development (2017).

The massive improvements in Māori incomes since 1992 were based on rising Māori employment rates, fewer Māori on benefits, more Māori moving into higher paying jobs, and greater Māori educational attainment. Māori unemployment reached a 20-year low of 8 per cent from 2005 to 2008.

New Zealand has the smallest gender wage gap of any country; 60% of university graduates are now women.


 


 

Banned from r/ProtectAndServe

The American police subreddit did not want to know that there were a few bad apples in their rank ranks despite the overall good news about the use of lethal force.

Blacks are not shot dead out of proportion but there are more incidents of excessive force which is nonlethal. Racists are cowards. There is excessive force under the colour of authority but they chicken out when there are real consequences and serious investigations.

ASSORTATIVE MATING OR GLASS CEILING?

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Source: ASSORTATIVE MATING OR GLASS CEILING: UNDER-REPRESENTATION OF FEMALE WORKERS AMONG TOP EARNERS : Accounting for Worker Well-Being

Sociologist documents what Gary Becker knew in 1957

Sociologist documents what Gary Becker knew in 1957

Source: Pager, Devah. 2016. “Are Firms that Discriminate More Likely to Go Out of Business?” Sociological Science (September):849-859. PDF

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Gary Becker (1991) on the power of culture and traditional women’s roles

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Source: The Adam Smith address: Education, labor force quality, and the economy. By: Becker, Gary S., Business Economics, Jan1992, Vol. 27, Issue 1

Why is the Swedish gender wage gap so stubbornly stable (and high)?

The Swedes are supposed to be in a left-wing utopia. Welfare state, ample childcare and long maternity leave but their gender wage gap is almost as bad as in 1980. They must be a misogynist throwback.

swedish gender wage gap by percentile

Maybe Megan McArdle can explain:

There are countries where more women work than they do here, because of all the mandated leave policies and subsidized childcare — but the U.S. puts more women into management than a place like Sweden, where women work mostly for the government, while the private sector is majority-male.

A Scandinavian acquaintance describes the Nordic policy as paying women to leave the home so they can take care of other peoples’ aged parents and children. This description is not entirely fair, but it’s not entirely unfair, either; a lot of the government jobs involve coordinating social services that women used to provide as homemakers.

The Swedes pay women not to pursue careers. The subsidies from government from mixing motherhood  and work are high. Albrecht et al., (2003) hypothesized that the generous parental leave a major in the glass ceiling in Sweden based on statistical discrimination:

Employers understand that the Swedish parental leave system gives women a strong incentive to participate in the labour force but also encourages them to take long periods of parental leave and to be less flexible with respect to hours once they return to work. Extended absence and lack of flexibility are particularly costly for employers when employees hold top jobs. Employers therefore place relatively few women in fast-track career positions.

Women, even those who would otherwise be strongly career-oriented, understand that their promotion possibilities are limited by employer beliefs and respond rationally by opting for more family-friendly career paths and by fully utilizing their parental leave benefits. The equilibrium is thus one of self-confirming beliefs.

Women may “choose” family-friendly jobs, but choice reflects both preferences and constraints. Our argument is that what is different about Sweden (and the other Scandinavian countries) is the constraints that women face and that these constraints – in the form of employer expectations – are driven in part by the generosity of the parental leave system

Most countries have less generous family subsidies so Claudia Goldin’s usual explanation applies to their falling gender wage gaps

Quite simply the gap exists because hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous. That is, in many occupations earnings have a nonlinear relationship with respect to hours. A flexible schedule comes at a high price, particularly in the corporate, finance and legal worlds.