Why Single Women Should Be Libertarians

Economics

Last night I saw a piece on ABC World News Tonight, and here’s the link to their online version of it. It says that in most major cities, young women (under 30) who have no kids and are not married earn about 8% more than men. In some cities, New York for example, the difference is as high as 17%.

Now, if I were the director of a Men’s Center, I would issue a public statement about how this is clearly unfair to men, an obvious sign of gender discrimination. I might even have a bake sale to raise funds to raise awareness of the unfairness of it all. But that would obviously be ridiculous…there’s no such thing as a Men’s Center (even though we’re a minority at almost every college in the country).

The main reason cited in the article is actually a bit of speculation, since no analysis of the educational levels and/or occupation of women vs. men is reported. But the apparent cause is a simple one: women make up 60% of college graduates these days, and college graduates earn salaries about twice what high school graduates thus, thus women earn more money. The “gender gap” has been narrowing for decades as the composition of college graduates has been changing, so this is hardly a surprising result.

(Of course, if you look into the “gender gap” and correct for occupation and education, you’d see that all but 5% of the gap disappears. Yet directors of Women’s Centers keep citing that women make 78 cents for every dollar a man earns, as if that is really the statistic that is relevant for determining discrimination. That would be like me citing the fact that the composition of the NFL is 70% black, and then jumping to the conclusion that white players are clearly being discriminated against. It’s a statistical fact, but it doesn’t tell you anything about why it’s a fact. For more, see an old favorite of mine.)

But let’s get back to this article. The interesting thing is that it is only single childless women who get paid more than men. Women are more likely to take time off of work during/after pregnancy, and also more likely to drop out of the labor force for extended period of time after having children. Whether that’s “fair” or a result of old-school societal norms that force them to be at home while their husband “gets” to work is beside the point — it’s a fact. And it’s a fact that business should be accounting for. If I have two people, one of whom is more likely to drop out of the workforce and make all the training they received wasted, I’m going to pay that person less because my expected return on them is lower. If someone demands equal pay but does not have equal workplace expectations, that’s not equal at all. Until men can have kids, firms are likely to expect women to work fewer years. It’s that simple. And if men giving birth is anything like it was in the movie Junior (in which my good friend Dana Wagner, aka Studio Compton, has a small extra appearance), it’s probably not something you want anyway.

(Note: This is also a bit of a self-fulfilling prophecy: firms believe women will be less likely to stay in the work force, so they pay them less as a result, and then women find the choice to stay home more appealing because the opportunity cost of doing so is lower. Thus, women are more likely to leave the work force, and employers feels justified in paying them less. It’s like when I was a teenager and my friends and I would go to a restaurant: the server would assume we were going to tip poorly, so we would get poor service, and then we would of course tip poorly.)

By not having kids and, in fact, not even being married, these women are giving their employers a signal about their commitment to the job, and they are being rewarded with higher pay. And they’d likely get even higher pay if they could enter into a contract with their employee to waive maternity leave rights (thereby making an even stronger commitment to staying in the work force), and saving their employers a large expected expense in the future. After all, not every women wants to have children (despite what Dr. Bob might tell you). But thanks to the Family and Medical Leave Act, that kind of contract would be illegal because Big Brother has determined that you should not be allowed to waive your rights to maternity leave, even if you never plan on having a child.

So all the single ladies (all the single ladies), congratulations on getting the money you rightfully deserve (and have probably been getting for a while now, despite protestations by Women’s Center directors to the contrary). Just remember one thing: if it weren’t for big government intervening to “protect” you, you’d probably be making even more money than you are.

Share
6 Comments

6 Comments

  1. Janice  •  Sep 3, 2010 @2:43 pm

    I should let this one go, but I just can’t. I find it interesting that you post this on labour day weekend. If we allow that I should be able to sign away my right to fair treatment in the case that I become pregnant, should I also be able to enter a contract with my employers concerning a safe workplace? “Pay me 10 cents an hour more, and feel free to be lax on the air pollution spilling into the factory”?. Or why even expect higher pay? The factory could easily turn this around and say “sign over your rights about air pollution/maternity leave/racial discrimination/overtime hours/whatever…. or else I’ll hire someone who will”. I’m guessing that will bring us back a few hundred years in terms of worker’s rights.

  2. ProfSwitzer  •  Sep 3, 2010 @3:01 pm

    In the Hubbard and O’Brien textbook that I use, it mentions that workplace safety laws can leave workers no better off — they get a safer environment but lower pay as a result. If they were willing to take on that added risk in exchange for the higher pay, and they value the higher pay more at the moment and are less concerned about long-run risk, they might actually be worse off as a result of workplace safety laws. If I want more money in exchange for a less safe workplace environment, I think I should have that choice. That’s the concept of liberty.

    If you think you should get “fair” treatment in the event that you become pregnant, then fine — you negotiate an employment contract that includes that. Choose the health insurance option that covers it fully. But if women don’t want to have kids, why should they have to have the same contract? Should they be forced to buy a more expensive health insurance option that they won’t use? Should women who are pro-life be forced to buy a health insurance option that includes abortion and is therefore more expensive? Based on what you wrote, I’m led to think you would argue that insurance companies would charge the same price for health insurance that covers both pregnancy and abortion that they charge for one that includes neither. But if you take a look at health insurance rates for different plans, you’ll find that (shockingly!) the market accounts for that. The plans that include more bells and whistles cost more. Who knew?!

    Or is your argument that no firm would provide you with employment contracts that gave you paid maternity leave without the government making it a law? If that’s the case, then how do you explain that the vast majority of female employees were already getting that even before this law was passed? If your theory is correct, the pre-FMLA world would have been one with no maternity leave. But that’s not what happened when the market was left on its own. You assume non-competitive labor markets, but the facts contradict that assumption.

    Why expect higher pay? Competitive labor markets. A firm offers you higher pay and lower fringe benefits, which some people think they won’t use anyway, and you can be sure that some people will take that higher pay. The company could very well say that you have to sign over your rights or they’ll hire someone else who will. In a competitive market, you go some place else.

    I’m posting it today because I saw the news piece yesterday. I didn’t realize that was so controversial. Maybe I should have waited to post it on National Fatality Equity Day. I guess that would probably have been more appropriate, but it would have been an old story by then.

    One last thing. It should be clear that my answer to your question (should you be able to take higher wages for higher risk?) is yes — you should have that choice. But risk is not exactly what this post is about. Pregnancy is something that women have control over. Heck, even MTV is now running ads saying that pregnancy is 100% avoidable. MTV! If you know you don’t want to have a child and you are a responsible person, you behave accordingly. If you don’t, you bear the risk. But if you are responsible, you should also be able to earn higher wages because you are not costing your employer maternity leave and are not as much of a risk to leave the work force.

  3. Janice  •  Sep 3, 2010 @4:59 pm

    I read your original post as proposing that we should have a right to contract away our rights to maternity leave. Your response argues more that the right shouldn’t exist. I have issues with the first. My question was not “should I be able to take higher wages for assuming more risk”, it was “should I be able to take higher wages to sign away a legal right”. I think not. Assuming that society has decided that something is a right, then you should not be able to sign those away because my freedom to do so impinges on the ability of others to secure that right. If you are lucky enough to have the human capital that enables you to be choosy about the jobs that you take, you can go elsewhere when your employer doesn’t want to grant you mat leave or a safe work environment. But many people aren’t mobile between industries, occupations or locations. When the unemployment rate starts to hit 10%, and the unemployment rate facing a low educated woman in a depressed region is even higher, she’s likely going to have to sign away her rights if such a practice was allowed. The fact that maternity leave was offered prior to making it a law doesn’t negate this argument – it certainly wasn’t offered to McEmployees. I view these workplace rights as laws to protect those without bargaining power, knowing that this hurts some at the lower end in order to benefit others. That’s the choice that society has made when granting this right.

    Then the question becomes should this be a right in the U.S.? Not my place to say. But I do think though that when we are discussing workplace rights, we should be focused on those who do not have bargaining power in the workplace and assume that if the right isn’t in law it won’t be offered. Then, what is the minimum acceptable standard that society would consider decent for its employees?

    My understanding is that the FMLA protects a woman’s job for 12 weeks following a birth. If this is right, I do think the law is flawed in offering the leave only to women. This certainly doesn’t help the ongoing fight against discrimination. Having the child (biology) doesn’t require too many days off work. Caring for the child does. If they offered it to either parent, it may not lead to an equal split of child care, but it wouldn’t hurt.

  4. ProfSwitzer  •  Sep 3, 2010 @7:48 pm

    I guess you’re right — I’m arguing more that the right shouldn’t exist. It should be something negotiated by employer and employee. You say that “assuming that society has decided that something is a right, you should not be able to sign those away.” I guess I would argue that declaring maternity leave a “right” means I no longer have the liberty to contract according to terms with which I am comfortable. And if you “protect” me from something that I don’t need protection from, and I suffer from it, that’s not exactly a good thing. Should this be a right in the U.S.? Good question. The people didn’t vote for it — our representatives did. I guess that’s the problem with a republic. (As much as I am one to note that the U.S. is not a democracy, but rather a republic, I guess I am now forced to admit that there are drawbacks to this particular form of governance.) What is the minimum acceptable standard? Good question. It seems like the minimum acceptable standard is ever-increasing. My question is: why?

    I understand that not everyone has bargaining power in a job, so perhaps we should have some minimum requirements. My question is this: do I have the right to waive those minimum requirements because I feel they do not even apply to me? If I know I am never going to have kids, should I not be able to waive maternity leave? At what point do laws and rationality have to be reconciled? You say that we should be focused on those who do not have bargaining power — does that mean we have to pass a law that applies to everyone (and might not be needed by some) in order to help those people? (These are rhetorical questions; answer if you wish, but I don’t expect one.)

    I think I’m reading it right — it’s not just women covered under FMLA; it’s “parents” of the child. So men and women are covered. But I’m pretty sure the wage differential is less about maternity leave than it is about potential work force exit. And until societal norms change so that men and women are equally likely to leave the work force for years to take care of children, I understand firms paying differently.

  5. Mark  •  Nov 25, 2010 @4:37 pm

    Awesome Dr Bob reference. Do you ever make references to him in class at St Cloud?

  6. ProfSwitzer  •  Nov 26, 2010 @10:49 am

    Can’t say that I do, Mark — you kinda have to know the guy to get the humor.

Leave a Reply