Equity and Gender: The Comparable Worth Debate by Ellen Frankel PaulReview by: Martin MilkmanPublic Choice, Vol. 66, No. 1 (Jul., 1990), pp. 99-100Published by: SpringerStable URL: http://www.jstor.org/stable/30025291 .

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Public Choice 66: 99-100, 1990.

Book review

Ellen Frankel Paul, Equity and gender: The comparable worth debate. New Brunswick, NJ, and Oxford: Transaction Publishers: 1989. ix + 143 pages. HC $24.95; PB $12.95.

Equity and Gender: The Comparable Worth Debate is a polemic for rejecting the concept and use of comparable worth as a standard of wage setting. Vari- ous economists, sociologists, political scientists, and legal scholars have la- bored over the comparable worth question. Ellen Frankel Paul attempts to summarize this complex and diverse body of research while simultaneously ex- plaining to the reader how free markets work. Paul concludes that discrimina- tion against women does not occur in the labor market, and that even if it were to occur, comparable worth is not a workable alternative. Furthermore, even if it were a workable alternative, it should not be implemented as policy be- cause comparable worth is incompatible with a free market system. Perhaps this is too much ground to cover in a mere 150 pages.

Following a brief introduction highlighting the key issues in the comparable worth debate, Chapter 1 summarizes the case for comparable worth. Chapter 2 then summarizes the case against comparable worth. Chapter 3 reviews key legal issues and precedents surrounding comparable worth at both the state and federal levels. Chapter 4 argues that comparable worth is not compatible with the free market, and that on both philosophical and efficiency grounds, society in general and women in particular are better off in a free market economy than in a labor market that imposed comparable worth standards.

"Comparable worth deserves a fair hearing - a dispassionate examination from the acrimony of much that has passed for public debate on this subject," Paul writes. Unfortunately, she does not give comparable worth advocates this fair hearing. In reviewing the economics of discrimination literature, Paul de- votes several pages to explaining empirical studies of the wage gap between male and female workers. These studies attempt to explain the well established differential between male and female workers by accounting for differences in human capital and other factors aside from gender believed to influence wages. Her conclusion that "it is clear that if women exhibited precisely the same characteristics as men ... the wage gap would shrink to wage pittance of a few cents" is incongruent with conclusions reached by the bulk of these published empirical studies. Paul bases her conclusion on the small number of studies that estimate the unexplained earnings differential to be much smaller than the 10 to 20% found in the majority of the other studies. Paul also omits any refer- ence to the asymmetric information literature which shows that in situations where a worker's future productivity is not known with certainty by the em- ployer, statistical discrimination can be a profit maximizing strategy for the firm. Advocates of comparable worth often draw on this literature to help ex- plain why the free market can not be relied upon to end occupational segre- gation.

It is most unfortunate that Paul has failed to present an unbiased case for

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comparable worth, since many of her conclusions do not rely centrally on a finding that the labor market discrimination is nonexistent. Instead she argues that comparable worth is not compatible with the free market. She claims that a comparable worth standard is much different than the Equal Pay Act, Title VII, and affirmative action. "The market and comparable worth emanate from two different normative assumptions about individual action." The market is based upon consumer sovereignty, while comparable worth is based upon the sovereignty of a class of "experts," a contrast that Paul argues forces a choice between free markets and comparable worth. Paul further develops this theme by explaining the Austrian view of the market process and provides a good introduction to the Austrian explanation of markets. Using this frame- work, Paul makes it clear that a labor compensation system based on compara- ble worth is not compatible with the free market.

Paul's approach, however, does not fully address the proposals of many comparable worth advocates which are concerned with employment in the pub- lic sector. Public choice research indicates that employment and wage setting decisions in the public sector are made with different constraints and objectives than private sector employment and wage setting. Arguing against comparable worth based on consumer sovereignty is inappropriate when viewing public sector employment. While I am sure that Paul would argue against using com- parable worth as a wage setting device in the public sector, due to her fears that it would result in comparable worth spilling over into the private sector, the basis of her argument is primarily directed at comparable worth in the market sector of the economy.

Despite the weaknesses of the book, most readers will find it helpful and somewhat stimulating. The review of comparable worth's judicial and legisla- tive histories is helpful, and while Chapter 4 is not as well thought out as one might desire, the contrast between Austrian economic thinking and the philosophical basis of comparable worth is stimulating and original. Given Paul's comparative advantage in this area, I finished the book wishing that she had concentrated more of her effort on developing the Austrian critique of comparable worth and left the review of the debate to those with comparative advantage in the economics of discrimination.

Martin Milkman Department of Economics and Finance College of Business and Public Affairs

Murray State University Murray, KY 42071

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