SOME REFLECTIONS ON COMPARABLE WORTH

SOME REFLECTIONS ON COMPARABLE WORTH

TRUDY ANN CAMERON*

Despite its somewhat impudent tone, this paper examines a major controversy. “Comparable worth” has its proponents and detractors, but as in most debates, neither side fully appreciates the maintained hypotheses of the other. From an economic point of view, the disagreement seems to boil down to differences of opinion about whether the “‘excessive supply” of women to ‘ioomenk jobs”& a result of their different utility functions or of their different constraints. There also has been a serious confusion of the “normative” with the “positive,” some oversight of the potentially large regulato y costs that would accompany comparable worth legislation, and a tendency to consider only the partial-equilibrium consequences of these measures. Each of these considerations is examined in detail, with the conclusion that while comparable worth measures might alleviate some inequities in the short term, the long-term consequences could seriously aggravate the very problem the policy was intended to solve.

A recent federal court ruling in Washington State deemed that “comparable worth” payments to women are not mandatory. This ruling has taken much of the momentum out of the movement to secure compensation for women whose jobs pay less than those occupied primarily by men. Nev- ertheless, the debate over the legitimacy of comparable worth notions is still intellectually intriguing. I should warn that some propositions explored in this paper may seem outrageous to either of the polar groups involved in the debate. Bear in mind, however, that such proposals are intended to force participants to look critically at the foundations of their arguments. Some of these comments are “economic.” However, we must also consider some of the sociological conditioning that affects individual preferences, which subsequently determine the different labor supply decisions of women and men.

To preview my conclusions, I favor some form of temporary compensation to women in low-paying jobs, but only as a stopgap measure to dimin- ish inequities during the slow process of adjustment as society works its way out of disequilibrium. I do not favor across-the-board, mandated comparable worth legislation. Such legislation would introduce at least as many distortions as it would resolve. Over the long term, it would reinforce-rather than reverse-the sorts of market decisions that have produced the current inequalities.

*Department of Economics, University of California, Los Angeles. These observations have been tempered by conversations with Mark Plant, Susan Woodward, and Edward Learner, and by the comments of Sharon Bernstein Megdal.

Contemporary Policy Issues Vol. IV, April 1986

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34 CONTEMPORARY POLICY ISSUES

I have four points to make, and will treat each in turn.

1. “INTRINSIC VALUE

It seems we must be reminded that the idea that anything carries some intrinsic economic worth should have been debunked long ago by the clas- sic “diamonds and water paradox.” A thousand gallons of water weighs more and represents more volume than a 1-carat diamond. But it is impossible to base valuation merely on a subset of physical characteristics. We are taught that relative scarcity determines market equilibrium prices. To forge an analogy to the comparable worth issue, advocates suggest that because workers in one job, such as nursing, have more training and bear greater responsibilities, nurses should receive higher wages than, say, maintenance personnel. Economists are confident that the interaction of both supply and demand determines prices. The number of nurses and the number of janitors, relative to the demand for the services of each type of worker, determines the wages commanded by each.

II. COMPENSATING DIFFERENTIALS

There is an important deficiency in efforts to isolate statistical evidence of wage discrimination. A male/ female wage differential undeniably exists, even after controling for a bewildering array of variables. However, it is virtually impossible to determine how much of this gap is due to discrimination or exclusion, and how much is due to different preferences between male and female workers across a collection of job attributes. These attributes include not only the wage, but also the entire set of working conditions.

Phyllis Schlafly, who probably qualifies as a notorious non-feminist, has been credited with the argument that “women voluntarily choose low- paying jobs because they like the cushy indoor working climate better than the dirty men’s jobs” (Culbertson 1985). An economist would immediately note that “choices” are a consequence of the interaction between (1) tastes or preferences and (2) constraints. Schlafly’s argument apparently pre- sumes that women’s preferences are simply different, and that no special constraints influence occupational choices. In contrast, comparable worth advocates seem to argue that human utility functions are all the same, and that the only reason women’s occupational choices differ from those of men is that women’s opportunities are artificially constrained through discrimination. By either argument, women wind up “choosing” jobs that a lot of other women also “choose.” Because of this ample supply of labor to these jobs, the forces of supply and demand naturally drive down wages.

My contention in this section is that it is incorrect to assign the blame entirely to either one of these two factors influencing choice. I believe that both determinants are active. At the risk of being quoted out of context, I would like to explore Schlafly’s claim. It is possible that due to a persistent artifact of our sociological conditioning, the tendency to select “clean”

CAMERON: REFLECTIONS ON COMPARABLE WORTH 35

female-type jobs is in some sense utility-maximizing for many women. Women are not all identical. Indeed, if you are a woman who happens

to be reading this article, you probably are a tiny minority among the nation’s population of women. Membership in this nonrepresentative sample belies a high probability that your attitudes differ from those of the huge majority of women. A further hazard is that you are insulated from the environment in which many other women must function. Likewise, if you are a man who is encountering this article, you also are not quite repre- sentative of the average American male. With the plea that the following characterizations may very well not apply personally to any individual reading this paper, I embark as “devil’s advocate.”

Proposition: Many women’s preferences have men’s preferences regarding women as an argument (and probably vice versa, but with a smaller coefficient). The asymmetry in male/ female preferences over the attributes of potential mates, along with the interaction of these preferences, results in systematically different labor market supply decisions by these two groups. Specifically, many women seem to prefer jobs that are safe and clean and that require minimal physical exertion. This is in large part due to the fact that many men traditionally have been attracted to women who are unscarred, well-groomed, fresh, and attentive. Conversely, for a male worker, bashed knuckles, grimy fingernails, perspiration, and physical exhaustion are a reasonably acceptable physical state at 6 p.m. Indeed, such characteristics in male workers often carry the connotations of “hon- est laborer” or “good provider”-positive attributes in the mating assessment. These same characteristics in female workers at 6 p.m. carry negative connotations in the corresponding mating assessment. Because substantial time costs are incurred in achieving the metamorphosis from grubby mechanic to the “feminine ideal,” the perceived need to succeed in the “mating market” has historically imposed some very real constraints upon women’s occupational choices. If readers are offended by this gross generalization of female motives, they should examine whether they are confusing the normative issues (what they feel the world ought to be like) with the facts (the way much of the world is, for better or worse).

(At a 1985 Western Economic Association International Conference ses- sion, Donald J. Treiman, University of California, Los Angeles, argued that career decisions typically are made in late adolescence. This is a time of life when young people are particularly insecure about their sexual iden- tities and may be reluctant to choose a career at odds with the typical choices made by their gender.)

I have no doubt that women’s occupational choices also reflect involun- tary exclusion of women from male occupations. My suggestion here is that, in addition-despite the steady convergence of male and female utility functions-men and women traditionally have attached different weights to the arguments of these utility functions. The proposition enter- tained above, while intentionally inflammatory, is intended to illustrate


how women’s particular labor market choices could conceivably be uncon- strained optimal choices for many women-at least at some point in their lives. The optimal mix of wage and working conditions could reflect this perceived trade-off between labor market success and mating success.

Other important nonwage considerations may also enter into women’s utility functions and affect their occupational choices. Because of women’s biological child-bearing responsibilities and the gains from specialization within the family unit once a decision to bear and raise children has been made, it is a fact that women still bear primary responsibility for offspring. Consequently, women who intend to raise children often choose careers compatible with two objectives: earning income, but also raising their children “properly.” For example, the grade-school teaching schedule conven- iently matches the hours when school-age children are otherwise occupied. These hours are more attractive than an industrial work schedule, and the opportunity to take extended summer vacations is also appealing.

In the past, many women also have had the luxury of selecting careers not exclusively on the basis of maximizing earnings. A residual tradition of altruism still exists in many career choices. An admittedly small sample of my acquaintances in the nursing profession unanimously chose their career in part because it would afford them an opportunity to help people. For these women, it is possible that the nonpecuniary value of utility derived from “helping” at least partly compensates for the less attractive wages. When queried about their reasons for choosing a nursing career, the imme- diate response was “certainly not for the money!” (Sharon Bernstein Megdal has suggested to me that a variety of the tasks performed by nurses are “dirty” and distasteful. It is hard to deny, however, that nurses usually maintain an appearance that is unrivaled for crisp and meticulous cleanliness.)

If significant numbers of women gain in the mating market, or raise better children, or enjoy the rewards of the helping professions sufficiently to justify their failure purely to maximize wages in the labor market, then simple malelfemale wage differentials are not a truthful measure of the specific disadvantage suffered by individual women. Consequently, equat- ing monetary compensation with the existing differential between “comparable” jobs is invalid, unless we can argue that all women choose occupations strictly on the basis of money wages.

Opponents of comparable worth might find the above discussion veT appealing as an argument against compensating women for the low wages in their jobs. Indeed, by exploring the proposition that women’s utility functions might differ from those of men, I risk drawing fire from comparable worth proponents for sabotaging their efforts. But my arguments are not yet complete. An assessment such as that described above might be completely satisfactory in a static world. If the environment in which career decisions are made could be relied upon to persist indefinitely, one probably could trust market forces to drive the system toward a stable equi-


librium for which no intervention would be necessary. However, when environments-constraints-change after women have chosen to train (or been diverted into training) for conventional female occupations, many who currently participate in the market for conventional female jobs find that their optimal choices shift relatively in favor of higher wages. (Wage sacrifices in anticipation of future gains from relative success in the mating market may be extremely costly if these expected lifetime gains do not materialize. Divorces still seem to be unanticipated, despite the incontest- able evidence of the aggregate divorce statistics. But the “happily-ever- after” marriage is still a cherished myth.) Women who commit to career trajectories under one set of conditions, but later find their optimal choices to be different, are most hurt by the excessive numbers of women who con- tinue to be willing to work for lower wages if they are partially compen- sated by more desirable working conditions. Programs to increase the mobility of female workers seeking higher-paying occupations should be considered as an alternative, or at least as an important supplement, to comparable worth pay adjustments. At a more fundamental sociological level, young women should be taught to adopt a more realistic view of their future. Despite society’s high ideals for the modern woman, surveys show that vast numbers of school-age girls seem to have entirely missed the feminist movement. If the typical schoolgirl could be persuaded to assign at least a nonzero probability to divorce, then more pragmatic career plan- ning would be possible.

The fact that women’s wages in women’s jobs have always been some fraction of men’s wages in comparable jobs should have acted as a market signal for decades. Current pay inequities are not a consequence of some recent pay divergence and the market’s failure to respond quickly due to long training lags. The fundamental institutional change that has brought the pay differential into the forum is the change in attitudes toward marriage. Walter Oi (1986) cites the declining importance of marriage as a contributing factor in women’s increased participation in the labor force. The declining importance of marriage is also the root of society’s increas- ing concern over the level of individual women’s incomes. “Singlehood,” or the dissolution of marriage, is no longer perceived as a personal failure for which an individual should suffer. Whether as a cause or as an effect of this attitude change, the sheer numbers of female heads-of-households have increased. The male/ female pay differential has become an important issue because a growing proportion of women change their optimal choices regarding wages and job conditions while they are stranded-relatively immobile-in one type of occupation.

If the stated social objective is to raise the monetay compensation of all women, an important long-term solution is to induce changes in tastes. Such changes would include not only women’s tastes for job conditions, but more fundamentally: (1) the tastes of men for the characteristics of desirable mates, (2) the preferences of society for children raised in traditional


families, and (3) the social value of altruism, voluntarism, and humanitari- anism. This seems to be a truly heroic challenge, and many would question the desirability of such changes. But only after such changes occur will women’s free-market choices lead them into occupations where unadulter- ated conditions of supply and demand yield higher monetary compensation. In the intermediate term, programs to increase the mobility of women across occupations would do more to rectify the excessive supply of women in feminine occupations. In the short term, many may view comparable worth programs as a reasonable second-best solution. However. the distortions that would be induced by these measures appear to be significant , and the potential for long-term negative repercussions looms ver). large. A better stopgap measure might be to extend current incomes programs but to tailor compensation on the basis of some measure of need, rather than to tie the compensation to occupational categories regardless of need.

111. REGULATlONlBUREAUCRACY COSTS IN THE NET SOCIAL BENEFIT ACCOUNTING

I heartily agree with Oi’s (1986) contention that serious market distortions would occur as a result of mandated increases in female wages in specified occupations. As always, any regulatory solution would be met by considerable quantities of resources being diverted into nonproductive efforts to circumvent the regulations.

Even if a “worker” can be disaggregated into a collection of well- defined attributes, the bureaucratic problem of assigning values to those individual attributes-independent of market conditions-is no more trac- table than the original problem. Rule makers could not use the coefficients of an estimated hedonic wage equation, since the original dependent varia- ble reflects prevailing conditions of supply and demand. Even if calibra- tion of a multidimensional “worth scale” were feasible, there would still be as many possible unique categories of worth as there are workers. Rule makers would face the problem of maximizing fairness (i.e. , having the fin- est possible resolution among categories of jobs) at the expense of higher initial fixed costs of evaluation. Rule makers also would bear the costs of constant revisions, which would be necessav since the world is not static. The term “regulatory lag” would take on new meaning. One might also wonder whether the legal and lobbyist resources devoted to influencing the regulations could overwhelm the total explicit benefits to women.

IV. PARTIAL EQUILIBRIUM TRAP

Basic economic theory tells us that artificially raising wages in a market already characterized by excess supply would serve only to increase the quantity supplied and decrease the quantity demanded. If the demand for female labor is inelastic, the best we could hope for under comparable worth is an increase in the total wage bill accruing to women in these par-


ticular jobs. However, fewer units of this labor would be hired. Those who retain their jobs would be paid more, but some women who previously had work would become unemployed. Furthermore, new entrants or reen- trants, attracted by higher wages in these jobs, would find no job openings. Simultaneously, women who previously were indifferent between the whole package of job attributes constituting the “women’s job” and the “men’s job” would now prefer the “women’s job” with its increased wages. It may be possible to achieve a potential Pareto improvement, but only if the demand for female labor is sufficiently inelastic. Yet, the biggest hazard lies in limiting the analysis to partial equilibrium comparative statics. Oi (1986) emphasizes some of the broader consequences which might be expected. It is vitally important to appreciate the whole picture before advocating comparable worth legislation. I am loathe to deny women improved economic opportunities, but we are considering an improvement in the welfare of only one group of women: those in the covered sector who would retain their jobs over the long run. This gain must be traded off against the decreased welfare of other women (i.e., those who are either in the uncovered sector now, or who would be pushed into the uncovered sector). The last factor which can’t be neglected in the social accounting is the opportunity costs of comparable worth expenditures in terms of other programs. These other programs are valued by a cross-section of society-a cross-section that certainly includes women. Government budgets are at least as big an issue today as is comparable worth, and the constraint will only become more binding.

REFERENCES

Cdbertson, Diane, “It’s a Dirty Job, But Someone Has to Do It-for Less,” Citizen, Septem-

Oi, Walter Y., “Neglected Women and Other Implications of Comparable Worth,” Contem- ber 19, 1985.

porary Policy Issues, April 1986,4,21-32.

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SOME REFLECTIONS ON COMPARABLE WORTH