Econ 101

1. My wife is my age, and has seven year experience doing computer support:
2. In that same time, I accumulated fourteen years experience in journalism and tech writing.
3. A woman who did not marry or did not raise kids, the effect is not seen. My best friend’s wife is a computer  IT brainiac who has fifteen or twenty years experience. She is my age but her salary is more than mine, more than my friend’s.
4. My friend makes more than I do, because I dithered around with a failed law career before going into journalism.

Now, let us assume for the sake of argument that the market pays equal pay for equal experience. Assume we have all been working twenty years, but my wife took off ten years to raise kids. Assume we get a raise of ten percent every year, so that we all start making ten talents of gold, by the end of year one, we make 11 talents, year two 12, and so on.

Add up the salaries of the two women (my wife, my friends wife) and add up the salaries of the two men (me, my friend).

I and my friend make the same: twenty years experience means we make 30 talents of gold at the end of the year. Average male salary = 30 talents.

Add up my wife and my friend’s wife. My wife was making 20 talents when she dropped out of the work force; my friend’s wife makes 30. Average the two: 20+30 / 2 = 25. Average female salary = 25 talents. Aha! Women get paid less than men! Sure, but only in the aggregate average due to their behavior in the marketplace. Each individual woman is being treated fairly.

The average becomes is more outrageous if some women never work at all. Suppose you have five women and five men of equal age. In ten years, one women only works five, and a second woman works zero, having married just out of highschool and devoting her whole career to homemaking. At the end of ten years, the five men will have 50 years experience between them; at the end of ten years, the women will have 35 years experience between them. If we also assume the same pay rate and pay-raise rate as the last hypo (1 talent per year, a raise of ten percent per year) At the end of ten years, the five men will have 150 talents sum, which is an average of 30 per. At the end of ten years the women consist of three women making 30 per year, one woman making 20 per year, one woman making zilch. They will have 110 sum, which averages to 22 per.

Ergo, under this hypo, if men and women both get the same pay and the same rate of pay raises for the same work, and only two women out of five devote half or all of their time to home-making (and in real life it is far more), the man is making on average 8 talents more for “the same work.” Obviously if the homemakers are factored out of the equation, the salaries are equal.

But let us further suppose for the sake of argument that Woman A could do job A with efficiency level A and she is getting paid 5 talents less than Man A doing the same job A at the same efficiency level A.

You are boss of a firm who pays Mr. A 5 talents to do job A. If you hire her for for 2 talents more, she gets 2 more talents take-home pay, you get to pocket the 3 extra talents her labor is worth to your business, and you fire the guy. But your rival will offer her 3 extra talents and pocket the 2 talents value added; and she will leave you to take home and extra talent per year, unless you offer her 4. In other words, if she were actually doing the same job for less pay, she would clear the market, and pay rates would seek a new level. In other words, no matter WHAT YOU DO, you must pay her the going rate, or she will find other work elsewhere.

Even if nine companies out of ten practiced institutional discrimination, the tenth company would have a talent pool of half the population to draw upon, and, in this example, could pay the women force 2 or 3 talents per worker per year LESS than their competition: in other words, making the same number of widget, but able to sell them for one third less the price. The customers do not and cannot know the sex of the factory hand who made the widget: all the customer sees is the price tag. How long would you remind in business if your rivals were putting out the same product at 66% of your overhead?

Figure it out: You charge three bucks a gallon and they charge two bucks a gallon. Ten gallons costs the customer 30 bucks (you) or 20 bucks (them). A man wants to buy one hundred gallons a week. He look at the price tags. If he drives up to the Femmotopia All-Woman’s Amazon Bargain Emporium, he saves himself one hundred bucks he can spend on ice cream in Disneyland. At the end of the year, 53 weeks, he saves five thousand bucks. How long do you really think the nine discriminatory Boy’s Only Women-haters Club companies could compete in that kind of environment?

If women cost the company more in terms of health insurance or other extra costs, then they are asking higher pay than a man doing comparable work, even if their take-home pay is the same as the man’s, or less. Generally, women see the doctor more than men, especially during child bearing years. If the woman is an unwed mother, the health insurance and other extra costs on the company go up again. SHE IS GETTING THE SAME DOLLAR VALUE BENEFIT from her employment, but she is getting less take home pay than a bachelor. Those are just the facts of life.

Institutional discrimination cannot exist for long in a free market, under any conditions; ergo it can only exist where and when the market is not free. If there is institutional discrimination going on in the marketplace, all the government needs to do is remove what ever it is they, the government, is doing to create the discrimination.

If inequality of pay is happening for a reason unrelated to institutional discrimination, such as, for example, women in the aggregate cost more and work fewer years than men in the aggregate, not only ought the government do nothing, in fact the government can do nothing,no matter how badly it wants to, that will not make the situation worse.

Adding regulations will merely act as a transfer payment of one sort or another, shifting and hiding the burden of the extra cost: all the extra costs are carried out on the backs of the poor eventually, because all that happens is employers raise their prices to customers to make up for the increased inefficiency and cost, whatever it is, of the regulation. All a quota system or meddling with wage rates or benefits will do is create unemployment.