Ch. 11: Employment and Earnings Policy

1. Ch. 11: Employment and Earnings Policy • Topics already covered: • 1) verified existence of sex differences; • 2) presented HK explanations; • 3) discrimination. • This chapter: • 1) Describe government policies designed to combat labor market discrimination. • 2) Discuss evidence as to effectiveness of such policies.

2. Origins of Discrimination Laws • Early discriminatory laws: • Designed to protect women from too much exertion, bad language; or provide protection for fetus. • Marriage or pregnancy “bars”: • Explicit limits based on either; such as rules against hiring married women or pregnant women. • In US: overt “bars” gone by 1950s.

3. Anti-Discrimination Laws • First laws originated under President Kennedy. • Equal Pay Act of 1963: • First federal anti-discrimination law • Mandates equal pay for equal work. • Key is to define equal work: • Work that requires equal skill, effort, responsibility, and performed under similar working conditions.

4. Most Important Anti-Discrimination Policy • Title VII of Civil Rights Act of 1964: • Cornerstone of US anti-discrimination policy; • Much broader than 1963 Act; • Amended several times. • EEOC enforces Title VII: • Equal Employment Opportunity Commission; • Independent 5 member commission; • How active depends on which political party in power • Power exerted via $$ given to EEOC and who appointed head of Commission.

5. EEOC enforces following laws: • ADEA of 1967 (Age Discrimination in Employment Act); • Equal Pay Act of 1963: (EPA) • Titles I and V of the Americans with Disabilities Act of 1990 • Sections 501 and 505 of the Rehabilitation Act of 1973 • Civil Rights Act of 1991

6. Affirmative Action • History: • Established by Executive Order 11246, signed in 1965 by President Johnson; • Not applicable to women and enforced for them until 1972. • Law requires any company doing business with fed govt (with contracts of $50,000 or more) to agree to not discriminate in any aspect of employment. • Usually affects large firms: universities, defense industry. • Many large firms not required to follow details of law do so anyway (to avoid discrimination suits arising from other legislation).

7. Details of Affirmative Action • To determine which firms need an AA plan: • Firm documents employment by sex/race; • If proportions differ from proportions “in available labor force” then firm must file AA plan. • Plan includes goals and timetables and methods for implementation. • Difficult to figure out and implement.

8. Criticisms of Affirmative Action • Some critics of AA accuse it of: • establishing quotas (quotas actually forbidden by the Exec. .Order) • imposing reverse discrimination (although forbidden by the E.O.); • Reverse discrimination: when less qualified female or minority hired in place of more qualified white male. • Some critics say it: • stigmatizes minorities. • simply shifts minority workers from covered firms to uncovered firms.

9. Supporters of Affirmative Action • Because forces diversity in hiring, will remove employment barriers. • Even if some reverse discrimination, can be justified as remedy for past discrimination. • Once diverse workforce created, benefits will be seen. • Helps in selling to diverse public; • Helps ensure firms’ future survival in face of changing workforce (white male no longer majority of workers).

10. Effectiveness of Anti-discrimination Programs • Yes many employment outcomes have changed over time. • How much due to laws? • Hard to say. • To analyze, need lots of data from lots of firms. • Then compare firms covered by AA and those not covered: any differences in growing diversity? Yes. • Impact seems to be strong for African American women, small for white women. • Biggest impact from “casting a wider net” in hiring; • Helps to assure that minority hires are equally qualified. • Even when minority hire is less qualified, actual job performance is not lower.

11. Future of Affirmative Action • Because courts play pivotal role and political party in power controls the courts, future is evolving. • Courts becoming increasingly conservative. • Some AA has been banned. • Current cases at University of MI: • Grad school: race used as a factor (adds points but no quotas); • In 2002, US Court of Appeals said yes constitutional; • Currently at Supreme Court. • Note: when AA banned in California: • Took a couple of years for state also to ban favoritism for legacies or those supported by elected officials.

12. Comparable Worth • One alternative to AA. • Would modify Title VII: mandate equal pay for jobs of equal value. • So even very different jobs could be deemed to be of equal value. • Complicated process: HOW determine which jobs of equal value? • Need job evaluation. • 1) Describe all jobs in organization; actual tasks detailed. • 2) Identify job attributes (or compensable factors): • skill, effort, working conditions, etc. • 3)  Each job rated on each compensable factor (given a #). • 4)  Assign weights to each factor and produce total score. • 5)  Use JE results to determine pay.

13. More on Comparable Worth • Job evaluations: • Very complicated; • Different consultants find very different results for same firm. • CW is much opposed by most economists (remove wage setting from market and put it in hands of administrators). • Studies of CW: • Public sector CW laws in four states: • Could eliminate almost half of gender earnings gap. • Would cause 8%  in business costs. • May  unemployment. • Still controversial.