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.

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.

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.

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.

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

Affirmative Action History: –Established by Executive Order 11246, signed in 1965 by President Johnson; –Not applicable to women and enforced for them until 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).

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.

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.

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).

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.

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.

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.

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.