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AEIdeas

GOP presidential candidate Carly Fiorina blames unionization for pay differences between men and women. The Washington Post’s Max Ehrenfreund covers the issue today and includes some comments from me. He gets many things right. But not all.

To start, Ehrenfruend states that “Women made 82 cents for every dollar men made in 2013,” giving credence to the idea that there is massive gender pay discrimination. But, as I told Ehrenfruend, no serious researcher accepts that discrimination causes pay differences of even a fraction of this amount. Men tend to work longer hours, have more years of work experience, hold jobs that are physically and financially more risky, study college majors that are more earnings-oriented, and so forth. These kinds of figures just aren’t apples to apples and it’s bad journalism to cite them without making that point clear. (How bad? Let’s say I wrote that “Blacks are X percent more likely to commit crimes than whites,” without also noting that blacks are more likely to be poor, live in cities, have poor quality educations, etc.? Now you get it.)

Three things about unionization and women stand out to me. First, union jobs tend to pay more than similar non-union jobs. Second, union jobs in the private sector have historically been male-dominated – think steel, autos, etc. And third, union jobs tend to pay according to strict formulas rather than subjective measures of productivity. In teaching, for instance, salaries are often based on nothing other than the teacher’s education and years on the job.

And three interesting points come from these facts.

First, the decline of unionization has lowered the gender pay gap, because union jobs pay a premium and, historically, most of that premium was going to men. If I used the same quality of reasoning as the “women are paid 82 cents on the dollar” crowd, I could leave it here and have my talking point. But I’m not going to do that.

Second, and this is Fiorina’s point, because union jobs tend to pay based on seniority, a woman who leaves work to have kids and then returns will always be behind her male counterparts. Ehrenfruend tries to bypass this point, saying, “on average, experience is a good guide to how productive workers are, which is why economists rely on it to try to understand differences in pay.” This is not as true as he thinks. In practice, most wage comparisons use age as a proxy for work experience, because few datasets actually show how many years a person has worked. For men this is fine, but for women it’s not ideal. And substantively, productivity can depend both on actual experience on the job and on the maturity of the worker. Say, a 30-year old woman with kids with 2 years work experience is probably more productive than a 20-year childless woman with the same 2 years of experience. A strict payscale based on job tenure will miss that and punish female workers.

But third, the union pay premium and the union pay formula go together: if a woman takes a unionized job she’s benefiting from the former and being punished by the latter. But women seem to like unionized jobs: look at government employment, where women are disproportionately represented. So as a package, it seems that the union pay premium outweighs the inflexible salary scale.

None of this is to say that we should automatically want more unionization. Why? Because unionized industries fall short in creating jobs. The decline of unionization wasn’t because of some law or court ruling that made it hard to unionize. It was mostly because non-unionized industries increased employment a lot faster than unionized industries did. So, for women, a unionized job might be attractive, but there may not be enough to go around.

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