Quotulatiousness

January 5, 2014

Excerpt from Glenn Reynolds’ new book

Filed under: Bureaucracy, Economics, Education, USA — Tags: , , — Nicholas @ 10:19

The Wall Street Journal has an excerpt from The New School: How the Information Age Will Save American Education From Itself, the latest book by the Instapundit himself:

Though the GI Bill converted college from a privilege of the rich to a middle-class expectation, the higher education bubble really began in the 1970s, as colleges that had expanded to serve the baby boom saw the tide of students threatening to ebb. Congress came to the rescue with federally funded student aid, like Pell Grants and, in vastly greater dollar amounts, student loans.

Predictably enough, this financial assistance led colleges and universities to raise tuition and fees to absorb the resources now available to their students. As University of Michigan economics and finance professor Mark Perry has calculated, tuition for all universities, public and private, increased from 1978 to 2011 at an annual rate of 7.45%. By comparison, health-care costs increased by only 5.8%, and housing, notwithstanding the bubble, increased at 4.3%. Family incomes, on the other hand, barely kept up with the consumer-price index, which grew at an annual rate of 3.8%.

For many families, the gap between soaring tuition costs and stagnant incomes was filled by debt. Today’s average student debt of $29,400 may not sound overwhelming, but many students, especially at private and out-of-state colleges, end up owing much more, often more than $100,000. At the same time, four in 10 college graduates, according to a recent Gallup study, wind up in jobs that don’t require a college degree.

Students and parents have started to reject this unsustainable arrangement, and colleges and universities have felt the impact. According to a recent analysis by this newspaper, private schools are facing a long-term decline in enrollment. More than a quarter of private institutions have suffered a drop of 10% or more — in some cases, much more. Midway College in Kentucky is laying off around a dozen of its 54 faculty members; Wittenberg University in Ohio is eliminating nearly 30 of about 140 full-time faculty slots; and Pine Manor College in Massachusetts, with dorm space for 600 students but only 300 enrolled, has gone coed in hopes of bringing in more warm bodies.

Even elite institutions haven’t been spared, as schools such as Haverford, Morehouse, Oberlin and Wellesley have seen their credit ratings downgraded by Moody’s over doubts about the viability of their high tuition/high overhead business models. Law schools, including Albany Law School, Brooklyn Law School and Thomas Jefferson Law School, have also seen credit downgrades over similar doubts. And now Democrats on Capitol Hill are pushing legislation to give colleges “skin in the game” by clawing back federal aid money from schools with high student-loan default rates. Expect such proposals to get traction in 2014.

January 3, 2014

QotD: Pensions, an idealized view

Filed under: Humour, Quotations — Tags: , — Nicholas @ 17:47

I am going to lose my job — my salaried job with medical and dental and even a pension plan. Didn’t even know what a pension was until the employee benefits counselor clued me in, and it nearly blew the top of my skull off. For a couple of weeks I was like that lucky conquistador from the poem — stout what’s-his-name silent upon a peak in Darien — as I dealt this wild surmise: 20 years of rough country ahead of me leading down to an ocean of Slack that stretched all the way to the sunlit rim of the world, or to the end of my natural life expectancy, whichever came first.

Neal Stephenson, “Spew”, Some Remarks, 2012.

December 31, 2013

Social networking – your weak contacts may be the most valuable ones

Filed under: Business, Technology — Tags: , , , — Nicholas @ 10:20

Tim Harford explains why your friends and family are not the most valuable members of your extended social network … at least when it comes to looking for jobs:

This dispiriting stuff reminded me of Mark Granovetter’s work on “the strength of weak ties”, published in 1973. Granovetter, a sociologist, brought together two disparate strands of work: a survey of how people with professional or managerial jobs had found those jobs; and a theoretical analysis of the structure of social networks.

Start with the theoretical observation first: the most irreplaceable social connections, paradoxically, are often rather weak or distant ones. A family group or clique of close friends all tend to know each other and know similar things at similar times. Their social ties are strong but also redundant, in the sense that there are many different paths through which information could pass from one member of that group to another.

By contrast, “weak ties” between one social cluster and another are valuable precisely because the social contact is unusual. Information passed along a weak tie will often be totally new — and if it doesn’t arrive through the weak tie, it is unlikely to arrive at all.

Granovetter then supplemented this theoretical idea with his survey, showing that it was very common for people to find jobs — especially managerial jobs and jobs with which they were satisfied — through personal contacts. The old saw is true: it’s not what you know, it’s who you know. Or as Granovetter put it in his book Finding a Job, what matters most is “one’s position in a social network”.

But this is not because of crude nepotism: the key contacts who helped jobseekers find jobs were typically distant rather than close friends — old college contacts, perhaps, or former colleagues. Granovetter’s analysis made this finding make sense: it’s the more peripheral contacts who tell you things you don’t already know.

This observation has certainly been true for many of my jobs: colleagues from a decade or more in the past suddenly pop up with an interesting position or business opportunity (such contacts are all the more interesting because they’re completely unexpected).

December 26, 2013

The limits of redistributive politics

Filed under: Economics, Government, Politics, USA — Tags: , , , , — Nicholas @ 09:19

Wendy McElroy on the economic redistribution problem in politics:

A friend is celebrating the season by visiting her children in the States. Like many millennials, her 20-something son is working brutal hours for minimum wage at an unfulfilling job. After visiting with him and his girlfriend, my friend emailed, “These kids are SO stuck in not being able to even pay their rent that they have no energy left to dream anything.”

A similar story is playing out in family after family across America. Twenty-somethings are holding down two minimum wage jobs because no one wants to hire full-time people for whom they might have to provide health insurance. In a stagnant economy, their unemployment tops the chart. Meanwhile, they are saddled with debt and taxes for entitlements they will probably never receive, like social security.

As I moved through the day, my friend’s words haunted me. They perched at the back of my mind as I read a New York Times article that was an odd combination of proclaiming the obvious and writhing to avoid it. One quote captures the dance: “These days the word [“redistribution”] is particularly toxic at the White House, where it has been hidden away to make the Affordable Care Act more palatable to the public and less a target for Republicans…. But the redistribution of wealth has always been a central feature of the law and lies at the heart of the insurance market disruptions driving political attacks this fall.” The obvious: The core goal of Obamacare is the redistribution of wealth. The writhing: Obama lied, only he had to lie because of those wretched Republicans.

And, then, it occurred to me. It wasn’t just wealth. The dreams and future of my friend’s son have been systematically redistributed away over the last five years. As a white, male, 20-something, he is in a particularly hard-hit category of people. He is likely to work unfulfilling, low-paid jobs for as far in the future as he can see. And, as diligent as he may be, it is far from clear that he will be able to rise through merit.

From the onset of his presidency in 2009, Obama’s domestic policies have revolved around distributive justice. That is, he uses the force of law to forcibly wrench wealth, political pull, opportunity and dreams themselves from those in so-called ‘privileged’ classes and transfer them to so-called ‘disadvantaged’ ones. As his popularity sinks, Obama is returning to the theme of redistributing wealth, which has been a vote winner among his constituents. On December 4, he delivered a speech that foreshadowed policy in 2014. The White House called it a speech on “economic mobility”; the press called it his “inequality speech.” It was a call for egalitarianism, especially in terms of income and opportunities. In other words, a greater redistribution of wealth and further regulation to guarantee that everyone has access to money and upward mobility.

QotD: Today’s hard times versus the golden age of economic security

Filed under: Economics, Quotations — Tags: , , , — Nicholas @ 09:04

In other words, while it’s true that there are fewer guarantees than there used to be, it’s not true that everyone in the good old days had an easy path to lifetime employment. Those people were always a lucky minority. They still are, if a somewhat smaller one. Most people in the generations before the millennials had to struggle. They were afraid they wouldn’t be able to make it. They, too, were woken up in the wee small hours by their own economic terror. The reason your parents’ lives look so carefree to you? Well, in part because Mommy doesn’t usually tell little Timmy that she’s having night terrors over how to get him outfitted for school if the old minivan finally gives up the ghost. But mostly because all this was taking place when you were 6 years old. And everything adults do looks easy when you’re 6.

Megan McArdle, “Hey Millennials: You Got a Raw Deal. Get Over It”, Bloomberg.com, 2013-09-18

December 16, 2013

Reason.tv – Dirty Jobs’ Mike Rowe on the High Cost of College

Filed under: Business, Education — Tags: , — Nicholas @ 12:04

Published on 13 Dec 2013

“If we are lending money that ostensibly we don’t have to kids who have no hope of making it back in order to train them for jobs that clearly don’t exist, I might suggest that we’ve gone around the bend a little bit,” says TV personality Mike Rowe, best known as the longtime host of Discovery Channel’s Dirty Jobs.

“There is a real disconnect in the way that we educate vis-a-vis the opportunities that are available. You have — right now — about 3 million jobs that can’t be filled,” he says, talking about openings in traditional trades ranging from construction to welding to plumbing. “Jobs that typically parents’ don’t sit down with their kids and say, ‘Look, if all goes well, this is what you are going to do.'”

Rowe, who once sang for the Baltimore Opera and worked as an on-air pitchman for QVC, worries that traditional K-12 education demonizes blue-collar fields that pay well and are begging for workers while insisting that everyone get a college degree. He stresses that he’s “got nothing against college” but believes it’s a huge mistake to push everyone in the same direction regardless of interest or ability. Between Mike Rowe Foundation and Profoundly Disconnected, a venture between Rowe and the heavy equipment manufacturer Caterpillar, Rowe is hoping both to help people find new careers and publicize what he calls “the diploma dilemma.”

December 7, 2013

QotD: Minimum wage and Social Darwinism

Filed under: History, Quotations, USA — Tags: , , , , , — Nicholas @ 10:53

Consider the debate over the minimum wage. The controversy centered on what to do about what Sidney Webb called the “unemployable class.” It was Webb’s belief, shared by many of the progressive economists affiliated with the American Economic Association, that establishing a minimum wage above the value of the unemployables’ worth would lock them out of the market, accelerating their elimination as a class. This is essentially the modern conservative argument against the minimum wage, and even today, when conservatives make it, they are accused of — you guessed it — social Darwinism. But for the progressives at the dawn of the fascist moment, this was an argument for it. “Of all ways of dealing with these unfortunate parasites,” Webb observed, “the most ruinous to the community is to allow them unrestrainedly to compete as wage earners.”

Ross put it succinctly: “The Coolie cannot outdo the American, but he can underlive him.” Since the inferior races were content to live closer to a filthy state of nature than the Nordic man, the savages did not require a civilized wage. Hence if you raised minimum wages to a civilized level, employers wouldn’t hire such miscreants in preference to “fitter” specimens, making them less likely to reproduce and, if necessary, easier targets for forced sterilization. Royal Meeker, a Princeton economist and adviser to Woodrow Wilson, explained: “Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind.” Arguments like these turn modern liberal rationales for welfare state wage supports completely on their head.

Jonah Goldberg, Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Change, 2008.

December 5, 2013

The much-touted economic benefits of government subsidized professional sports facilities

Filed under: Business, Economics, Government, Sports — Tags: , , , , , — Nicholas @ 09:32

In short, if there are any positive externalities to governments spending vast sums to erect baseball, basketball, football, or hockey facilities for professional teams … most of the profit is captured by the well-connected and doesn’t benefit the communities who put up the money. I’ve linked to several articles that debunk the usual claims about how building this team a new stadium will provide so many millions of dollars in new spending, and the story always seems to be the same, regardless of the location of the latest corporate welfare pitch.

Earlier this year, Neil deMause linked to this Tampa Bay Times analysis of the local economic impact of the Tampa Bay Rays:

In 2008, Matheson studied sports projects from across the country to see if taxable sales rose after stadiums were built. The study also examined whether tax collections dipped when sports leagues shut down for strikes or lockouts.

“There was simply not any bump at all,” Matheson said.

Tax collections were as likely to drop as rise when a team started play in a new city. And collections dropped during some strikes, but rose during others.

The main reason relates to how spending ripples through an economy, said Dennis Coates, an economist at the University of Maryland, Baltimore County.

When a couple spends $100 for dinner and a movie, much of that money goes to waiters, ticket takers and other local workers and suppliers. Those people, in turn, spend their paychecks on rent, food and other sectors of the local economy.

Each dollar of original spending can contribute $3 to $4 to economic activity and job creation.

Professional sports mute this ripple effect.

“Spending that goes on inside a stadium tends to flow into the pockets of a relatively few, high-income individuals who live a large portion of the year outside the city,” Coates said. “Much of that money flows out.”

[…]

Sports franchises also drain an economy by soaking up taxpayer money that could go to other city services or tax relief — both of which stimulate economic activity.

In her 2005 study, the “Full Count,” Harvard University professor Judith Grant Long pegged Tropicana Field’s public subsidy at 130 percent of its construction cost, one of the highest public shares in the country.

“The real cost of public subsidies for sports facilities is significantly higher than commonly reported,” Long wrote. “Public costs associated with the operation of the facility and foregone property taxes are routinely ignored.”

The best face on Rays economic impact came from two 2008 studies that indicated that baseball bolsters tourism revenues to the tune of $100 million to $200 million a year.

Tourism analysis is an optimistic approach because it focuses only on dollars flowing into the area without examining how baseball might sap local spending levels.

At Field of Schemes, Neil deMause also notes:

The economists note other reasons why sports spending is overblown (some studies could be double-counting fans for each game that they attend even if they’re in town for an entire series, among other things); the whole article is worth reading. And when you’re done with that, check out Shadow of the Stadium’s rundown of other reports on how economists nearly unanimously agree that stadium subsidies are a really, really bad idea. Not that economists are always right, but it should if nothing else put the burden of proof on team owners to show why the heck they should be getting hundreds of millions of dollars in public cash, when nobody can spot any significant public benefits.

November 28, 2013

What’s the real US unemployment rate?

Filed under: Economics, Government, USA — Tags: , — Nicholas @ 11:44

Statistics can be very helpful tools in analysis, but the quality of analysis will depend on the accuracy of the statistics. In the US, the organization responsible for compiling the unemployment numbers is the Bureau of Labor Statistics (BLS). They actually compile several different categories of unemployment data, only one of which is commonly used by the media: the U-3 unemployment rate. Wendy McElroy explains why this may be a very misleading number:

The Bureau of Labor Statistics (BLS) compiles the United States’ unemployment statistics every month. It looks at six categories of different data, that are called U-1 to U-6. U-3 counts how many people were unemployed but were actively looking for work during the past month; this is the official unemployment rate that is broadcast by the media. By contrast, U-6 counts the unemployed and underemployed who are excluded from the U-3 data. For example, U-6 classifies people who have unsuccessfully looked for a job in the last year as “not participating in the labor force” rather than as unemployed. U-6 also includes part-time workers who need more employment in order to live, but the number of these workers is dwarfed by the number of long-term unemployed. (“Long-term employment” is defined as lasting 27 weeks or more).

The data included in the categories increase as the numbers ascend; the categories are defined as follows:

  • U-3 Total unemployed, as a percent of the civilian labor force
  • U-4 Total unemployed plus discouraged workers
  • U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force
  • U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons

What is America’s real unemployment rate? According to U-3 for October 2013, 11.3 million people were officially unemployed. BLS adds that 91,541,000 working age people did not participate in the labor force. If these numbers are added together, there are 102 million working age Americans who are either unemployed or not in the labor force for reasons that are not clear; for example, they could be retired. The non-working population represents 37.2% of working age people.

(Note: it is not known how the federal furlough of employees during the October shutdown affected the data, if at all. The furloughed employees seem to have been counted as both unemployed and working because they eventually received full payment for the time off.)

The unemployment rate reflected by the last four categories of BLS data break down as follows:

  • U-3 = 7.3%
  • U-4 = 7.8%
  • U-5 = 8.6%
  • U-6 = 13.8%

The American media used the U-3 numbers and reported the unemployment rate for October to be 7.3%, which is about 1/2 of the more realistic U-6 total. The media also glossed over U-3 figures that were alarming. For example, the official rate for teen unemployment (16 to 19 years old) stood at 22.2%; black unemployment is 13.1%

November 19, 2013

QotD: Education and aptitude

Filed under: Britain, Education, Quotations — Tags: , — Nicholas @ 09:14

Every time a liberal sees someone behaving badly they sigh and say, “They just need education,” but the solution to America’s problems is less education, not more. If we got over this myth that everyone needs infinite academia, we would have less unemployment, more manufacturing, a stronger economy, less student debt, and less school tax. The economy would be stronger and we would all be happier. Ironically, in an effort not to hurt anyone’s feelings, we developed a system where everyone has to go to college, even the stupid people, until we all feel like shit.

When everybody’s special, nobody is. Getting everyone into college means you have to dumb down the curriculum until it is nothing but meaningless drivel that has no application in the real world. Colleges aren’t going to complain when you stick them with more customers. They just take the check, lower the bar, and say, “Come on in.” But getting a gold star on your math test does not a computer programmer make.

When my dad was a kid in Scotland, Britain was practicing a very successful exam system called 11-plus. Dad came from a huge working-class family and as is often the case, one of them had an IQ much higher than the others. They all took their 11-plus test at age 11. His brothers did fairly poorly and he did incredibly well. The brothers were then diverted from academia and put into trade schools, whereas my father got scholarships for private school and eventually got a degree in physics from Glasgow University. The brothers did very well working at a printing press and now lead fulfilled lives as proud tradesmen. My father went on to develop sonar equipment that called the Russians’ nuclear-submarine bluff and helped lead to the fall of communism. This was all thanks to the 11-plus system and it worked beautifully for over 30 years until 1976 when the egalitarians decided it was cruel to admit that some kids are simply not as smart as others.

Not only is this kind of thinking the stupidest. It’s stupidist. What’s the matter with not being smart? As Hemingway put it, “Happiness in intelligent people is the rarest thing I know.” Have you ever seen a genius at a water park? He’s miserable. The only time people with an IQ over 120 are really happy is when they’re at work. They’re basically our slaves. Dumb people ride ATVs with their sons, go bungee jumping, and laugh their heads off when somebody farts. Many of them are also rich.

Gavin McInnes, “A Nation of Working-Class Dropouts”, Taki’s Magazine, 2013-08-23.

November 7, 2013

Children and the early industrial revolution

Filed under: Britain, Business, History, Law — Tags: , , , , , — Nicholas @ 11:35

Wendy McElroy talks about the plight of poor children in the early days of the industrial revolution in Britain:

Parish workhouses existed in Britain long before the Industrial Revolution. In 1601, the Poor Relief Act paved the way for parish officials to collect property taxes to provide for the “deserving poor.” In 1723, the Workhouse Test Act was passed to prevent false claims of poverty. Any able-bodied person who wished to receive poor relief was expected to enter a workhouse; its harsh conditions would presumably act as a deterrent. About the same time as the Industrial Revolution (circa 1760-1840), attitudes toward the poor underwent their own revolution. The Napoleonic Wars (1803-1815) not only bled Britain of money; they also created a flood of injured and unemployable men who returned from battle. Those men had families who were plunged into poverty. Between 1795 and 1815 the tab for Britain’s poor relief quadrupled. Meanwhile, the cost of mere subsistence soared because of political machinations such as the Corn Laws, a series of trade laws that artificially preserved the high price of grains produced by British agriculture. Many people could not afford a slice of bread.

But sympathy for the poor was in short supply. Historian Gertrude Himmelfarb’s definitive book The Idea of Poverty chronicles the shift in attitude toward the poor during that period; it turned from compassion to condemnation. An 1832 government report basically divided the poor into two categories: the lazy who sucked up other people’s money and the industrious working poor who were self-supporting. The Poor Law Amendment Act of 1834 instructed parishes to establish “Poor Law Unions” with each union administering a workhouse that continued to act as a deterrent by ‘virtue’ of its miserable conditions. Correctly or not, statesman Benjamin Disraeli called the act an announcement that “poverty is a crime.”

Pauper children were virtually imprisoned in workhouses. And nearly every parish in Britain had a “stockpile” of abandoned workhouse children who were virtually sold to factories. Unlike parents, bureaucrats did not view poor children as loved or otherwise valuable human beings. They were interchangeable units whose presence was a glut on the market because there would always be another poor child born tomorrow. Private businessmen who shook hands with government did not have clean fingers, either. Factory owners could not force free-labor children to take dangerous, wretched jobs but workhouse children had no choice and so they experienced the deepest horrors of child labor. The horror was not because of the free market or capitalism; those forces, along with the family, were among the protectors of children. Child laborers were victims of government, bureaucracy and businessmen who used the law unscrupulously.

November 5, 2013

Just add lawyers and stir

Filed under: Business, Law, USA — Tags: , , , , — Nicholas @ 10:46

Coyote Blog on the problem with the latest anti-discrimination law:

In reality, this is how it works: Suddenly, as owner of the company, one finds a lawsuit or EEOC complain in his lap, generally with absolutely no warning. In the few cases we have seen in our company, the employee never told anyone in the company about the alleged harassment, never gave me or management a chance to fix it, despite very clear policies in our employee’s manuals that we don’t tolerate such behavior and outlining methods for getting help. There is nothing in EEO law that requires an employee to try to get the problem fixed via internal processes.

As a result, our company can be financially liable for allowing a discriminatory situation to exist that we could not have known about, because it happened in a one-on-one conversations and the alleged victim never reported it.

What I want is a reasonable chance to fix problems, get rid of bad supervisors, etc. A reasonable anti-discrimination law would say that companies have to have a grievance process with such and such specifications, and that no one may sue until they have exhausted the grievance process or when there is no conforming grievance process. If I don’t fix the problem and give the employee a safe work environment, then a suit is appropriate. The difference between this reasonable goal and the system we actually have is lawyers. Lawyers do not want the problem to be fixed. Lawyers want the problem to be as bad as possible and completely hidden from management so there is no chance it can be fixed before they can file a lucrative lawsuit.

QotD: Accumulated bureaucratic turkeys

Filed under: Bureaucracy, Government, Quotations — Tags: , — Nicholas @ 00:01

Anyone with family or friends in the civil service hears about the hours wasted on bureaucratic wrestling with the guy who spends his energy crafting strategies to get you to do his work. My favorite came from a doctor in a prestigious department at a state hospital whose secretary threw out most of his mail, including all of the invitations, because answering it was too much work. He ended up getting his wife to come into the office and act as his unpaid secretary, because firing or replacing the secretary was way too much trouble.

I am not slamming all civil servants as lazy lackwits; these stories come from good civil servants who are endlessly frustrated by the obstructive and destructive minority. Turkeys in government are like prizes on Wheel of Fortune: Once you win one, it’s yours to keep. They can’t be fired, and they rarely quit; the best you can do is wait for a chance to transfer them somewhere else.

Because of the Universal Law of Turkey Accretion, the quality and effectiveness of a government agency’s personnel are likely to peak very shortly after that agency is established. HHS has been around for a long time, and so has its IT staff. Which means it has more than a few turkeys. Or, as David Cutler put it in a 2010 memo to Larry Summers, “The agency is demoralized, the best people have left, IT services are antiquated, and there are fewer employees than in 1981, despite a much larger burden.”

Megan McArdle, “Get Rid of Obamacare’s Turkeys”, Bloomberg.com, 2013-11-04

November 2, 2013

ENDA as political theatre

Filed under: Business, Law, Politics, USA — Tags: , , , , , — Nicholas @ 09:41

Walter Olson explains why the proposed federal Employment Non-Discrimination Act (ENDA), even if passed, would not do much to help the people it’s supposedly designed to protect:

The U.S. Senate is expected to vote Monday on the Employment Non-Discrimination Act (ENDA), a bill to “prohibit employment discrimination on the basis of sexual orientation or gender identity” that’s been proposed in one form or another for nearly 40 years. It will be a symbolic vote at many different levels. First, the bill stands little chance of passage in the GOP-controlled House; the point of giving it prolonged attention now is more to inflict political damage on Republicans for resisting a popular measure than to get a bill on President Obama’s desk. Second, it seeks to ratify (and take political credit for) a social change that has already occurred through nearly all the country, including even very conservative locales. Most larger employers are now on record with policies against discriminating against gay employees, and even smaller employers without formal policies mostly hew to the same path in practice, for many good reasons that include not wanting to lose the talents of employees from any demographic.

ENDA is a less salient bill than it looks in a second way as well; statistics from the many states and municipalities that have passed similar bills (“mini-ENDAs”) indicate that they do not serve in practice as a basis for litigation as often as one might expect. This may arise from the simple circumstance that most employees with other options prefer to move on rather than sue when an employment relationship turns unsatisfactory, all the more so if suing might require rehashing details of their personal life in a grueling, protracted, and public process. The forbidden group categories that tend more to drive HR managers crazy are things like age, disability, and criminal record consideration, where the law regularly tries to forbid behavior that in fact is perfectly rational for employers to engage in.

On a level of sheer entertainment, the bill has certainly furnished more than one way for some conservatives and Republicans to make themselves appear ridiculous. Some GOP supporters in Congress, for example, seem to be tempted by ENDA as an “easy,” crowd-pleasing vote to show they’re not always on the anti-gay side. But consider the implication: lawmakers who take this path come across as willing to sacrifice the freedom of private actors — as libertarians recognize, every expansion of laws against private discrimination shrinks the freedom of association of the governed — even as they go to the mat to preserve disparate treatment by the government itself in the recognition of family relationships. Sorry, but that’s upside-down. A classical liberal stance can reasonably ask the government itself to behave neutrally among different citizens with their differing values and aspirations, but should not attempt to enforce neutrality on private citizens themselves.

October 26, 2013

Another theory on gender wage gaps

Filed under: Business, Economics, USA — Tags: , , , , — Nicholas @ 09:34

A guest-post at the Freakonomics blog by John List and Uri Gneezy looks at an experiment they conducted to test their theory about the gender wage gap:

Scholars have long theorized about the reasons why women haven’t made faster progress in breaking through the glass ceiling. Personally, we think that much of it boils down to this: men and women have different preferences for competitiveness, and at least part of the wage gaps we see are a result of men and women responding differently to incentives.

Being experimentalists, we understood that without actual evidence, this was just a conjecture. Determined to test our idea in the field we launched a large-scale field experiment on Craigslist where we posted ads for an administrative assistant gig we needed to fill. The experiment was conducted with Jeff Flory and Andreas Leibbrandt as coauthors. We received responses from nearly 7,000 interested job seekers from cities all over the U.S.

After a job seeker touched base with us, we gave them more details on the way they’d be compensated. Then we asked them to provide some basic information if they wanted to be considered for the position. Half the job seekers were told that the job paid a flat $15 per hour. The other half were told they would be paid $12 an hour but they would compete with a co-worker for a $6 per hour bonus (so that both ads would pay workers an average of $15 per hour).

What’d we find? Women were 70% less likely than men to go after the job if it had the competitive pay scale.

The blog post is called “A Unified Theory of Why Women Earn Less”, but I don’t think it actually qualifies — if the experiment was repeated in different markets, it might well explain some of the difference, but I suspect that women’s choices of jobs that provide greater flexibility in hours and the specific fields that draw more female than male workers are probably greater influences on the overall employment and compensation picture.

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