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Column: Study of wage disparities far from simple undertaking

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Economist Gary Becker died last week. He was a professor at the University of Chicago and winner of the 1992 Nobel Prize in economics.

Becker was known for his vigorous inquiries into the economics of topics many economists would not touch.

He studied marriage and divorce, discrimination, crime and punishment, plus other real-world issues previously avoided by the profession.

Along with others, notably Armen Alchian of UCLA, Becker’s work became the backbone for the merged study of law and economics.

It was with thoughts of these economists in mind that I was disturbed to read Michael Hicks’ column (May 2, 2014), “Truth behind wage gap for men, women.”

Hicks, a prolific professor of economics at Ball State University in Muncie, writes about the important issues of our times.

His column opens with this seemingly innocuous sentence: “For the purposes of this column, let us assume that businesses attempt to maximize their profit.”

Whenever you hear or read those words, “let us assume,” you want to know what is being left out.

Via assumptions, economists often flatten the terrain with a logical steamroller, leaving the field without a stone of reality.

Ignored here are subconscious or explicit preferences of management in hiring, promoting and rewarding employees.

By assumption, we enter the fantasy world of perfect competition where only the workers’ contribution to profits counts. How management feels about working with diverse employees is crushed under the weight of an uncompromising pronouncement.

Hicks is quick to mention other factors related to why women earn 77 cents for every dollar earned by men. He specifically calls our attention to occupation, education, job tenure and experience. These four factors, he tells us, “explain almost all wage differences; gender, almost none.”

He discards the possibility of gender’s importance because he already included the four leading employment factors where men and women differ.

It is specifically because of gender that we find differences between men and women in occupation, education, job tenure and work experience.

Why have women traditionally been engaged in certain occupations, have different education experiences, held jobs for fewer years and had different sets of work experience?

Hicks informs us: “Apparently, women tend to give birth more frequently than men.”

Did he mean this as a profound observation or was it meant to be humorous?

Nowhere does Hicks suggest management may feel uncomfortable with workers who do not share the characteristics of the dominant group. Thus did Irish, Italian, Mexican, Chinese, African, Jewish, Catholic, Hindu, Muslim, male and female workers experience workplace discrimination.

Only recently have some employers embraced workforce diversity. Only recently have regulations, laws and court rulings attempted to address public and private barriers to increased opportunities for more inclusive occupations, education, job tenure and experience.

Those barriers will diminish as public policies are advanced by focusing attention on those persistent wage differentials.

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to letters@dailyjournal.net.

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