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January 24, 2023

Mandating a Bigger Gender Pay Gap

As it turns out, government has hurt women in the workplace instead of helping them.

Women have always been a portion of the labor force, though their presence was once generally restricted to certain occupations such as teacher, nurse, or secretarial jobs. That has expanded in the last few decades to working at practically every task men do. We see women now as engineers, truck drivers, construction workers, and even minor league baseball managers.

As women filtered into these formerly male-dominated fields, we began to hear a cry from leftists about the gender wage gap. For years their argument has been that women made 77 cents for every dollar made by a man, and even though their contention has been debunked by real events, Democrats routinely use this so-called gap as a talking point. Biden administration members even used the argument until it was found that they have a gender pay gap of their own.

Even so, the key reason was expressed a few months back by our Thomas Gallatin: “When the ‘gender pay gap’ claim is actually researched, it becomes clear that the gender discrepancy within the average pay rate between men and women overall has very little to do with sexism and much more to do with individual choice. In general, men and women value different things when it comes to career goals.” One of those detours for women is to stop or slow their climb up the corporate ladder by bearing and raising children, and new research suggests that a popular government perk may be exacerbating the gap.

Indeed, we’re bringing this up because we have fresh research on the subject. In her analysis of a new working paper from the National Bureau of Economic Research, The Heritage Foundation’s Rachel Greszler shares several conclusions regarding the wage gap. The most important one for this narrative is the study authors’ contention that the passage of family and medical leave in the early 1990s drastically slowed the closing of the wage gap.

Research in the NBER paper contends the gap in wages, which was closing at a rate of 0.7% a year for white women and 0.5% for black women prior to the adoption of family and medical leave laws at both a state and federal level, slowed to a pace of 0.03% and 0.05%, respectively. More importantly, the NBER authors estimated, “If gender wage convergence had continued at the pre-family leave rate, wage parity between white women and white men would have been achieved as early as 2017.”

For her part, Greszler adds a crucial point to the argument: “Employer-provided paid family leave programs can always be more flexible and responsive to the needs of employees than one-size-fits-all government programs that must establish strict rules, rigid eligibility criteria, and immovable benefits.” Everyone’s situation is different, but employers also have other factors to deal with while a parent is away, particularly who does her (or, in some cases, his) job. Moreover, while the federal FMLA regulations do not require paid leave (yet), laws in effect in a growing number of states are mandating employers grant paid leave. Eight states and the District of Columbia already have paid medical leave, with three additional states beginning the payroll withholding and employer contributions this year for future benefits. For companies in affected states, this is another overhead expense for them to deal with in an inflationary era.

While many thousands of women have taken advantage of medical leave to spend a little time with their growing families, the rest of the women in the workforce have had their progress slowed down because of these federal and state mandates. Additionally, employers who may have had their own generous programs have had to shelve or revise them in favor of one mandated by government. “As has already happened in states that have government paid-leave programs,” writes Greszler, “employers that do provide their own programs will typically require their workers to first jump through hoops to get what they can from the government program before they can receive their employer’s benefits.”

It’s another case where government could have left well enough alone and workers would have been better off. Except politicians tend to operate by the “demotivational” poster that says, “If you’re not a part of the solution, there’s good money to be made in prolonging the problem.”

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