Diversity VII: Red vs. green

In discussing the wage gap (the average difference in per-hour earnings of men and women), the main statement I see being brought up is “The fact that on average women earn less than men per hour is unfair towards women.” The general rebuttal is: “You have to look at the underlying reasons for that difference,” to which the response is: “You can talk about underlying reasons until you are blue in the mouth, but at the end of the day women earn less than men, which is unfair.”

The wage gap appears to be not unfair, however. It is the result of individual decisions which people make. The correct characterization of the wage gap is not “women earn less than men,” but “people who make choices A, B, and C earn less than people who make choices D, E, and F.” Because on average women tend to make life choices which give them less earning potential than men, on average women earn less than men — however, on an individual basis a woman who makes particular choices earns just as much as a man who makes the same choices (actually, there are indications that at present, especially in the younger generations, women earn a bit more than men with the same choices).

You do not have to believe me in this respect: you just have to study the reports of the official institutions which examine the differences between men and women in the job market, such as the reports of the Dutch Central Bureau of Statistics (CBS) and the United States Department of Labor, which point out that there are many clear reasons for the observed average differences in earnings, but that gender discrimination, if it even is one of them, has an unnoticeable effect. Thus, since it is not gender discrimination at work, the wage gap is not unfair.

Because all of this is rather abstract, I thought I would illustrate it with a highly simplified example. Imagine that there is a country called Bicoloria, where there live red and green people. There are only two industries in Bicoloria, which are of about equal size, namely a food industry which feeds the Bicolorians, and an art industry which provides the Bicolorians with entertainment. All Bicolorians work in one of these industries. The food industry, which has fairly unpleasant work circumstances, pays 200 credits per hour. The art industry, in which the work is much more pleasant, pays 150 credits per hour. The majority of red Bicolorians prefers the pleasant, artistic work in the art industry, while the majority of green Bicolorians is more interested in getting the high wages (and thus status) of the food industry. The net result is that 70% of the workers in the food industry are green, while 70% of the workers in the art industry are red.

Someone calculates that on average, a green Bicolorian earns 12% more than a red Bicolorian. “That’s unfair towards red Bicolorians!” is the outcry. Red Bicolorians say: “It is systemic oppression of the reds by the greens!” and “How are we going to explain to young reds that over the course of their lives they will earn significantly less than greens?” But is this 12% difference in earnings really unfair? Because reds have a preference for jobs that pay less per hour, and choose jobs that they prefer, on average they earn less per hour. However, an individual red who decides to work in the food industry, earns just as much as an individual green who works in the food industry.

Moreover, what would be the effect of trying to solve this illusion of injustice? I have heard several possibilities, all of which have very negative consequences. Here are three ideas (each of which I have derived from actual discussions on the wage gap, and some of which have been implemented by particular governments and industries):

Idea #1: Increase the salaries of all reds by 12%. While this will make sure that the average salaries of reds and greens are equal, in every industry reds will earn 12% more than greens for doing exactly the same work. That is unfair.

Idea #2: Stimulate reds to work more in the food industry, and greens to work more in the art industry. This can be implemented using social engineering programs, which try to push people in particular directions. Many of such programs have been tried out in Western countries (e.g., stimulating men to take part-time jobs, and stimulating women to go into STEM fields). If these programs have the desired effect, they will indeed erase the wage gap. However, in general, it is found that the effect of such programs is negligible, as long as people are still allowed to follow their own preferences. Naturally, they can be made more effective by actually forcing people in different fields than they prefer, which leads to an overall significant decrease in happiness. I assume that nobody thinks that a good policy encompasses giving up freedom of choice.

Idea #3: Equalize pay between jobs, i.e., let both the food industry and the art industry pay 175 credits per hour. Overall, the same amount will be spent on salaries, thus this can be implemented with higher taxation on food and giving subsidies to the art industry. Again, the initial result will be that the wage gap between reds and greens will be eradicated. This is a typical socialist or communist system, in which there is no link anymore between what you do and what you earn. The natural follow-up will be that most people will no longer want to work in the unpleasant food industry, as the higher salaries of the food industry were the compensation for the work being less pleasant. The net result, which is common to any socialist or communist system, is that people can no longer be free to take a job of their choosing, and that most people will not be motivated to do a good job anyway (as you do not get rewarded for doing a good job), leading to poverty, unhappiness, hunger, and corruption.

In summary, “solutions” to the wage gap either unfairly give bonuses to individuals of particular groups just because they belong to those groups, or take away freedom of choice. Both these directions are infringing upon the core Western values of equal treatment of all people and individual freedom for all people.

The wage gap is the result of a system which allows individuals, with their individual differences, to follow their own preferences in making life choices. It does not affect individuals; it is no more than a statistic which you can attach to a group. It is the necessary consequence of there being differences between preferences of the sexes in general and a beautiful system which honors individuality.

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