Letter to a Very Bright 11th Grader

by Don Boudreaux on September 24, 2012

in Man of System, Prices, Regulation, Seen and Unseen, Work

24 September 2012

Ms. Annie M__________
11th Grade
Southwest High School
Minneapolis, MN

Dear Ms. M____________:

Thanks so much for your e-mail and kind words about Cafe Hayek.  Russ Roberts and I are delighted that you and your family enjoy it.

Your teacher asks you to challenge me to give “one good reason why the law should not require that women be paid the same as men for the same work.”  I’m happy to oblige.  There are many good reasons, but I’ll here stick to one.

That one reason is that it’s practically impossible for government officials to determine when two jobs involve “the same work.”  What might look like the same work to outside observers – to government officials, lawyers, or even the workers themselves – might well be very different work.

Is the worker Mr. Smith more experienced than the worker Ms. Jones?  Is Mr. Smith less likely than is Ms. Jones to take time off of work to care for children or sick parents?  Is Mr. Smith less likely than is Ms. Jones to quit in order to move with a spouse to another city?  Is Mr. Smith a bit more helpful than is Ms. Jones with customers?  Is Mr. Smith slightly more willing than is Ms. Jones to stay on the job a few extra minutes after the workday officially ends in order to help with important unfinished business?

These questions – and many others like them – are important.  Yet in the real world no outside observer is in as good a position to answer them as is each individual employer.  Not that every employer always gets it right, but every employer does have strong incentives to get it right.  If an employer underpays a woman, some other firm can increase its profits by hiring her away at higher pay.

Suppose that the law your teacher endorses were applied to the market for women’s dresses.  Would that be good?  Your teacher – to be consistent – must answer “yes.”  After all, why should one dress that keeps its wearer clothed sell for a different price as another dress that does the “same work” – namely, keeps its wearer clothed?

Ask your teacher if she supports equal prices for equal-sized dresses.

If she replies that not all dresses of the same size are equal in value to one another, ask her – politely, of course – how she knows this fact to be true.  Ask her why market prices for dresses should be trusted as signals of the different qualities or ‘values’ of dresses, while market wages for human labor should not be trusted as signals of the different qualities or ‘values’ of workers.

Ask your teacher also if she would trust government officials to judge whether or not, say, a size 2 knee-length dress from Liz Claiborne provides services to its buyers that are “equal” to those supplied by a size 2 knee-length dress from Versace.  If, as I suspect, she feels uneasy about bureaucrats making such a determination about the relative value of dresses, ask her why she trusts bureaucrats to make the same sort of determination about the relative value of human labor.

(If she likes the idea of bureaucrats sitting in judgment on the appropriate prices of dresses, write to me again.  The conversation will then have to be much different.)

Good luck, Annie.  Let me know what happens.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

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