An edited version of this article first appeared in the July 27, 1998 issue of The Halifax Daily News. If you wish to reproduce this article,click here for copyright info.
Pay Equity--Nonsense Upon Stilts
To appeal, or not to appeal? That is the question. Can federal government lawyers find enough errors of law in the Human Rights Tribunal’s multi-billion dollar pay equity ruling to justify another round in the courts against the federal civil service union?
The truth is, the government is failing to see the forest for the trees. The errors lie not in the minutiae of the tribunal’s decision, but in the basic principle of "pay equity" itself. The concept is balderdash.
This evaluation is not new. Economists have been saying so for at least 250 years. Adam Smith, lecturing to Scottish lawyers in 1750, explained why water, an extremely useful commodity that all humans need to survive, could be purchased more cheaply than diamonds, a commodity that most people could get along without:
"It is only on account of the plenty of water that it is so cheap as to be got for the lifting, and on account of the scarcity of diamonds...that they are so dear."
In other words, the value of a commodity--whether water, diamonds or an individual’s labour--is determined by supply and demand. All other factors--perceived usefulness, the exertion involved in producing it, its beauty or lack thereof and so on--are in themselves irrelevant, unless they somehow affect the quantity supplied or demanded.
Ignoring the wisdom accumulated over centuries, the Canadian Human Rights Act attempts to explain the value of human labour in a manner totally divorced from reality and causation. It states: "In assessing the value of work performed...the criterion to be applied is the composite of the skill, effort and responsibility required in the performance of the work and the conditions under which the work is performed."
Consider the logical implications of this policy if imposed throughout the economy. A poor typist should get paid more than a good typist, because she expends greater effort to obtain the same product. A gardener with hayfever should get paid more than one without, because the working conditions are more onerous to him. A farmer who uses a horse-drawn plough should get paid more for his crop than his neighbour who uses a gas-powered plough.
Everyone would have an incentive to choose the work for which he is least suited, and do it in the most difficult manner possible. Labour-saving devices would be abhorred—they’d reduce the "value" of one’s work.
Nonsense upon stilts.
The factors of skill, effort, responsibility and working conditions are already taken into account before supply and demand kick in to determine the price of labour.
All of us, in considering whether to pursue a particular job, ask ourselves whether we have or wish to acquire the necessary skill, are willing to put forward the effort, want to accept the responsibility and find the working conditions acceptable. We throw those four factors into the scales, along with the salary being offered, and we weigh them.
Our unique personalities and circumstances dictate that each person will evaluate a job differently. Some will revel in exercising a high level of responsibility; others will shrink from the stress involved. Some will love outdoor work; others will hate it. Some will gladly spend years training for a position; others won’t. Some will find a particular task easy; others, difficult. Some will consider the pay generous, given the other factors in the equation; others will consider it inadequate.
The labour supply for any particular job is the product of these various factors being sifted and weighed by myriad individuals, each with different preferences. Pay equity bureaucrats can also weigh these factors, but their conclusions will necessarily reflect only their own unique partialities, not the choices of all the individuals who constitute the labour market for that job.
There is no logical or moral reason to adopt some pay equity bureaucrat’s conclusion that the pros and cons of a particular job demand a higher salary, when plenty of individuals have demonstrated, by accepting the job at the existing salary, that for them the factors weighed in differently.
Traditional "women’s work"--child care, homemaking, nursing home aide, clerical worker, etc.--pays poorly because supply is high. There are scads of people able and willing to perform those tasks, even at low wages. Raising the wages will simply cause even more people to desire those jobs. But the number of jobs won’t increase. In fact, it will decrease, as employers look for other ways to rebalance their total wage bill. Result? A few overpaid workers with jobs, and a surplus of would-be workers without jobs.
Ignoring supply and demand has caused the downfall of many socialist economies. Try as they might, governments cannot repeal the laws of economics. However, Canada could, and it should, repeal the archaic and destructive provisions of the Canadian Human Rights Act.
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