Freeman

IT JUST AIN'T SO

Female-Parent Wage Gap Requires Action?

Child-Rearing Has Opportunity Costs

SEPTEMBER 01, 2000 by KAREN Y. PALASEK

Sylvia Ann Hewlett’s New York Times article, “Have a Child, and Experience the Wage Gap” (May 16, 2000), presents itself as a summary of the detrimental effect that the choice to have children imposes on women’s wages. The author leads her readers through seemingly relevant data contrasting the dollar incomes of double-earner families with the price (exclusive of college tuition) of bringing children along to the age of 18.

We are told we must not forget the hidden costs of child-rearing, particularly for the mother. As if it isn’t bad enough that there already exists a gap between men’s and women’s wages, this children/no-children difference adds insult to injury. Even among women, those without children do better than those with kids, and the gap gets worse with each child. Conclusion: the policy Band-Aids that have been offered to working female parents are a welcome but pitifully inadequate remedy for the double disadvantage under which they struggle. The Clinton administration’s executive order banning discrimination in the federal workplace against working parents, according to the author, doesn’t go nearly far enough. Ms. Hewlett cites the work of economist Jane Waldfogel to lend authority to her argument for regulation of private-sector hiring of parents as well.

On the surface, Ms. Hewlett appears to be making a cogent argument. Assuming that the data are accurate, we are made vividly aware of the uneven wages among men, women, and women parents. As “hidden costs” Hewlett counts the difference between wages actually earned by women parents and those of their non-parent female counterparts. It isn’t clear whether Hewlett thinks that lack of paid leave, too-expensive daycare, and inflexible work hours are also “hidden costs,” or are just another target on her general list of gripes.

Child-rearing certainly involves hidden costs for women; these are better known to economists as opportunity costs. Discussing them intelligently requires understanding how they arise. They do so whenever we make choices: alternative courses of action have unique consequences. When we choose path A rather than path B, we get the consequences pursuant to path A, while the consequences associated with path B never come into existence. If we women choose to raise families, it is presumed that we get the consequences associated with that choice: large and somewhat unpredictable monetary obligations over an extended period (as opposed to paying off an automobile with a set price in a few years), significant and unpredictable demands on our time, and what Ms. Hewlett calls “hidden costs,” which are really path-dependent alternative consequences, that is, higher earnings, that fail to materialize.

To the extent that the “reduced” earnings Ms. Hewlett describes are the result of the normal time and money demands of raising children per se, they are not hidden at all, though they may be variable. They are simply theoretically higher earnings that never appear. That the ordinary obligations of child-rearing cut into the available time and attention that mothers have to devote to another job, and that the consequences of combining these choices reduces either the returns to the mother or the returns to the children, is perfectly logical. Who could reasonably expect to get the full results of being exclusively a mother or exclusively a career woman while in reality spending only part-time in at least one of these pursuits? That the choices we make do not give us the results of the choices we do not make should be no surprise.

The Effects of Policy

Ms. Hewlett, as an advocate for working mothers, confronts us with the low-earnings/high-cost theme over and over by scattering large quantities of unrelated data throughout her article. By the end of her piece, we are left with a collection of gripes and data on the responsibilities of child-rearing that by sheer volume must, I suppose, convince us that policy action is imperative. Do we really need a policy because, as the author alleges, kids expect preschool, braces, therapy, summer camp, and computer equipment? And do parents really need to be rescued by the state because they are rewarded for their sacrifices with mere hugs and kisses, while “the nation” allegedly gets all the real benefits? I suspect that what we really need is more mature adults—understanding that families can involve materially uncompensated sacrifices and tradeoffs.

As a corollary to the principle of hidden opportunity costs, we must pay attention to the effects of government policy choice on everyone in the community, not just on one group. Regardless of what we would like to believe or how we would prefer the world to operate, secondary and unintended consequences, sometimes long-run consequences, extend beyond working mothers. At the family level, the choices made by mothers impose some consequences on their children, whether the mothers work or stay at home. The author addresses only the mother’s opportunity costs and returns, ignoring those to the children.

At the national level, the author misses the opportunity-costs boat altogether. Exactly whose taxes should be increased to achieve the income parity with non-parenting women or men that Sylvia Hewlett would like to see achieved? It’s a sure bet that she doesn’t advocate wage parity via wage reductions for everyone else. Even regulating the private employer in the way she suggests will not affect most of the items on her list, like the high cost of braces and the lack of satisfaction parents get with “intangible rewards” of hugs and kisses. Whose wants and desires should we curtail by reducing their opportunities with higher taxes and regulations so that working moms can “have it all”?

Though steeped in data, it is important to recognize that “Have a Child, Experience the Wage Gap” presents merely the author’s value judgments dressed up like an economic calculation problem. Our values, not statistical evidence of some income disparity, should determine our policies. And knowing that more favorable legislation will make working moms better off doesn’t automatically justify changing a large number of third parties’ opportunity costs. The power of economic tools is in their ability to enlighten us. When misused as window dressing, or as substitutes for a forthright discussion of values and preferences, they serve only to confuse and misdirect.

—Karen Palasek
Adjunct Professor of Economics
Campbell University
Buies Creek, N.C.

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September 2000

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