Regulation and bureaucracy increase wage gender gap?

by philg

A Harvard economics professor, Claudia Goldin, published a paper this year about how much of the difference between what American men and women earn on a per-hour basis may be due to the fact that women, on average, work fewer hours per week. (Harvard Magazine)

Goldin doesn’t delve into why employers would prefer a 60-hour/week worker to two 30-hour/week workers.

I’m wondering if one factor is government regulation and bureaucratic compliance costs. Consider the employee who works just 5 hours per week. All of his time is taken up by team meetings, required safety and diversity training, etc. The productivity of this employee is zero and therefore the value to the employer is zero (the cost, on the other hand, will be high, especially if the employer must provide health insurance). As companies get bigger to deal with the “go big or go home” business environment created by regulation there is more time spent on coordination among employees. As government adds more regulations, there is more time spent on informing employees regarding these regulations and complying with them.

Thus while politicians walk about wanting to reduce the difference in average compensation paid to men versus women (or at least people who identify as “men” and those who identify as “women”), I wonder if it is the government itself that accounts for a large part of the gap.

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4 thoughts on “Regulation and bureaucracy increase wage gender gap?”

  1. “Goldin doesn’t delve into why employers would prefer a 60-hour/week worker to two 30-hour/week workers.”

    The “Efficiency Begins at Home” chapter in Joseph Heath’s The Efficient Society discusses in some detail why part-time work is difficult.

    The Time Bind is based upon [Arlie Russell] Hochschild’s study of a large American corporation — referred to as “Amerco” to protect the anonymity of her sources — that was trying to create a workplace that would better accommodate employees with child-care responsibilities. … despite making a wide range of such programs available to its employees, rates of participation were abysmally low. Hochschild set out to discover how the following three facts could obtain: “First, Amerco’s workers declared on survey after survey that they were strained to the limit. Second, the company offered them policies that would allow them to cut back. Third, almost no one cut back.”

    … Upon investigation, Hochschild was able to quickly dismiss the standard explanations for these low participation rates. There was no correlation, for instance, between income level and participation rate, making it difficult to make the case that employees chose not to work part-time because they could not afford it. Hochschild also found that the policies were not just “window-dressing,” but that a good-faith effort had been made to implement them. And perhaps more importantly, the majority of employees believed that the company was making a good-faith effort.

    What Hochschild ultimately found was that most employees did not take advantage of the alternative work arrangements because it was not in their interest to do so. It’s one thing to go part-time when your job involves stacking boxes in a warehouse. Here you are clearly being paid an hour’s wage for an hour’s work. But this “market” model of the labour contract is clearly inapplicable to [many] jobs. In most corporations, employees do not exchange money for discrete units of time. They are paid to become members of a team. Their salary is paid in exchange for their cooperation — the willingness to place the firm’s interest above their own. Once this exchange is made, employees are expected to throw themselves into any project with all the energy and enthusiasm they can muster.

    If we think of employment as teamwork … then it is easy to see why part-time work is not a solution. The problem with teamwork is that it doesn’t allow for degrees. Either you’re in or you’re out. Either you’re there for the others or you’re not. To form a cohesive group, people need to know that they can rely on each other when the crunch comes. When someone chooses to work part-time, it sends all the wrong signals. It suggests that they are not “really” committed to the team, and that when push comes to shove, they can’t be relied upon.

  2. Interesting. In an earlier life at a bigco, I supervised work groups with regular (nominal 8 to 5) hours and others with rotating shifts. Attendance was much better in the rotating groups. I believe the cause was the work required all positions to be filled (similar to air traffic control or 911 operators) and the employees knew that if an individual was absent, the person who was not relieved would have to involuntarily stay on the job. This peer pressure was not as strong in the day shift groups, presumably because an absence could be covered by deferring some work or upping the normal pace temporarily (“the willingness to place the firm’s interest above their own”).

  3. “I’m wondering if one factor is government regulation and bureaucratic compliance costs. Consider the employee who works just 5 hours per week. All of his time is taken up by team meetings, required safety and diversity training, etc. ”

    This is one of your better observations. I’ve noticed this in the corporate workplace as well. You are actually expected to prioritize the bureaucratic bs and make sure you get that done first. This results in two types of work environments. In one the employees run ragged trying to complete the bureaucratic stuff and then do things that add value. In the other, typical but not limited to government employment, the expectation is to do only the standard 8-9 hours but that means only the make-work gets accomplished.

  4. Preference for one 60hr worker over two 30hr workers can be explained simply by the “load” for each employee.

    Phil mentions the minimum base rate time that each individual employee spends to maintain their status before being productive, but also: two employees eat two lunches, take double the numbers of breaks, occupy 2x the leased square footage, require twice the office furniture and computers, present double the number of internal customers for administrative support and management, double the social security contribution cap, twice the health insurance and other benefits costs…

    The rule of thumb for calculating an employee’s fully loaded cost is to double their FTE salary. By that math, two 30hr employees will cost a business 175% of one 40hr employee, and one 60hr employee will cost 125% of one 40hr employee.

    Too many assumptions in there of course: that the work is fungible enough to spread across employees without efficiency loss, some businesses can avoid providing benefits to non FTE, equipment reuse is possible in shift work. Also remember that some employer responsibilities only kick in at certain headcount levels.

    But in general, the larger the company and/or the higher the salaries involved, the more the employer would prefer 1×60 over 2×30.

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