Paycheck Fairness Act is anti-womens' employment

Scheduled to come to a vote in Congress tomorrow, the Paycheck Fairness Act is a bad solution to a statistically trumped-up problem.

The most frequently cited statistic is that women earn 77 cents for every dollar a man makes. However, not all of that gap can be attributed to discrimination.

The Bureau of Labor Statistics reports that comparing male and female full-time workers, men work more hours: 8.2 versus 7.8 hours per day, on average. Just assuming an exactly even hourly rate, we'd expect women to earn 95% of men's total on a yearly basis; however, there are also more women working part-time than men, widening the gap further. Men are also disproportionately likely to die from an injury on the job, as this chart shows.

Source: US Department of Labor, Bureau of Labor Statistics, Current Population Survey, and Census of Fatal Occupational Injuries, 2012.

But put aside those statistical details. A gap in male-female wages undoubtedly remains, and some of it is probably due to gender-bias and discrimination. What does the Paycheck Fairness Act do to fix that?

The Act would strengthen the Equal Pay Act of 1963, which already requires similar workers be paid the same. The new legislation would expand the damages that women can claim in court, and give women more tools to sue their employers if discrimination is suspected.

The new law would result in effectively unlimited liability for a business sued for giving unequal pay. Put yourself in the shoes of a small business owner. Suppose you are considering hiring either a male or female employee for an entry-level position. Suddenly knowing that your business could be shut down if a court decides your payment to the woman is unfair, who would you be more inclined to hire?

Let's think of another group that has been "protected" by sweeping federal legislation. Persons with physical disabilities are given additional tort resources by the Americans with Disabilities Act if it's found that they were treated unfairly. A paper by Acemoglu and Angrist (2001), using reliable econometric techniques, found that employment of disabled people dropped substantially following the ADA's passage. Now, twenty years later, physically disabled persons are unemployed at record levels.

There are obvious weaknesses in the analogy between the Paycheck Fairness Act and Americans with Disabilities Act - women are a larger segment of the population, and aren't physically limited from doing most jobs - but a lesson remains. Creating new protected classes of workers is not always to that group's overall benefit.

Even well-intentioned laws may end up punishing businesses for hiring certain workers, which hurts both individuals and the economy as a whole. The Paycheck Fairness Act is almost certainly dead in the water; even without passage, its political purpose will have been achieved. But, if President Obama and the Democrats want to show they are helping women, a first step is to not shut them out of the labor market.

One small victory for Privacy vs. GPS Trackers

The Supreme Court ruled today that a warrant is required for police to attach a GPS tracking device to a suspect's car. Previously, officers could use GPS to track a car's movements for suspicious activity, and then substantiate criminal charges using those findings.

Prosecutors justified this practice by saying it was no different from tailing or following a suspect. The Supreme Court disagreed, holding that

The Government’s attachment of the GPS device to the vehicle, and its use of that device to monitor the vehicle’s movements, constitutes a search under the Fourth Amendment.

It's a welcome victory for privacy rights advocates. After the controversial passage of the NDAA on Dec. 31, civil libertarians must have been hoping for some good news.

How much tangible impact will this decision have on criminal investigations? Probably a very small one. Police departments will have to pay more overtime for old-fashioned surveillance on suspects, instead of using a fancy GPS unit.

Alternately, wireless technology and smart-phones have provided even better ways for law enforcement to establish location. As the BBC article on this case concludes,

...the ruling is unlikely to have an impact on the use by law enforcement agencies of another surveillance method, mobile phone tracking software.

 Police, and executive agencies with support of the Obama Administration, have had no trouble requesting location data from iPhone or iPad services to aid in criminal prosecution. I'm no legal expert, but this Supreme Court decision might establish precedent for that practice to be challenged in court as well.

One subsidy I can get behind: Public Defenders

Interpreted at the most literal (or cynical) level, public defenders can seen as a subsidy for criminals because society pays for their legal fees. Of course, not everyone who is arrested is guilty of a crime, but if police are doing their job correctly, most people who are arrested will be guilty of something.

To quote a former police officer: "I don't want to put anyone that's innocent in jail. But, I try not to bring anyone into the interview room that's innocent."

Free legal counsel reduces the cost of being arrested, increasing the net "payoff" to a life of crime. In an anarcho-capitalist system (which some of my classmates at GMU think would be just swell) there'd be no public defenders, the accused would pay the cost of legal representation, and in theory this would provide an additional deterrent to criminal activity.

That's all very well and good, as far as it goes. Ideally, the criminal justice system should take criminals off the streets, and also deter potential criminals with the threat of punishment.

But, there's also a very serious negative externality to the justice system when it puts innocent people in jail. This takes several forms: harm to the person imprisoned and their family and friends, but also society as a whole. People in jail become burdens on the taxpayer and produce nothing (except maybe license plates). The justice system loses credibility when it convicts the innocent. Finally, for each person wrongfully imprisoned there is a criminal walking the streets with impunity, out committing more crimes.

Economists are often skeptical of externality justifications for government subsidies. But, I'd submit that the harm of imprisoning innocent people is so great, that money spent on public defenders is well worth it. Even if career criminals benefit slightly as well, that's a tradeoff worth making (80% of people in jail confess anyway, according to the police officer quoted above, so the harm of that cross-subsidy is pretty minimal in my view).

A last tidbit for thought: being convicted in a criminal trial requires evidence "beyond a reasonable doubt" which amounts to 98% or 99% certainty from a jury. There are a little over 2 million people incarcerated in the U.S. currently. If 99% certainty means being wrong 1% of the time, that's 20,000 people sitting in jail for crimes they didn't commit, at the minimum. Combined with the over-confidence effect (people are lousy at estimating confidence intervals around what they are certain of) it's likely to be much more. A tragic situation, and one which might be made even worse without access to public defenders.

How to live rent-free the rest of your life. OR, Five Big Mistakes Criminals Make During Police Interrogations.

 "...the technique of violence was first developed in 2 million B.C. by the australopithecines and tried by forthwith primates, who had no brains to speak of, but nonetheless invented the tomahawk and used it on each other. This practice led to the enlargement of the brain, another useful weapon. Yes, murder was invented even before man learned to think. Now, of course, man has become known as the 'thinking animal.'"
- spoken during the credits of Death Race 2000 (1975).

One of the reasons I love reality television is that it can make you feel like an expert in fields you have no personal knowledge or training in whatsoever. From watching many episodes of A&E's crime show, "The First 48" I feel pseudo-enlightened about the workings of the criminal justice system, and I'm here to share that almost-wisdom with you.

Laws against 'texting and driving' haven't made us any safer.

We've all seen it: alarming, dangerous driving behavior perpetrated while under the influence of cell phones. In response to this threat, many locales (including my home state of Washington) enacted bans on texting-while-driving. Has the menace of distracted drivers been curbed?

According to a USA Today article, traffic accidents have actually gone up in areas where anti-phone laws were enacted. To quote the most interesting part:

"Texting bans haven't reduced crashes at all," says Adrian Lund, president of the Insurance Institute for Highway Safety, whose research arm studied the effectiveness of the laws.

Statistical Fallacy #317: Holding Constant that which Changes. See: 'median household income'.

Alternately, 

"Torture numbers, and they'll confess to anything."*

  Our inquisitionist of the day hails from Bloomberg. In an article today, Venessa Wong wrote the following:

While many Americans dream of a windfall that will take care of their financial needs for life, the sobering reality is most of us are not getting far: U.S. Census Bureau data show median household income barely changed in the 10 years following 1998 as the price of housing and other goods increased. In consumer price index-adjusted dollars, the median household income in 2008 was $50,303, compared with $51,295 in 1998. [Emphasis added.]

 What's wrong with the above? In a fairly common maneuver to paint a doom-and-gloom image of the times, average household size is treated as a constant to compare incomes over time. That just isn't the case.

The problem with using 'median household income' as a measuring stick is that it's actually a factor of two other variables: combined income, and number of people per household. The latter aspect is conveniently overlooked by pessimists, who are looking to demonstrate a negative trend over time. When everything is considered, a different picture emerges.

Are minimum wage hikes the answer to recession?

The current economic downturn has caused belt tightening by businesses globally, and much of the hardship has been felt by low-paid workers. In response, many have called for a higher mandated minimum wage. From California and Minnesota to Azerbaijan and Nigeria (just in recent news) the issue has been a political hot-button.

In the economics literature, a consensus has not emerged on whether minimum wages cause unemployment. According to basic economic theory, any binding price floor (e.g. minimum wage laws) will cause a surplus of the good in question. In the labor market, that means unemployment. While politicians and pundits tout the benefits of "a living wage" or the difficulty of living off $8.25 an hour they conveniently ignore those unable to find work as a result. Until relatively recently, this trade-off was at least acknowledged. However, a study conducted by Card and Krueger, which found no impact on the fast food industry in Pennsylvania and New Jersey from a minimum wage increase, fueled a new round of optimism regarding higher price floors on wages. Is economic theory put on hold when discussing the labor market, or is this just too good to be true?

You can read my paper on minimum wages and unemployment here. By comparing state unemployment levels to their unemployment rates in 2008 while controlling for other job-related factors, a positive relationship between minimum wages and unemployment rates was found (it's a riveting read, I promise). It was presented at the SIRC on April 24, 2010.