I attended the Association for Private Enterprise Education’s annual conference in Las Vegas earlier this week. One of the sessions I attended was titled “Improving Women’s Well-Being: Economic Freedom, Gender Ideologies, and Entrepreneurship.”
One of the presenters showed a slide on the federal Pregnancy Discrimination Act (PDA) of 1978 and said it had been expanded. economic freedom for women. I wrote him a note saying that, on the contrary, reduced economic freedom for women and employers. Later, when I passed her in the hallway, I pointed out that what’s more, a study by a Harvard economist revealed that the funding was being financed by married women of childbearing age.
Here is an elaboration of my points.
Economic freedom
Whenever the government interferes with contracts between employers and employees, it reduces the freedom of both parties. Take the PDA. We can certainly imagine a married woman who would like to have the freedom to contract with an employer who does not offer pregnancy benefits. For what? The most obvious reason is that she may not want to get pregnant. The benefit therefore seems worthless to her. But it’s worse than that. Even if the benefit has no value, there is a cost. There is nothing free and employers, if forced to offer this benefit, will find ways to reduce the pay (either in dollars or other benefits) of women, especially married women, by childbearing age.
Which brings us to the economic question: who pays?
Who pays for pregnancy discrimination law?
In June 1994, the American Economic Review published “The Incidence of Mandatory Maternity Benefits” by Jonathan Gruber, at the time an assistant professor of economics at Harvard University. What he was able to do was compare wage growth in states that had already mandated pregnancy benefits with growth in states that didn’t. He hypothesized that in states without mandates, the wages of married women of childbearing age would increase more slowly once the PDA took effect than in states that already had mandates. And that’s what he found.
He wrote:
The results consistently suggest a shift in mandate costs of around 100 percent, with little effect on net labor input.
In short, it is the women who are supposed to benefit from the mandate who pay.
BTW, Gruber and I were inspired by his research when we testified before Senator Ted Kennedy’s Senate Labor and Human Resources Committee, while the Hillarycare program was under consideration and on the verge of defeat before its defeat. Jonathan was invited by the Democratic majority; I was invited by the Republican minority, whose prominent member was Senator Nancy Kassebaum of Kansas. She was also the daughter of the 1936 Republican presidential candidate, Alf Landon.
The photo above is of me testifying before Kennedy and Kassebaum.
(Editor’s note: This episode of The Great Antidote with Kerianne Lawson on women and economic freedom This might also be interesting.)
