Less women in the job market, better wages for men?

[Tolya]

I've heard it from my friends. Seriously, with a straight face. They said it. That was part of their opinion on why gender equality is wrong - that before "equal job opportunities" men earned enough to support themselves and their families, and that when women entered the job market, the families earn the same, but women have less time on their hands to devote themselves to their families and raise children.

Barring all the obvious bullshit, and the fact that if it weren't for those dreaded feminists, she wouldn't have gotten a university degree and become a well earning manager she is, I wonder where the hell such opinions come from? They are Christians (she is a baptist), so maybe that is part of the bullcrap they are fed with in their church?

[Purple]

Well I hate to say it but there is some truth to this. For a start you could perhaps make the argument that with less people total able to get a job you would get less competition per work place forcing employers to give out higher wages and stuff to attract workers. Now obviously this argument is flawed in many ways (more so in america than anywhere else) but you can try and make it. And if you do go from assuming it is right you can than make the argument that your friends did and actually be somewhat reasonable. Now I am not saying that I agree with any of it. But I can see the path logic takes to get there.

[Broomstick]

If you took women out of the labor force in many professions the number of workers would drop by 1/2, which would tend to drive up wages due to relative low availability. Of course, some other professions would be hardly affected and others would be decimated. And it would suck to be a single woman, or woman whose husband is too disabled to work.

Back in the day when respecting the employment was legal in my particular nation some of the discrepancy was writ into law - there were specific statues in some cases setting rate for women at a specified lower amount, and laws that actually prohibited women from entering certain professions. This means, so far as I can see, that even when gender discrimination was legal and widely practiced it still wasn't "natural" or sustained by the free market but had to be imposed. And on top of that, there have always been women who were head of households (de facto even if not legally) and who have had to work, so there was never really a time when there were NO women in the labor force.

In any case, just because a form of discrimination is advantageous to some does not make it right. Discarding talent and skill because the body it is in is regarded as wrong in modern society.

Yes, I do think religion plays into it - it seems I mostly hear this from conservative faiths even when their relevant Holy Writ contains no such prohibitions on women working.

[Tolya]

Yes, but halving the workforce does not mean that the rest gets their salaries doubled (and therefore, being able to suppport families all by themselves). Initially, with a higher demand for a worker, some wages might rise, but in the end, with less production capabilities, the overall economy will shrink. That's at least what my limited understanding of economy tells me. It would also drive a further wedge between the rich and the poor, because prices would go up due to higher demand and lower availability.

That's the scenario where women would be instantenously ejected from the job market. But really, what the argument was about, that the women entering the job market was detrimental to the families, since women should stay at home, cook dinner, raise kids. And the manly man should provide.

[spaceviking]

I think it is worth mentioning that, the idea that in the past women stayed home and did not work really only applies to middle and upper class families. Also a greater percentage of families were farmers, which was a whole family occupation

[Mr Bean]

It's also worth pointing out that in the past thirty five years as more and more women have entered the workforce our wages have been stagnate. Meaning the salary of my single parent mother is identical to the same new single parent today. Despite the fact that the cost of things has increased vastly with inflation and transportation costs. More women must work because more households need two incomes.

When a plant worker was working 40 hours a week making 33,000 per year in 1980 that was passable. Milk cost 1.50$ a galleon vs 2.50$ of today. A full tank of gas was 15$ rather than 50$ and lots of other things were .50 cents to two dollars cheaper. Even if inflation means certain items end up costing less today that only applies if your making more.

[Broomstick]

Wage stagnation combined with inflation may well be why so many women entered the work force, or at least one significant factor. With real wages (adjusted for inflation) stagnating or even decreasing in order for a household to get ahead (or just keep up) you need to have more wage earners.

So, in 1970 my father's $30,000 a year job comfortably supported a family of six, in the middle middle class or even the lower levels of upper middle class. These days? Barely adequate for two, hence why so many families have two adults attempting to earn wages. You'd need $100,000-120,000 a year, at least, to maintain the lifestyle my parents gave us growing up.

[ArmorPierce]

My non-researched opinion, production potential increased, yes, but the increased potential supply would need a increased demand. Assuming that demand was already mostly met prior from a single household income, a increase in income will not increase it 1 for 1 since there will not be much of an uptick in demand. So a increase in workers does not necessarily increase production, but the immediate effect of increased supply of workers probably would result in lower wages.

It is worth noting as Mr Bean has mentioned, as more women have entered the work force real wages have stagnated, and for black men it actually has fallen. Of course there probably are different factors at play.

[Broomstick]

Did wages start stagnating before or after large numbers of women entered the labor force starting around 1970?

Also, what effect did laws mandating equal pay for women and minorities have? (I am just old enough to remember when it was legal and customary to pay women and minorities less for the exact same work as that done by white men.)

[Mr Bean]

Did wages start stagnating before or after large numbers of women entered the labor force starting around 1970?

Wage growth slowed down under Carter due to inflation initially but did not flat line until the second year of Regan. A professional economist can point out the two hundred and six factors that caused wages to flat line. But the basic simple version is hard inflation under Carter wiped out all gains followed by Regan rule combined to flatline wages even as productivity gained year after year.

[Surlethe]

For wage stagnation, I don't think you have to look much further than the collapse of Bretton Woods and the end of capital controls. The basic story goes like this: factor-price equalization caused wages to flatline in the US (and other developed countries) as they skyrocketed in developing countries. Returns instead went to capital invested overseas. (All the other stories about union-busting and so forth are just variations on this one.)

Wage growth slowed down under Carter due to inflation initially but did not flat line until the second year of Regan. A professional economist can point out the two hundred and six factors that caused wages to flat line. But the basic simple version is hard inflation under Carter wiped out all gains followed by Regan rule combined to flatline wages even as productivity gained year after year.

No no NO. Do we need an inflation sticky or something? Inflation doesn't cause wage growth to slow or stop. Inflation doesn't wipe out gains in wages. Inflation is a rise in ALL prices, INCLUDING WAGES.

[K. A. Pital]

Inflation doesn't wipe out gains in wages.

Inflation does wipe out not only wage gains, but also all productivity gains, if unchecked. That's why we have an inflation-adjusted GDP measure after all. If inflation had no impact on this, nominal figures would be the only ones in use. Purchasing power of fixed wages falls, and COL adjustment a recent invention, including also making retroactive payments.

[Thanas]

Inflation can indirectly wipe out gains in wages if, for example, the increase in wage is only matching inflation or the wages do not rise at the same level during inflation.

[Mr Bean]

No no NO. Do we need an inflation sticky or something? Inflation doesn't cause wage growth to slow or stop. Inflation doesn't wipe out gains in wages. Inflation is a rise in ALL prices, INCLUDING WAGES.

No No NO, it is quite possible to go five years in this country with raises that don't go up as fast as inflation. Take government workers here in ohio who have not even got inflation adjusted pay raises the past four years in certain areas meaning every point of inflation growth is half a point lost in wage growth.

Don't take automatic pay raises as a given, this is America. Not even automatic to match inflation pay raises. Between pay freezes and contract workers it can be possible to earn the exact same salary for years with only minimal raises.

[His Divine Shadow]

Yeah it's possible for that to happen here as well, or to have raises that don't match inflation.

[aerius]

No no NO. Do we need an inflation sticky or something? Inflation doesn't cause wage growth to slow or stop. Inflation doesn't wipe out gains in wages. Inflation is a rise in ALL prices, INCLUDING WAGES.

Define inflation. Are you talking about monetary inflation, textbook inflation, CPI inflation, or actual real world inflation? If the former, what do you define as money? All of the above will give very different answers, and unless we know what the hell you mean when you say "inflation" we're just going to end up having another pointless discussion.

[Surlethe]

Inflation does wipe out not only wage gains, but also all productivity gains, if unchecked. That's why we have an inflation-adjusted GDP measure after all. If inflation had no impact on this, nominal figures would be the only ones in use. Purchasing power of fixed wages falls, and COL adjustment a recent invention, including also making retroactive payments.

I don't know what you're talking about in the bolded above. We have inflation-adjusted measures because we generally believe that part of increases in spending are caused by increases in the amount of stuff being made, and we want to be able to make measurements to test this belief. The purpose of defining inflation is to be able to define inflation-adjusted measures, to tease out how much an increase in spending is higher prices and how much is more stuff. Agreed that under an inflation, purchasing power of fixed nominal wages falls, but it doesn't matter that it's wages -- replace "wages" with "prices". That's got nothing to do with the point. In general COLAs are one way the labor market experiences inflation.

Inflation can indirectly wipe out gains in wages if, for example, the increase in wage is only matching inflation or the wages do not rise at the same level during inflation.

This is very precisely the misunderstanding I'm railing against. Inflation is an increase in ALL prices. What you describe -- wages not rising at the same rate as other prices -- is a change in the RELATIVE price of labor. The only way inflation is relevant to relative labor price changes is because sometimes people irrationally refuse to take nominal pay cuts, so under low inflation, this relative price change can manifest unemployment. In general, some level of inflation facilitates relative price changes, but underlying economic reality causes those relative price changes, not the change in the price level.

No No NO, it is quite possible to go five years in this country with raises that don't go up as fast as inflation. Take government workers here in ohio who have not even got inflation adjusted pay raises the past four years in certain areas meaning every point of inflation growth is half a point lost in wage growth.

Don't take automatic pay raises as a given, this is America. Not even automatic to match inflation pay raises. Between pay freezes and contract workers it can be possible to earn the exact same salary for years with only minimal raises.

You completely missed my point. Inflation is defined as a rise in all prices, i.e., the "price level." Wages are a price. Sometimes during inflation wages fall relative to other prices; sometimes during inflation wages rise relative to other prices (e.g. when FDR devalued in 1933). This is all irrelevant to the change in the GENERAL price level, except when, as I explained to Thanas above, higher inflation causes market pressures to result in price changes instead of throwing people out of jobs.

Define inflation. Are you talking about monetary inflation, textbook inflation, CPI inflation, or actual real world inflation? If the former, what do you define as money? All of the above will give very different answers, and unless we know what the hell you mean when you say "inflation" we're just going to end up having another pointless discussion.

Textbook inflation: Change in the price level. Economists' usual definition of inflation, the one that everybody should learn in 9th grade economics, and apparently nobody understands. Monetary inflation, CPI inflation, "real world inflation" (whatever that is), GDP deflator, core CPI, and so on are different measurements that try to quantify textbook inflation and certain causes of textbook inflation.

****

Let me put it like this. The price level measures something like the amount of spending divided by the total amount of stuff produced in the economy. Two things can happen to make the price level rise: an increase in the amount of spending or a decrease in production. Think about an individual good: its price rises because either demand rises or supply falls. In the aggregate, inflation is caused by a broad upward movement of demand curves across the economy, or a broad downward movement of supply curves across the economy.

What everybody intuitively thinks when they hear "inflation" is the latter, a fall in supply, which is usually accompanied by a relative decrease in purchasing power of wages, hence living standards: there's less stuff to go around, so you can't buy as much. But to conclude that inflation itself is causing the fall in living standards is a cum hoc fallacy. The inflation doesn't cause a fall in living standards; the increase in scarcity (---> fall in the relative price of labor) does.

[aerius]

Define inflation. Are you talking about monetary inflation, textbook inflation, CPI inflation, or actual real world inflation? If the former, what do you define as money? All of the above will give very different answers, and unless we know what the hell you mean when you say "inflation" we're just going to end up having another pointless discussion.

Textbook inflation: Change in the price level. Economists' usual definition of inflation, the one that everybody should learn in 9th grade economics, and apparently nobody understands. Monetary inflation, CPI inflation, "real world inflation" (whatever that is), GDP deflator, core CPI, and so on are different measurements that try to quantify textbook inflation and certain causes of textbook inflation

Well that takes care of step 1. Next: Does textbook inflation apply in the real world? And if it does, can you prove it? As in go to the St. Louis Fed and pull up the damn graphs.

[K. A. Pital]

In case of general inflation, Surlethe, when wages are rising at precisely the same pace as other prices, there are no "wage gains" to speak of - they are only nominal. When I was studying, the textbook definition of inflation was the reduction of the price of money - essentially inflation is simply money becoming cheaper and thus the purchasing power of money decreases. Wages, et cetera are tangential here. However, if wages are fixed (no increase in nominal wage), then a change of all other prices necessarily reduces the purchasing power of money, and with it that of the nominal wage as well.

Since each unit of money buys less and less with inflation, and inflation usually runs as a constant process other than steep decree "indexation" which is the only way for nominal wages to rise, it is obvious that inflation, in fact, does not operate in a similar fashion depending on the good or service. As labour is not a good or service that is traded on a stock exchange, the price of labour is not well-defined and, more yet, labour is usually paid by the month, which means it does not adjust to the rise of the price index as fast and as smoothly as other items can (many goods or services can experience, when necessary, 100-1000% increases in a matter of days, which is evident from studying disaster regions). That is simply not feasible with the price of labour, because is it quite inflexible and often determined by many factors other than the marginal product of labour. Cue the examples where setting wages at the margin would literally kill people as it would be well below subsistence.

That's the core point of my argument.

[Thanas]

Inflation can indirectly wipe out gains in wages if, for example, the increase in wage is only matching inflation or the wages do not rise at the same level during inflation.

This is very precisely the misunderstanding I'm railing against. Inflation is an increase in ALL prices. What you describe -- wages not rising at the same rate as other prices -- is a change in the RELATIVE price of labor. The only way inflation is relevant to relative labor price changes is because sometimes people irrationally refuse to take nominal pay cuts, so under low inflation, this relative price change can manifest unemployment. In general, some level of inflation facilitates relative price changes, but underlying economic reality causes those relative price changes, not the change in the price level.

Dude, over here inflation has pretty much meant a general rise in prices/relative loss of money since...well, since the German inflation crisis.

[Lord of the Abyss]

It seems to me that the sexism in the "less women in the job market, better wages for men" argument is the assumption that it has to be women who don't have jobs. "Fewer people working means better wages for those still working" would be a non-sexist version.

I'm reminded of what I've heard claimed about the aftermath of the Black Death in Europe; that commoners began to be treated and paid better afterwards because there was a labor shortage because so many had died. Except with people being unemployed instead of dead.

[Starglider]

I'm reminded of what I've heard claimed about the aftermath of the Black Death in Europe; that commoners began to be treated and paid better afterwards because there was a labor shortage because so many had died. Except with people being unemployed instead of dead.

That isn't comparable; a hard labor shortage pushes up the equilibrium price of labor. Unemployment is a surplus of labor that pulls down the equilibrium price. Even the reduction in US labor participation rate is only a soft shortage. Although that said once people go onto disability they are unlikely to ever come off it, so if the 'use disability benefits as substitute for long-term unemployment benefit' trend continues there may be a tangible permenant reduction in workforce.

[Broomstick]

Getting on to disability benefits in the US isn't as easy as people seem to think. Yes, there are some slam-dunk cases, but to counter that, my spouse has spina bifida, nerve damage to his left arm, and some other issues yet was unable to obtain disability benefits even after exhausting all appeals. Sure, anyone can apply for disability, only a minority of those ever actually get it. You have to be really fucked up, not just a little crippled up.

[Starglider]

Getting on to disability benefits in the US isn't as easy as people seem to think. Yes, there are some slam-dunk cases, but to counter that, my spouse has spina bifida, nerve damage to his left arm, and some other issues yet was unable to obtain disability benefits even after exhausting all appeals. Sure, anyone can apply for disability, only a minority of those ever actually get it. You have to be really fucked up, not just a little crippled up.

Annecdotes aside, statistically disability claims have been on a steady strong increase since the 2001 crash despite constant improvements in healthcare and workplace safety;



You can see an earlier surge in the early 90s recession, and yes this is a much stronger trend than you would expect from population aging.

[Broomstick]

Does that statistic take into account the fact that several millions of people of working age are no longer counted among the "workforce population"? I'm talking about the people who are able-bodied adults who, although unemployed, are not counted among the unemployed thereby driving the overall number of "the workforce population" downward? That could contribute to a rise in the percentage of people on disability vs. the "workforce population" alongside an actual increase in the disabled.

It's like the difference between the U3 and U6 numbers for unemployment in the US. The U3 is always lower because it defines "unemployed" more stringently, and is often 1/2 of a the U6 number. Likewise, do your statistics compare those on disbility against the entire population of working age people, or just those who are actually full time employees? Because those are significantly different numbers, at times these past few years they've differed by 40-50 million people.

Please do check on that then get back to us.

For a little extra help, the BLS estimates the US "workforce" at 155 million as of May of this year. It also says that the labor participation rate (the percentage of able-bodied people of working age actually working was only 63%, which is the level of the late 1970's when stay at home moms were much, much more common. So, in 2001, a higher percentage of the potential workforce membership was actually in the workforce. That means even if the rate of disability claim growth remained exactly the same it would SEEM to increase simply because the workforce participation percentage has declined since then. Until you allow/correct for that your source means little.