Government wage differentials revisited

This paper updates studies done in the mid-1970s concerning the measurement of government wage differentials in the United States. Based on an analysis of two large micro data sets, we reached the following conclusions. First, as a group, government employees earned a small wage premium of approximately 2 to 3 percent during the 1970s and early 1980s. Second, the government wage premium was substantially higher for federal employees and for women employees. These findings are consistent with earlier studies. We thank Eanswythe Leicester and Ken Emery for their research assistance and Diane Kurtz for her clerical assistance.     

Anti-Discrimination vs. Anti-Poverty? A Comparison of Pay Equity and Living Wage Reforms

SUMMARY

Welfare reform focuses attention on the potential of pay equity and living wage strategies to move women out of the ranks of the working poor. In this study, we use data from a large municipality in the Northeast to simulate implementation of the two policies and compare their relative effectiveness in raising the earnings of female- and minority-dominated jobs, narrowing gender- and race-based earnings differentials, and lifting workers out of poverty. Results show that pay equity raises salaries across-the-board, but especially among low-skilled and minority-dominated jobs, and closes the wage gap. Both pay equity and living wage dramatically reduce the incidence of poverty; living wage, however, leaves virtually untouched the type of discrimination targeted by pay equity and has little impact on the wage gap. The implications of these results for addressing the needs of women transitioning off public assistance and wage justice are discussed. We conclude that both policies should be an integral part of welfare reform efforts, as well as key planks in an overall wage justice strategy.     

Understanding political pricing of labor services: The Davis-Bacon Act

Examples of divergence between the intended (stated) and actual consequences of government intervention in the marketplace abound. In this paper, two legislative attempts to specify wage rates on government contracts are analyzed. The Davis-Bacon Act has been successful in forcing government contractors to pay the prevailing union wage rate. In contrast, the Walsh-Healey Act has been ineffective in establishing minimum wage scales on most government contracts. Analysis indicates that the success of one and the failure of the other is due to differences in enforcement costs, special interest group support, the concentration of opposition, and the narrower scope of Davis-Bacon.     

Do employers pay efficiency wages? Evidence from Japan

Economists have long been interested in the seemingly cooperative nature of Japanese industrial relations. It has been hypothesized that information sharing in the wagesetting process has been used to promote efficiency. But have Japanese employers really paid efficiency wages, that is, can productivity gains be linked to pay raises? Efforts to test for efficiency wage setting face the problem of sorting out the extent to which pay influences labor productivity and vice versa. For the 1975–1997 sample period, we used an innovative statistical technique developed by Geweke to disentangle the linear association between pay and productivity growth. Efficiency wage behavior has not been the norm in Japan. Nevertheless, efficiency wage setting cannot be ruled out for some key areas of manufacturing.     

Promoting Gender Equality without a Gender Perspective: Problem Representations of Equal Pay in Finland

The current locus of promoting equal pay in Finland is the workplace. Legal instruments, like gender equality planning and its pay surveys, are to be implemented in workplaces. This development raises important questions about the central role of the local trade union representatives as promoters of equal pay. This article analyses how local trade union representatives construct the problem of unequal pay and their role in narrowing the gender pay gap and their possible agonistic adversaries in negotiations on equal pay. Different problem representations concerning equal pay are analysed and evaluated on the basis of their potential to fracture the gender‐blind wage bargaining culture and ability to cash in on the promises made towards narrowing the gender pay gap.     

A new evaluation of impacts of prevailing wage law repeal

A recent academic study claims that repeal of the Davis-Bacon Act, the federal prevailing wage law covering construction of public works, would cost more in lost taxes than could be recovered in lower construction expenditures and would also result in an increased number of construction injuries and deaths. Those claims are not supported by the facts. Indeed, the opposite is true. The facts support savings to the federal government from repeal of Davis-Bacon in excess of $1.5 billion annually, and, if anything, a lower rather than a higher frequency of construction injuries. Furthermore, states still having prevailing wage laws would also realize significant savings from repeal. Aggregate savings from eliminating all prevailing wage laws could exceed $4 billion a year. The author gratefully acknowledges the assistance of David Denholm, President, Public Service Research Council, and Derrick Max, Staff Economist, U.S. House of Representatives, in finding sources of data and helping structure this paper, and of Dr. Herbert R. Northrup, Professor Emeritus, University of Pennsylvania, for his guidance and advice.     

Paid family caregiving: a review of progress and policies

Policymakers in the United States have begun to examine solutions that encourage increased sharing of caregiving responsibilities between government and family. Initiatives in Sweden and the United Kingdom are now in place. Support includes a care leave policy implemented at the federal level, paying salaries to family members when caregiving is a regular job, providing job training to salaried caregivers when their personal caregiving experience ends, community-based programs for caregivers, and allowances to be used for providing care to an elderly person. In the United States, 13 states pay caregivers as Medicaid providers. Policymakers have considered tax incentives and, in 1975, U.S. Senate Bill 1161 was introduced but failed as an attempt to provide cash subsidies to families caring for the elderly. A proposal has been made to expand the Temporary Disability Model to include care of family members of all ages by providing adequate wage replacement to assist caregivers. At present, 34 states provide some type of economic support for caregivers. Research is needed to determine what types of programs are most acceptable and beneficial to caregivers as well as cost effective for government.     

AGENCY GROWTH, SALARIES AND THE PROTECTED BUREAUCRAT

In contrast to numerous assertions in the literature on bureaucratic behavior that government employees seek to promote the growth of their agencies to increase their salaries, this paper offers empirical evidence indicating the absence of a significant positive relationship between agency growth and salaries. The impact of agency growth on salaries is estimated using a random sample of individual federal white-collar employees. Inspection of civil service rules reveals that most federal employees are highly insulated from fluctuations in agency staffing or budget appropriations. The existence of a highly protected bureaucracy raises questions about the control and performance of federal workers.     

Incentive compensation in the public sector: Evidence and potential

Conclusions During much of the 20th century, the U.S. public sector underwent a conversion from a patronage to a civil service system of work and pay. Later in that century, a substantial proportion of public employees became unionized, with the consequence that pay (and other terms and conditions of employment) became less single-mindedly management determined and more collectively determined. Still later, fiscal crisis, the government re-invention movement, and broadened economic competition spurred governments to shift away from strict payment for time practices and adopt various incentive compensation initiatives based on the principle of pay-for-performance. That this is not the only pay principle operative in governments, however, is attested to by the existence of prevailing wage, minimum wage, and, most recently, living-wage statutes in many if not most governments.     

Union premiums in the federal and private sectors: Alternative evidence from job queues

Although traditional wage estimates indicate a larger union-nonunion differential in the private sector compared to that in the federal sector, the role of non-wage benefits is ignored in such comparisons. A job queue approach shows that premiums to unionized employment (in terms of both wage and non-wage benefits) are lower in the federal sector than in the private sector. This approach not only overcomes the limitations of wage studies in examining the relative superiority of union over nonunion jobs in both sectors, but also strengthens their conclusions through a more appropriate alternative method. The author thanks John Heywood, Neil Garston, Richard Roseman, and Miles Finney for helpful comments. I also thank the editor and the referee for extremely useful suggestions.     

A Reexamination of Card and Krueger's State-Level Study of the Minimum Wage

Card and Krueger's (1995) difference-in-difference study of the 1990-1991 federal minimum wage hikes compared states by the proportion of workers directly affected by the minimum wage. They found "no evidence that the increase in the minimum wage significantly lowered teenage employment rates more in highly affected states" and they concluded the minimum wage did not reduce employment. Their paper was highly influential and convinced many that the minimum wage did not reduce employment. However, when I apply their model to the 1996-1997 federal minimum wage hike, I find that increases in the minimum wage significantly lowered teenage employment rates more in highly affected states. Using Card and Krueger's interpretation, this implies the minimum wage did reduce teenage employment.     

The Labor Market Effects of Sex and Race Discrimination Laws

We study the effects of state sex and race discrimination laws that were passed prior to federal antidiscrimination legislation. State sex discrimination laws targeted discrimination in pay only. Because an equal pay constraint raises the relative price of female labor, we would expect the relative employment of females to decline. We find robust evidence that state equal pay laws for women reduced relative employment of both black women and white women. We also find some evidence of positive effects of race discrimination laws on earnings of blacks relative to whites, although no evidence of employment effects. (JEL J15 , J16 , J18 , J23 )     

Rural Policy and Direct Local Participation: Democracy,Inclusiveness, Collective Agency,and Locality‐Based Policy*

Abstract During the closing decades of the twentieth century, the federal government has experienced a period of delegitimation and fiscal crisis that has led to decentralization of some federal programs and a fledgling revival of community‐ and place‐based policies. These and other locality‐based policies are not new tools. The renewed interest in this type of policy raises questions about their effectiveness. Historic and recent records of locality‐based policies suggest that they are not panaceas for achieving programmatic goals. Three cases provide an empirical, comparative basis for assessing the liabilities of locality‐based policies: the Third New Deal efforts to institute county land‐use planning; Mexico's experiences with community forestry; and emerging grassroots ecosystem management movements in the western United States. Among other factors, the degree of local democracy and inclusiveness and the quality of local social, economic, and physical infrastructures are identified as important in mediating effective policy implementation.     

Rescaling the Sanctuary City: Police and Non‐Status Migrants in Ontario,Canada

Canadian cities pledge to provide access to municipal services to non‐status migrants and withhold information identifying non‐status migrants from federal immigration authorities. Despite these promises, local police continue to cooperate with the Canada Border Services Agency, which raises questions about the capacity of cities to honour their promises. An empirical study involved interviews with high‐ranking police officers in eight local jurisdictions in Ontario about police perceptions regarding their role in the enforcement of federal immigration law and their obligations to honour sanctuary‐city policies. The results show that many police officers believe they possess legal authority to report non‐status migrants to federal authorities. We suggest that this belief rests on misconceptions about the relationship between criminal law and immigration law, claims of jurisdictional immunity from municipal government, and distortions of the principles of policing in Canada. Rescaling of sanctuary policies to the provincial level may offer solutions.     

MINIMUM WAGES AND TIPPED SERVERS

Tips allow restaurants to pay servers lower wages. As more servers are hired, each serves fewer meals and earns less in tips. As a result, restaurants must pay a higher wage. This gives them monopsony power over wages. Over some range, a higher minimum wage should increase employment. Empirically, we found the full "reverse C" monopsony pattern of employment for restaurants, with employment first going up and then down as the minimum wage is increased.     

Intertwining Gender Inequalities and Gender‐neutral Legitimacy in Job Evaluation and Performance‐related Pay

This article analyses the intertwining inequalities in wage determination and the gender‐neutral legitimacy that pay systems provide by masking these inequalities. Job evaluation and performance‐related pay were originally designed for purposes other than promoting equal pay, namely as managerial tools for determining wage levels. Typically, the main objective of a pay system is not to promote equal pay. Still, as a tool for assessing the value of work, job evaluation is regarded as a central method in promoting equal pay. The use of job evaluation is recommended by the European Commission and the International Labour Organization, and often features in gender‐equality policy and legislation. In contrast with the status of job evaluation, little research exists on performance‐related pay and gender pay equity. The findings show that the wages determined by pay systems reflect gendered cultural valuations of jobs and occupations. Pay systems provide gender‐neutral legitimacy for gender‐based wage disparities.     

Unions and unequal pay: The establishment of the “family wage”

Equal pay laws in many OECD countries establish the right of men and women to equal pay for work of equal value. Nevertheless, during the first half of the 20th century, before the enactment of equal pay laws, employers and unions in several countries promoted unequal pay through “family wage” arrangements. This article seeks to improve understanding of the historical and sociological origins of “family wage” arrangements through both comparative research and in‐depth historical archival research on family wage arrangements in Israel. It shows that unions played a complex role in promoting family wage arrangements. While their action refected their patriarchal understanding of society, they were also guided by socialist principles.     

The employment effects of social security tax changes and minimum wage regulations: A case study of the American restaurant industry

Several recent changes in public policy in the United States have significantly affected labor market conditions in the restaurant industry. First, at the close of 1987, Congress passed legislation requiring employers to pay, for the first time, Social Security taxes (hereinafter FICA) on the tip incomes of restaurant employees. Second, after a long hiatus, there were two successive increases in the federal minimum wage law — one on April 1, 1990, and the second exactly one year later. This study attempts to measure the employment effects of these policy changes and, in the process, to illuminate how seemingly minor changes in public policy may have very substantial effects on markets.     

Wage Inequality and Performance in Nonprofit and For‐Profit Organizations

This article examines the effects of several forms of wage inequality on service quality and employee effort. We suggest that two popular theories, tournament and fair wage/equity, are not necessarily competing. Each theory accurately describes aspects of employee behavior, but because of sectoral differences in organizational objectives and employee attitudes, tournament theory's predictions are relatively stronger in the for‐profit sector, while fair wage/equity theory's predictions are relatively stronger in the nonprofit sector. Using an employer–employee matched data set of nursing homes linked to a federal regulatory database and a resident survey, we found that ownership moderates the relationship between wage inequality and service quality. Although wage inequality positively affects service quality in the for‐profit sector, the reverse is true among nonprofit organizations. We also found that overall wage inequality in the workplace has a more pronounced influence on employee discretionary effort than does the employee's place in the distribution of wages.     

Do ENDAs End Discrimination for Behaviorally Gay Men?

Twenty-two states have implemented state Employment Nondiscrimination Acts (ENDAs) making sexual orientation discrimination illegal, and Congress has repeatedly considered a federal ENDA. However, we know very little about the impact of existing ENDAs and the likely impact of future ENDAs. I describe the implementation of ENDAs and highlight their shortcomings relative to federal employment nondiscrimination law. Despite their shortcomings, I show that state ENDAs decrease wage differentials by roughly 20 % for behaviorally gay men. ENDAs appear to reduce this wage differential by reducing the portion of wage differentials typically associated with discrimination. These results inform a contemporary policy debate over the necessity and impact of expanded protection from discrimination for gay men. (JEL J1, J3, J7)