The Wage Gap Could Lead To A Cynical Profit Opportunity

Saturday’s New York Times carried an article “How to Attack the Gender Wage Gap? Speak Up”, pointing out that women earn only a fraction of what men are paid. The Times cites some numbers: “77 cents for white women; 69 cents for black women. The final dollar — so small that it can fit in a coin purse, represents 57 cents, for Latina women.”

While for the non-profit organisation described in the article this is seen as a problem, a profit-minded business owner might see this as an opportunity. Why not find an industry with mostly male employees, offer jobs at 57 per cent of the current wages in that industry, attract an all-Latina workforce, and crush the competition with labour costs that are a fraction of those in the rest of the industry?

It seems odd to me that this business strategy is never described by folks who decry wage disparities among groups. At a party the other night I met a young man who is in law school and hopes to, upon graduation, do “public interest” work. He cited the statistic that women get paid only 74 per cent of what men earn for exactly the same work. He said that he had gone to “socialist summer camp” as a child and still believed in most of the tenets that he had learned, e.g., that corporations are soulless profit-seeking machines who would destroy society in pursuit of the last dollar. He cited Walmart as an example of the worst possible enterprise. I asked “Couldn’t Target then destroy Walmart simply by hiring an all-female workforce and undercutting Walmart on costs? Consumers don’t usually check to see who works at a big box store before buying paper towels on sale.”

His explanation was that otherwise heartless capitalists are generous when it comes to men. In order to perpetuate the patriarchy they are happy to pay a 30-per cent premium in order to have a man in a job that a woman would do equally well at a lower wage. This seems potentially plausible for managers in government who can steal from taxpayers in order to indulge whatever favoritism they might wish to use in employment. It also seems potentially plausible for managers and board members at public companies who can steal from shareholders and pay people more than a market wage (see Bob Nardelli at Home Depot and Michael Eisner at Disney, for starters!). But it is tougher to explain why an individually-owned or family-owned business would do this. Would you steal from your children in order to pay a man $100,000 per year to do a job that a Latina would do for $57,000 per year?

[Separately, does this wage gap exist in other countries? Foxconn is frequently pilloried as among the world’s most evil enterprises, enslaving workers in order to fatten Apple’s profit margins by making iPads at the lowest possible cost. Yet this article says that about 65 per cent of Foxconn’s factory slaves are men. If women would do the work for less, why hasn’t Foxconn figured that out?]

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