Topic: Government and Politics

Gender Pay Gap: When You’ve Lost Slate…

White House speechwriters couldn’t resist sticking an applause line into President Obama’s State of the Union speech about how women supposedly earn only 77 cents to every dollar a man earns in America. Even more depressing, it drew some of the night’s biggest applause. But as almost everyone familiar with the numbers has had reason to know for years and years, it simply isn’t true. Most, if not all, of the gap melts away once you factor in variables such as hours worked, choice of occupation, and midcareer family interruption, among others. Hanna Rosin at Slate is the latest to set the record straight:

…The point here is not that there is no wage inequality. But by focusing our outrage into a tidy, misleading statistic we’ve missed the actual challenges. It would in fact be much simpler if the problem were rank sexism and all you had to do was enlighten the nation’s bosses or throw the Equal Pay Act at them. But the [more-accurate] 91 percent statistic suggests a much more complicated set of problems. Is it that women are choosing lower-paying professions or that our country values women’s professions less? And why do women work fewer hours? Is this all discrimination or, as economist Claudia Goldin likes to say, also a result of “rational choices” women make about how they want to conduct their lives.

All credit to well-known Washington journalist Hanna Rosin, a co-founder of Slate’s Double X, for writing a piece bound to displease some of her colleagues in the liberal commentariat. 

So Long And Thanks For All The Nannying

Rep. Henry Waxman (D-Calif.) has announced his retirement from the House of Representatives. Here’s an excerpt from my non-fan-letter from 2011, when he lost his longtime chairmanship of the Energy and Commerce Committee:

Some lawmakers can talk a decent game about lean ‘n’ smart regulation, but no one ever accused Waxman of having a light touch. (The 900-page Waxman-Markey environmental bill, mercifully killed by the Senate, included provisions letting Washington rewrite local building codes.) He’s known for aggressive micromanagement even of agencies run by putative allies: his staff has repeatedly twisted the ears of Obamanaut appointees to complain that their approach to regulation is too moderate and gradual. More than any other lawmaker on the Hill, he’s stood in the way of any meaningful reform of the 2008 CPSIA law, which piles impractical burdens on small makers of children’s products, thrift stores, bicycles and others.

Like his predecessor, Rep. John Dingell (D-Mich.), Waxman and his subcommittee chairs have famously used hearings as a club to discipline interest groups that don’t cooperate. Last spring he menaced large employers with hearings after several of them announced (contrary to some predictions) that ObamaCare was going to hurt their bottom lines. …

The committee was an unending source of ghastly new legislative proposals for regulatory manacles to be fastened on one or another sector of the economy, ideas that with any luck we may now be spared …. Thus it appears unlikely that the Republican-led committee will give its blessing to something called the Safe Cosmetics Act of 2010 (H.R. 5786), introduced by Reps. Ed Markey (D-Mass.), Jan Schakowsky (D-Ill.), and Tammy Baldwin (D-Wisc.), which – by mandating that all compounds found in personal-care items at any detectable level be expensively tested for and disclosed on labels – could have added tens of thousands of dollars of cost overhead to that little herbal-soap business your sister is trying to start in her garage. (Fragrance expert Robert Tisserand explains why most small personal-care product makers would not survive if the bill passed). Nor is it likely that the new leadership of chairman Fred Upton (R-Mich.) will be in a hurry to adopt Rep. Schakowsky’s H.R. 1408, the Inclusive Home Design Act, which would mandate handicap accessibility features in most new private homes.

(hat tip for title: Jonathan Blanks)

Minimum Wage Laws Kill Jobs

President Obama set the chattering classes abuzz after his unilateral announcement to raise the minimum wage for newly hired Federal contract workers. During his State of the Union address, he sang the praises for his action, saying that “It’s good for the economy; it’s good for America.[1] Yet this conclusion doesn’t pass the economic smell test; just look at the data from Europe.

There are seven European Union (EU) countries with no minimum wage (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden). If we compare the levels of unemployment in these countries with EU countries that impose a minimum wage, the results are clear – a minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%; whereas, the average unemployment rate in the seven nations without a minimum wage is about one third lower – at 7.9%.

Nobelist Milton Friedman said it best when he concluded that “The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by high minimums are the most poverty stricken.”[2]


[1] Barack Obama, State of the Union Address, New York Times, January 28, 2014.

[2] Milton Friedman, The Minimum Wage Rate, Who Really Pays? An Interview With Milton Friedman and Yale Brozen, 26-27 (Free Society Association ed. 1966), quoted in Keith B. Leffler, “Minimum Wages, Welfare, and Wealth Transfers to the Poor,”Journal of Law and Economics 21, no. 2 (October 1978): 345–58.

Farm Bill Spending Up 49 Percent

Under cover of SOTU media coverage, Congress is set to sneak through the first big farm bill since 2008. The Congressional Budget Office released its estimate of the bill’s cost: $956 billion over 2014-2023. It would thus mean almost $1 trillion more borrowed from U.S. and foreign creditors, adding more weight to the anchor pulling down the living standards of our children and grandchildren.

If you are a reporter, please don’t write that the farm bill “slashes” anything. Even according to the official score, it just trims $16.5 billion from expected spending of $956 billion over the decade, which is just 1.7 percent. The food stamp (“nutrition”) portion of the bill trims just $8 billion from expected spending of $756 billion, which is just 1.1 percent.

However, the 2014 farm bill is not a cut at all when compared to the 2008 farm bill, which was projected to cost $640 billion over 10 years. That is a 49 percent spending increase.  

Sure, the new bill shuffles the farm subsidy deck chairs, but the bill’s main budget attribute is that it ratifies the huge recent increase in food stamp spending. The House bill had proposed trimming a modest $39 billion (5 percent) from food stamps, but Republican leaders caved in and agreed to just a token 1 percent trim in the final bill.

Here are 10 reasons why the farm bill makes no sense.

Cato Scholars Respond to the 2014 State of the Union

Cato Institute scholars Alex Nowrasteh, Aaron Ross Powell, Trevor Burrus, Benjamin H. Friedman, Simon Lester, Neal McCluskey, Mark Calabria, Dan Mitchell, Justin Logan, Patrick J. Michaels, Walter Olson and Jim Harper respond to President Obama’s 2014 State of the Union Address.

Video produced by Caleb O. Brown, Austin Bragg and Lester Romero.

Live Blog of the 2014 State of the Union

President Obama on Tuesday laid out his plans for the upcoming year in his fifth annual State of the Union (SOTU) address. And, after a year dominated by budget battles, the NSA spying scandal, and the meltdown of Obamacare, the libertarian message is more relevant than ever.

Cato scholars live-blogged their reactions to what the president said—and what he left out.

Below is a video compilation of their response, followed by the transcript of the liveblog.
 

The State of the Union Is…Irrelevant

Kevin Williamson has your red-meat, small-r republican rant on the State of the Union over at NR. He’s right that the once-modest Annual Message has become as bloated and ridiculous as the presidency itself.   

Like Williamson, I used to fume and fume about our latter-day Speech from the Throne, but lately I’m no longer sure it’s worth the bother. For the speech to be worth getting worked up about, somebody would have to be listening. But as I point out in the Washington Examiner today, the polling and poli sci evidence suggest that POTUS is basically howling into the void: 

“There is overwhelming evidence that presidents, even ‘great communicators,’ rarely move the public in their direction,” writes George C. Edwards III, a presidential scholar at Texas A&M University. “Going public does not work.” In a 2013 analysis of SOTU polling, Gallup found that “most presidents have shown an average decrease in approval of one or more points between the last poll conducted before the State of the Union and the first one conducted afterward.”

(For more on that point, see Table 2.2 from Edwards’s book On Deaf Ears: The Limits of the Bully Pulpit or this review of the evidence by Ezra Klein) 

Nor does the president usually fare any better trying to use the SOTU to bend Congress to his will. As this Associated Press analysis puts it, the speech is “high volume, low yield” in terms of generating legislative action.  Contra TR, the bully pulpit isn’t so “bully.” 

None of that is to deny that the modern president has powers vastly greater than he was ever intended to have—or than one man should ever have. The danger isn’t his “power to persuade”: it’s what he can get away with under the “living Constitution” version of Article II: waging war worldwide, reshaping the law through “royal dispensations,”  taking care that his secret laws are faithfully executed. What he does matters; what he says in this stage-managed spectacle is the least of our worries. 

Many of us at Cato will watch and read the speech tonight because it’s sort of our job. If the spirit moves you, follow along on Twitter, hashtag #CatoSOTU. Otherwise, it seems to me that the late Justice Rehnquist had the right attitude

When asked why [he planned to skip the SOTU], he explained that it conflicted with a watercolor class at the YMCA. An incredulous law clerk said, “You can’t miss the State of Union Address for a watercolor class.” Rehnquist responded that he had spent $25 to enroll in the class, and he was going to get every benefit out of it.