Monday, March 23, 2009

Desparate Times May Lead to Shameful Measures

Low employment was a tremendous problem during the Great Depression of the 1930s. That problem created an excuse for some shameful and ultimately regretted labor market policies, such as the barring of married women from some jobs. Reminders of this pattern are already starting to be seen in today’s recession: the Employ American Workers Act (a part of the stimulus bill) makes it difficult for companies helped by the federal bailout plan known as TARP to hire skilled immigrants.

Policies like these, and the discrimination that usually goes with them, are fueled by the mistaken theory that a job held by an immigrant is a job that cannot be held by an American. We will ultimately see the Employ American Workers Act as unjustified, just as we now regret the “marriage bars.”

The “marriage bar” is a discriminatory employment practice that was common years ago, even if it seems unfamiliar today. The marriage bar actually had a couple of versions: a “hire bar” in which a woman would not be hired if she were married, and a “retain bar” in which single female employees were fired when they married.

Professor Claudia Goldin’s book “Understanding the Gender Gap” explains some of the historical evidence showing that marriage bars proliferated during the Great Depression.

National Education Association surveys indicate that, as of 1928 (just before the Depression), 61 percent of school districts had a hire bar, and 52 percent had a retain bar. By 1942 (after the Depression), the percentages had increased to 87 and 70. Two office firm surveys indicate that school districts were not alone in putting these policies in place, and that the 1930s was a time of significant increase in their practice.

Today it is difficult to fully understand the historical origins of these practices, but we strongly suspect that “saving jobs” served as an excuse, especially during a time of low employment like the 1930s, because jobs were portrayed as a zero-sum game. A job held by a married woman, so the story goes, takes away a job from a head of household (that is, a man, or perhaps a single woman). Supposedly these bars would create jobs for heads of households.

The Census Bureau has measured the employment situation every year since the 1960s. The chart below uses that data to show how the “zero sum” theory was refuted by the subsequent history.

Among people aged 25-54 (25-54 are prime ages for working, before retirements of some cohort members) in 1967, 14 percent were women working full-time jobs throughout the year and 39 percent were men working full-time jobs throughout the year (the remaining 47 percent were men and women not working). By the year 2006, 26 percent of people in that age group were women with full-time jobs throughout the year.

According to the “zero sum” theory, male employment should have fallen to 27 percent of the people in that age group — each woman hired would represent a man not hired. In fact, by 2006 men working full time throughout the year were still 39 percent of people aged 25-54. That is, the labor market was able to absorb millions of women workers without losing jobs for men.

Thankfully, marriage bars are recognized today to be both politically and economically incorrect. But the “zero sum” theory still thrives in political rhetoric, as in “Take This Job and Ship It,” a book by Senator Byron L. Dorgan, which claims that every job created for our trading partners is one less job for Americans.

And as mentioned earlier, the theory has even found its way into the stimulus bill, now to oppose the hiring of skilled foreign-born workers. Perhaps that hiring might harm particular groups in the short run, but economics recognizes that on the whole international trade and migration create opportunities for Americans.

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