Kamala Harris’ Salami Socialism

 

One of the most frightening developments in the run-up to the 2020 presidential election is the Democratic flirtation with socialist ideals. One recent manifestation of this unfortunate trend is the recent proposal from Senator Kamala Harris (CA) to have a vast government takeover of employment markets in the name of gender equity. In an age in which the phrase “diversity and inclusion” is on the lips of every business and university, she announces, without a shred of evidence, her deep conviction that labor markets consistently and systematically discriminate against women by failing to offer them equal wages for equal work. Her purpose is to hold “corporations accountable for pay inequality in America.” How? Through “the most aggressive equal pay proposal in history.”

The proposal goes downhill from there. The first question that one has to ask is why competitive labor markets need any form of wage regulation to protect women in the first place. Sure, there are thousands of large corporations in America, but they are in constant competition with each other, along with every small firm in the market, to hire the best talent they can find. Harris starts out with misleading statistics that lament that women only earn 80 percent of what men earn, and then waxes even more indignant that the ratios are even worse for Latina women (53 percent), Native American women (58 percent), and African American women (61 percent). Clearly, any effort to accurately explain these outcomes requires an accounting, as she acknowledges in the fine print, for education, hours worked, job classification, years of experience, parental leave, and many more factors. Accounting for some of these factors—many others are hard to identify, observe, and measure—reduces that gap to around 6 percent at most.

If the gap tops out at that level, the question is whether this massively coercive gambit is worthwhile. It is exceedingly difficult to make these adjustments, and Harris’s proposal comes at a peculiarly inopportune moment. The hands-off policy of the Trump administration on domestic employment markets—in painful contrast with his meddlesome approach on international trade—has led to “screaming shortages” for skilled and unskilled workers alike. Employers are moving heaven and earth to offer not only wage and salary increases, but also a variety of perks to fill gaps in their labor force. Does Harris really believe that the forces of discrimination are so ingrained that firms, many of which are run by women, would reject or underpay women because of their desire to establish a male hierarchy that costs them both time and money? If there is some systematic and significant evidence of salary imbalance, she should demonstrate it rigorously before undertaking this massive regulatory initiative. Her use of uncorrected numbers is totally indefensible.

Yet note the extremes to which she is prepared to go. The current antidiscrimination law generally relies on private complaints to trigger unequal pay or employment discrimination investigations. In a booming market, most workers find it easier to switch jobs than to engage in costly litigation. Senator Harris fails to recognize that the low number of suits is a sign of healthy employment markets. Misreading the basic situation, she wants to reverse the traditional process by requiring all employers with over 100 employees to file annual reports to show that they have not engaged in any form of improper gender discrimination, with analysis broken down by race and ethnicity, under a set of regulations yet to be announced. She then tops that off by banning employers from asking about salary history, or using arbitration agreements, or stopping employees from freely discussing their pay. And she will impose this regime by executive order on all firms doing business with the government.

The implications are staggering for she posits a several thousand fold increase in government intervention. As the Wall Street Journal notes, there are over 100,000 firms with more than 100 employees. To make good on her administrative offensive, Harris has to address both ends of the labor market. Large firms have thousands of employees working in different locations at home and abroad. Of necessity, they have decentralized hiring decisions. How does anyone create a single index to measure gender discrimination? At the other end, detailed regulations will have to be adopted to determine whether mid-size firms that employ seasonal and part-time workers fall above or below the threshold line.

Unfortunately, she is oblivious to the inordinate demands of her proposal. She states: “To the extent pay disparities do exist for similar jobs, companies will be required to show the gap is based on merit, performance, or seniority—not gender.” Good luck with that. There is no easy definition of “similar,” “merit,” or “performance.” Studies of this sort require a detailed knowledge of the endless variations of industry custom and practice that goes far beyond basic job descriptions or company surveys. Nor ironically, is there any reason, given today’s already intense commitment to diversity and inclusion, to think that alleged discrimination cuts in favor of women and not men. Harris’s conceit is to think that anyone can, on a mass production basis, fine-tune her quixotic venture to justify a fine of one-percent of profits for each one-percent deviation from the ideal gender ratio. Based on 2018 net revenues, should Apple have to pay around $600 million in fines for each point it’s off? And what should be done with firms that operate at a loss, perhaps because of the high cost of compliance with her proposal?

Harris does not stop with an effort to commandeer every firm. She somehow thinks that the Equal Employment Opportunity Commission, the government agency that would oversee her proposal, will be sufficiently expert in its assessments of gender discrimination that it will be able to dispense advice to aid firms in their compliance efforts. She does not offer, of course, any estimate of the compliance costs that will be generated by this effort, but she is nonetheless confident enough to “estimate the plan will generate roughly $180 billion over 10 years, with revenue decreasing over time as strong equal pay practices become part of corporate culture.”

That number is just a wild guess, and the real tragedy would be if the EEOC’s draconian enforcement of the rules actually produced that amount of revenue. Permanent improvements in wages and salaries necessarily depend on increases in overall levels of investment. Harris’s proposal will take those dollars from private investment, which is bad enough, and put them into long-term public capital assets. This scheme is simply a transfer payment that will make it even easier for government agents to harass private firms, thereby inducing firms to shrink their operations.

The likely outcome, if this program should ever be implemented, is that we may well see some reduction in gender differences, with male wages declining more sharply than female wages. But the object of any reform should be to increase wages for women, without reducing those for men. Unfortunately, the only way to achieve perfect gender equality is by reducing wages for men and women. Yet somehow, Harris seems to think that her proposal will benefit families with two working spouses.

Why does this bizarre proposal have any kind of traction at all? The best guess is that candidates like Harris are emboldened by the ever greater fascination with socialism in key components on the Democratic left, led by Representative Alexandria Ocasio-Cortez. The hardline version of socialism calls for the collective ownership of the means of production, covering everything from airlines, banks, insurance companies, hospitals, and more. Such socialist programs always crash and burn because of two incurable defects: government corruption and government ignorance. State leaders siphon wealth off the top, and then badly invest what remains. As Jonathan Chait writes, this form of full-throated socialism remains deeply unpopular, garnering just about ten-percent of public support in its purest incarnation.

It is, therefore, a political necessity for the Democratic left to find ways to sugarcoat its efforts to exert government control, employing what I like to call salami socialism. Instead of asserting overt and total state control of the economy, progressives are finding ways to take over corporations one insidious step after another. Senator Harris is not the only practitioner of this time-honored practice. Senator Elizabeth Warren used the same technique in her ill-considered proposal to force all corporations with over a billion in assets to hold elections so that employees could name 40 percent of the directors of these corporations.

That proposal cuts deeply against core principles in corporate law. Directors owe fiduciary duties of loyalties, and they cannot be loyal to two sides whose interests are in conflict with each other, which is just what Warren’s plan proposes. Now just think of the negative synergies that would arise under the nightmare scenario where a Warren-style board of directors would have to devise a pay plan that meets a Harris-style EEOC diktat. Then pile on the other mandates being proposed in the progressive agenda dealing with climate change, education, health care, and unionization. Incrementally, private enterprises will become wards of the state.

© 2019 by the Board of Trustees of Leland Stanford Junior University

Published in Law, Politics
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There are 13 comments.

  1. Member

    Sounds like a full-employment proposal for all of the currently un-employable grievance studies graduates. Lord help us.

    • #1
    • June 3, 2019, at 2:42 PM PDT
    • 2 likes
  2. Coolidge

    It is a dumb idea and the worst form of virtue signaling. If I run a company every employee gets a unique job function code and unique job rating. I don’t even ask a person what their sex is. They get an “other”, because I am most woke.

    • #2
    • June 3, 2019, at 2:43 PM PDT
    • 1 like
  3. Coolidge

    Way back in 1994, some Talking Head on KPFZ, the lib public radio station, was lamenting that the hispanic portion of Calif’s population did not have 25% of the PhD’s, even though it was 25% of the population.

    This woman announcer suggested that immediately, universities that were part of the UC system should start issuing PhD’s to hispanics to help them catch up.

    The big problem with that analysis was that at that time, roughly 50% of all hispanics in The Golden State were under the age of 15.

    • #3
    • June 3, 2019, at 3:06 PM PDT
    • 2 likes
  4. Member

    Well explained post, because too many unfortunately don’t understand just how bad and destructive this proposal would be.

    What’s likely to happen is that most hiring will stop in all but the most desperate situations with new work being outsourced, or shifted to some new technological/robotic capital improvement option. That will happen in part because this proposal will only lead to more favoritism and victimhood for our aggrieved victim class which will lead to even more poor motivation for good work and in the end grossly unproductive new hires.

     It would also likely affect job advancement within a company because the new rules so damage the evaluation of meritorious work. Good work will come to mean nothing in terms of job advancement because victimhood factors will rule the day.

    I can only hope Trump rips her a new one for this seriously damaging proposal. 

    • #4
    • June 3, 2019, at 3:55 PM PDT
    • 3 likes
  5. Member

    Harris needs to get married, stay home and raise a couple of kids. 

    I’m a woman and if I owned a business, I would only hire men. Women are just too much trouble, and its getting worse.

    • #5
    • June 3, 2019, at 4:17 PM PDT
    • 3 likes
  6. Coolidge

    Ralphie (View Comment):

    Harris needs to get married, stay home and raise a couple of kids.

    I’m a woman and if I owned a business, I would only hire men. Women are just too much trouble, and its getting worse.

    I share those thoughts as well.

    • #6
    • June 3, 2019, at 4:28 PM PDT
    • 2 likes
  7. Thatcher

    It’s ironic the Dems who perpetuate the lie about women earning less than men pay their female staff significantly less themselves. It’s even more ironic that the Democrat female politicians are worse . . .

    • #7
    • June 4, 2019, at 6:36 AM PDT
    • Like
  8. Member

    Harris strikes me as less a “salami” socialist (?) than an empty suit. She’s trying to make up for her lack of knowledge/experience by latching onto goofy left wing ideas that she almost certainly hasn’t given 10 minutes of actual thought to. This is what happens when you’re fundamentally a demographics candidate. The irony is that being a demographics candidate…..she doesn’t need to pander to the crazies. I suppose she’s counting on the fact that no actual journalist will pose any of the tough questions you raised. If her answers to single payer questions are any indication…..she better hope they don’t.

    • #8
    • June 4, 2019, at 6:55 AM PDT
    • Like
  9. Member

    This is an example of how when Democrats say “socialism,” they aren’t talking about Soviet style socialism. They will give us something worse than that.

    • #9
    • June 4, 2019, at 7:20 AM PDT
    • 2 likes
  10. Member

    Part of the difficulty trying to challenge proposals such as Ms. Harris’ is that she has so many faulty premises and assumptions built in that an audience loses patience when we attempt to point out the defects. 

    To me the most glaring faulty premise is that employees are nothing but their job description and their demographic group. But each employee is a unique bundle of interests, desires, capabilities, and other factors that together bring to the employer a unique value not duplicated in any other employee. The employer has a hard enough time evaluating what combination of pay, benefits, and other features will attract and retain that employee when the employer and employee are dealing directly with each other. There is no way a government bureaucrat operating only on statistical data is going to be able to evaluate any better the individual situation of each employee.

    As I have noted other times here on Ricochet, in my professional career I made a lot less money than many others in the same profession because of choices I made: Relatively regularly scheduled work, rather than unpredictable schedules; greater vacation time; salary rather than more volatile pay or rather than the potential for more pay far in the future; environments and work assignments with less professional conflict; and many others. In addition, I do not have certain capabilities that are needed to enter the highest paid echelons of my profession.

    On the other hand, I made somewhat more than some others in my work department because I do have skills and capabilities that my employers found useful (for a while until the employer decided it could do without me altogether and laid me off); I was more willing and able than many of my colleagues to travel for business reasons; etc.

    We department managers had many long discussions at salary adjustment time about how to “fairly” distribute our salary budget among individual employees, having to compare and rank the employee who was outstanding when dealing with vendors, but couldn’t communicate well with our own company executives, versus the employee who did individual work very well but couldn’t get along with teams, versus the employee who did excellent work but needed frequent monitoring to ensure deadlines would be met, versus the employee who was willing to work many extra hours but sometimes didn’t seem to get anywhere during those hours, versus the employee who got a lot done during specific hours, but would not stay late if an emergency arose late in the day. In other words, each of those employees had his or her own capabilities and interests, and the employer department had its own interests of what it wanted out of those employees, and it was a constant balancing act to get the two balanced. Throwing a third party (government) bureaucrat into the mix does nothing but complicate an already difficult situation.

    • #10
    • June 4, 2019, at 12:43 PM PDT
    • 2 likes
  11. Member

    Full Size Tabby (View Comment):
    To me the most glaring faulty premise is that employees are nothing but their job description and their demographic group. But each employee is a unique bundle of interests, desires, capabilities, and other factors that together bring to the employer a unique value not duplicated in any other employee.

    Excellent comment!

    And one other thing. If there is a job with such a precise description that it is interchangeable with others and can be duplicated and assigned a salary level such that everyone with that description gets the same salary or wage, that is a job that is begging for automation and elimination. It has always mystified me as to why people want their jobs to be turned into commodities of that kind.

    • #11
    • June 4, 2019, at 1:34 PM PDT
    • 2 likes
  12. Member

    Full Size Tabby (View Comment):
    To me the most glaring faulty premise is that employees are nothing but their job description and their demographic group.

    I agree, and think the person defines the job, not the other way around for the most part.

    There are good and bad and average of every job: teachers, doctors, builders, mechanics, beauticians. Even though those are licensed professions, there is a wide gap of performance by each, and the evaluation of their performance is also subjective, which is shown by not only how successful they are, but that one person thinks a certain doctor is great, and another thinks the same doctor is terrible (“I wouldn’t take my dog to..”). 

     Also, some jobs appeal to different individuals and also groups. As a woman, I find the construction industry hard to be in just a little bit, or part time. I worked a job where we averaged a min. 45 hours a week, and only one week vacation in the summer (defined as between April and October) no matter how many years of seniority. I guess if you think a job should be the definitive goal in life, that contrary to early feminists concerns about women being able to have careers (Fay Weldon, who also said women should have lots of babies if they want them), not just jobs then Harris is your person.

    Primary school teaching is one of the most family friendly occupations, and I know it used to be heavy female employees. Sometimes there are intangible benefits to some occupations that are not quantifiable. 

    • #12
    • June 5, 2019, at 11:55 AM PDT
    • 2 likes
  13. Moderator

    Kamala Harris used to be a prosecutor. Without looking it up, I’d be wiling to bet a lunch at Burger King that she sent more men to prison than women. I would further be willing to bet a Margarita that if one calculated the length of prison time for the average male vs. female convict that she put away, you would find that the men are getting longer sentences. If these hunches are correct, it can only mean one thing. Since women and men are on average indistinguishable in their behavior, we must conclude that Kamala Harris is a sexist who enjoys locking up men to further the matriarchy. It’s the only possible explanation.

    • #13
    • June 5, 2019, at 7:37 PM PDT
    • 2 likes