‘ Equity’ shell game

Last

week, the Public Service Alliance

of Canada convinced the Canadian Human Rights Tribunal to pay Canada Post employees using “pay equity.” “ Equity” in this case means “ determined from above,” and so has much the same meaning as “democratic” in Democratic People’s Republic of Korea — the official name of North Korea. While “ pay equity” won’t make Canada a communist dictatorship, it will likely cause some of the economic dislocations that weakened and ultimately undermined centrally planned economies all over the world.

Pay equity uses a formula to determine an “equitable wage” for each job. The formula might be “equitable wage” equals A1 times “skill level needed” plus A2 times “effort exerted” plus A3 times “responsibility” plus A4 times “bad working conditions.” Since bona fide experts set each A carefully, surely no one can object. After all, the experts might even use statistical analysis. What could be simpler or less controversial than statistical analysis?

But how to determine the “skill level” a job requires? Simple: Use another formula! For example, “skill required” might equal B1 times “knowledge required” plus B2 times “interpersonal skills” plus B3 times “problem-solving skills” plus B4 times “judgment needed.” Now, you might think that this just pushes the problem back a step. After all, how do you pick B1 through B4? But once again, the simple solution is to hire an “expert.”

“ Wait a minute,” you might exclaim. “How do you know the “knowledge required” or “judgment needed” for a given job?” Well, one solution is to shrug and make up some numbers. More intrepid students of pay equity, or people spending government money, might come up with new formulas for each of these, and then more formulas for the inputs to those formulas. Again, what could be simpler? At each stage, an “expert” picks more numbers and thinks up more formulas. Nothing fishy here!

Although this might remind you of the Japanese Zen master, deep in meditation, whose obtuse student once asked “What supports the world?” The master intoned, “The world rests upon the back of a giant turtle.” The imperceptive student, unsatisfied, pressed on, “But what supports the turtle?” The master hissed, “ Another turtle!” The befuddled student pled, “But what holds up that turtle?” The Master shouted, “It’s turtles all the way down!” and smashed his begging bowl over the witless student’s head.

So it is with pay equity. At some point, somewhere, someone has to make up the formulas and numbers that determine the “ equitable wage” for each job. Changing these assumptions changes the “ equitable wage” for every job. If we let experts’ formulas set wages, choosing the As and Bs and all the other explicit and implicit assumptions necessary to gauge the “ judgment” or “ responsibility” needed for each job suddenly involves big bucks.

Representatives of every corporation, industry association, labour union and professional association would start taking politicians and bureaucrats out for expensive lunches to persuade them to raise B3 and lower A1, or to measure “ responsibility” a bit differently. The reason, of course, would be to get “truer” measures of “equitable wages.” That the change incidentally raised or lowered certain wages in ways that also benefited the lobbyist would be the purest happenstance. Ministers whose ridings or campaign contribution lists included people with certain kinds of jobs would, purely coincidentally, come to see formulas and assumptions that increased their “equitable wages” as not only wise, but essential to the national interest. Jobs concentrated in professions, ethnic groups or ridings that pigheadedly voted for opposition parties would be revealed, by pure coincidence, to merit lower “equitable wages.” New lobbying firms could set up in Ottawa to draw upon the expertise of newly retired government “pay equity formula setters” in drafting effective lobbying strategies for their clients. It’s hard to argue that this sort of thing wouldn’t ultimately cause worse messes than markets could ever match. But we have learned never to underestimate great orators and vested interests.

Regardless, it’s comforting to see Canadians better protected from the grubby morals of the marketplace. Just as Eastern European central planners decided that miners of sulphurous coal needed higher pay than nurses, our experts can determine that night watchmen (lots of responsibility) deserve more money than computer programmers (people skills optional). Just as young Eastern Europeans invested years in jobs their countries really didn’t need, so can young Canadians. And just as enticing people into all the wrong jobs weakened and ultimately devastated Eastern European economies, so might it be here. Ancient wisdom holds that money is the root of all evil. If “pay equity” takes hold, all Canadians, including those whose wages rise in the short run, will be much better protected from the root of all evil in the longer run.