Thursday, October 01, 2015

Another "sun tax"

Voting with feet is a core benefit of federal systems. People can choose exit over voice; the power of politicians to do nutty things is thereby checked.

But there is also the "sun tax".  This means that natural (and other) amenities draw labor and capital -- and weigh on the exit option; bad policies can not simply survive but also multiply.

A quick Google Scholar search turns up only a handful of relevant scholarly studies. But the idea is simple enough. West coast and New York City taxes and regulations are known to be in a league of their own -- and very unlikely in lower amenities places.

Today's WSJ includesSarah Ketterer's "The 'Wage Gap' Myth That Won't Die. ... You have to ignore many variables to think women are paid less than men. California is happy to try"  The op-ed cites various studies that test the obvious statistical controls that narrow the observable gap (career choices, college major choices, different hours, etc.). But here is the author's key point:
The Fair Pay Act will prohibit employers from paying men and women different wages for “substantially similar work.” ... The Bureau of Labor Statistics (BLS) notes that its analysis of wages by gender does “not control for many factors that can be significant in explaining earnings differences.” 
What factors? Start with hours worked. Full-time employment is technically defined as more than 35 hours. This raises an obvious problem: A simple side-by-side comparison of all men and all women includes people who work 35 hours a week, and others who work 45. Men are significantly more likely than women to work longer hours, according to the BLS. And if we compare only people who work 40 hours a week, BLS data show that women then earn on average 90 cents for every dollar earned by men.
So 35 hours worked vs. 45 hours worked are "substantially similar"? Sound like lawsuit heaven. This means litigation costs and diminished economic growth and opportunity.

But there is that California sun. Lawmakers get to take bows for being on the side of the angels. They can roll the dice with better odds that the California economy will somehow survive.