A new study copied here be published shortly. I obtained a copy of the paper after finding a Montana State University press release and requesting more information. Professors Wendy Stock, of Montana State University's Department of Agriculture, and David Neumark of Department of Economics at the University of California, Irvine, have looked at the effect of state civil rights laws before the rush of federal laws passed in the 1960s so that they could isolate the effects of pay equity laws from states that didn't have them. Here's a beginning synopsis:

This paper takes an alternative approach to the problem of inferring the effects of laws prohibiting sex and race discrimination to those taken in most previous research. In particular, prior to the enactment of the federal legislation, many states enacted similar laws or practices barring discrimination in wages (for women) and employment (for blacks, although those laws covered wage discrimination as well). Because these laws or practices were passed at different times in different states, a more natural control group is provided. Specifically, the quasi-experimental design afforded by the variation across time and over states allows us to assess the impact of state anti-discrimination statutes by constructing comparisons using data for the same time span from states that did not enact such statutes.

This approach makes sense, as the authors present the underlying reason to do the study:

A principal alternative view is that black economic progress simply reflects longer-term trends, perhaps obscured in some periods (and hence giving the impression of more rapid change in the 1960s and early 1970s) because of other changes. The latter view is put forth most forcefully by Smith and Welch (1989), who conclude that slowly evolving historical forces ... education and migration–were the primary determinants of long-term black economic improvement. At best affirmative action has marginally altered black wage gains around this long-term trend” (p. 519).viii A central reason for this view of the evidence is that relative black economic outcomes had been improving earlier, although this may have been partly masked by other changes. As an example, Margo (1995) and Goldin and Margo (1992) have documented the “Great Compression” of general wage inequality as well as black-white earnings differences from 1940 to 1950,ix and, as Margo asks, if anti-discrimination legislation played a strong role in racial wage convergence in the 1960s, “how did black workers manage such impressive relative wage gains in the 1940s, well before the modern civil rights movement bore its fruit?” (1995, p. 470).

Indeed, how did blacks and other minorities make gains before the advent of so-called "affirmative action?" A powerful question, since it implies an answer for how blacks would make progress following an era of preferential-affirmative action. Neumark and Stock continue though:

As we show in the bottom panel of columns (2) and (4) of Table 1, in the Census data that we use in this paper we find the same evidence of earnings gains for blacks relative to whites between 1960 and 1970. But we also see the sharper relative earnings improvement for blacks from 1940 to 1950. The table also shows gains in the relative employment of both black and white women from 1950 to 1960 as well as 1960 to 1970.

Amazingly, black and female gains were sharpest before large-scale adoption of equity laws.

So Neumark and Stock figure that if they study the handful of states that had already passed equity laws well-prior to the 60s federal laws (including Michigan, one of the earliest leaders in this area), that they can isolate the effects and draw some new conclusions. Their strategy is sound, as they summarize here:

This paper exploits cross-state variation in anti-discrimination legislation at the state level.

So what's the surprising result. Women lose ground for the first six years after equity laws are passed. Why - probably market anticipation and shifting to avoid consequences.

There is an immediate negative employment effect of sex discrimination laws, and the duration effects are statistically insignificant in almost every case. The evidence pointing to negative and significant effects of sex discrimination laws is consistent with such laws effectively raising the price of female labor and–absent laws regarding employment discrimination against women–leading to substitution away from female labor.xxx
Table 8 presents the earnings estimates, using the same set of specifications as in Table 7. For specifications 1-3, which capture the effects of equal pay laws with dummy variables, there is generally no statistically significant evidence of earnings effects, with one exception for specification 3. The results for specifications 4-6 are somewhat more interesting, providing evidence of an immediate negative effect of sex discrimination laws on women’s relative pay, but with a growing positive effect over time that offsets this. To fix ideas, in column (3) for specification 5–for white females relative to white males–the immediate reduction due to a sex discrimination law is approximately 1.5%, but the positive effect of the duration variable indicates that women’s earnings grow by 0.26% per year (note that the years variable is divided by 10), implying that after about six years women’s relative earnings are boosted, on net. Although the initial dip in earnings indicated by these estimates is somewhat puzzling, one could imagine that an initial response to equal pay laws is to reduce the number of women in jobs in which their pay can be easily compared to men’s pay. Nonetheless, as long as these laws boost women’s relative earnings in the longer run, we would expect the negative employment effects that we found in Table 7, and these may well predate the price changes as long as the price changes are anticipated.

With such surprising results, we might expect some backtracking and counter-interpretation of the results. The researchers live up to the career-protecting expectation, in this passage:

This does not imply that laws prohibiting wage discrimination based on sex do not on net help women, but rather emphasizes that such laws may impose tradeoffs between higher wages and lower employment. Such considerations may become increasingly important if there is some retrenchment of affirmative action in the United States, which would likely weaken policies combating employment discrimination and leave equal pay legislation as the stronger arm of federal anti-discrimination efforts.

The researchers did not respond to my two questions, and I invite them to if they are reading this. What lead them to believe that a "retrenchment of affirmative action" would "weaken policies combating employment discrimination"? As I've blogged recently, diversityInc dot com has written that the use of race preferences can be an automatic defense against traditional discrimination lawsuits. Eliminating preferential types of "affirmative action" therefore might strengthen pay equity and traditional discrimination law enforcement types of "affirmative action." The researchers do however admit that it would make equal pay laws the "stronger arm", and they also talk about the "tradeoffs" of each type of law and policy, so I believe they understand at least the policy. The second question I have is if such laws decrease relative earnings and employment for six years, and then they rebound, how fast do they rebound COMPARED to the normal growth that was occurring BEFORE the passage of the laws. That is, catching up after 6 years is only half the story since there would have been other growth in the meantime. And is the rate of growth on the rebound the same, faster, or slower than the other growth rate. If its slower or the same than the unaltered market rate, then such laws hurt everyone including women more than they help anyone. This is strictly an empirical question, and I doubt the scope of this research.

Regardless of the answer to the latter question, I believe that the pay equity and anti-discrimination laws are a moral imperative since they are implementations of government-neutrality between races and sexes. If government is to give legal recongition to contracts and corporations, and the benefits thereof that legal process, then government is obligated to respect only those contracts that are made regardless or race or gender. But preferential-types of "affirmative action" are different, and its appropriate we separate the terms properly.