[geofft]

Misaligned incentives: the people doing interviews have such indirect financial incentive to hire the right people (only that a good/bad hire affects the company's profit, which affects their own salary/stock), almost no way of telling if they made a bad hire decision, and definitely no way of telling if they made a bad no-hire decision. Remember Alan Greenspan's story of finding a competitive advantage because everyone else was happy to ignore half the population in hiring. If you have no direct incentive aligned with the business's needs, then the incentive of "I will derive pleasure from the interview process" (whether it's having a fun conversation, or having a conversation that makes you feel powerful / more confident about yourself, or hiring in a way that reinforces your existing biases) is all that remains.

[airstrike]

> Alan Greenspan's story of finding a competitive advantage because everyone else was happy to ignore half the population in hiring

Maybe I'm living under a rock, but I've never heard of that. Would you mind sharing a link?

[geofft]

https://www.nytimes.com/1983/06/05/business/the-quiet-allure...

> Though David Rowe, a veteran architect of the Wharton forecasting model, has played a key role in developing the firm's econometric model, the senior staff, including Miss Eickhoff, Judith Mackey and Lucille Wu, is mostly female. Mr. Greenspan explains the gender bias with the free-market pragmatism that has become his hallmark: "I always valued men and women equally, and I found that because others did not, good women economists were cheaper than men. Hiring women does two things: It gives us better quality work for less money, and it raises the market value of women."

That is, just a few decades ago, the leading economic consulting firms in the world—economists!—were regularly overpaying men because they didn't want to hire equally capable women, such that Greenspan could find an obvious mispricing in the labor market.

Imagine how much more poorly people who are not economists and not owners of their firm must be making hiring decisions on much less blatant biases than gender.

[ALittleLight]

Isn't this admitting that he's underpaying women? Because if he paid them as much as he would pay a man then they wouldn't be cheaper.

[bloomer]

Well he is an economist so he is saying he is paying them the market rate which he believes to be underpriced relative to their intrinsic value. As an economist he would place the underpricing blame on society and the labor market. A similar situation would be if a company realizes it can get more value out of hiring junior developers cheaply over senior developers. An economist would also say they weren't underpaying the junior developers because no one else was willing to pay them more.

[geofft]

I think he's claiming his competitors are overpaying men by artificially pretending supply is half the size it actually is. Or looked at another way, the market value of men is determined by companies that hire everyone + companies that only hire men, but the market value of women is determined only by companies that hire everyone, so demand is lower. Either way, it's not "underpaying" relative to either intrinsic value or value in a fair (everyone is willing to hire everyone) market, which is most of the moral argument for why underpaying is bad. It's "underpaying" in the strict technical sense of paying less than what others are willing to pay men, but that only applies in the hypothetical where one single woman were being hired as if she were a man; if all women on the market were hired like men, supply would increase which would affect everyone's pay.

I think there are multiple solutions to a gender wage gap resulting from markets with irrational participants, and reducing the market value of the overpaid gender is a perfectly valid way to accomplish it. I think that's what he's doing.

[dasil003]

Correct. No one would say such a thing today, but a couple decades ago it was downright progressive.

[airstrike]

By hiring women he's reducing the supply of women in the market which presumably raises their value, but I do agree the more progressive approach would be to hire women for the value he would be willing to pay men

[geofft]

Note that he's not necessarily willing to pay men more - the reporter says the senior staff was "mostly female," not balanced. He might have just been willing to pay men and women the same salary, which was less than what other companies were willing to pay men.

[jldugger]

Not necessarily. He could be underpaying everyone. In which case, the degree to which women accept offers vs men would contribute to a systemic pay gap, without directly intending to.