Should The Government Force Companies To Promote Women?
A new law would require companies to maintain a minimum amount of women on their corporate boards. Many argue that discrimination is keeping women out of STEM fields while others argue that men are just more interested or more likely to take these jobs. Regardless of why, California has passed a bill mandating companies promote and hire women to their boards. Is this just social justice gone too far or are women really being held back by discrimination that a feminist push could alleviate? Was this the right move or will it just make things worse?
Support the show (http://timcast.com/donate)
Learn more about your ad choices. Visit megaphone.fm/adchoices
A new bill has been passed in the Senate and the Assembly in California, and currently only needs to be signed by Governor Jerry Brown to become law.
This law would require companies to have a minimum amount of women on their board.
The logic being, companies with women on their board tend to do better in a lot of different ways, and by having women on the board, you will show them within the company that there is an opportunity for growth, essentially that the glass ceiling has been broken.
But there is criticism.
Some investors, even women, are saying this will turn women into quota hires.
It will make people doubt their actual ability.
Others say that by policing for outcome, you'll require companies to lower their standard and find people who are less qualified to simply fulfill their obligation under the law.
But there are people who believe this is the right move, because the only reason they think that women aren't on the board is because these companies have a boys club, that men are essentially keeping women out because it's sexist.
But there is evidence to suggest that isn't the case.
There's some studies on the greater male variability hypothesis, which suggests that there are just more male geniuses, and we can look at that.
But some people say, look, it's already illegal to discriminate against women.
So naturally, these companies aren't keeping women out on purpose.
They're just finding the best candidates who happen to be men.
But let's take a look at the story and break down what people are actually saying, why they think this law is a good idea, and why people think this law is a bad idea.
From Recode, a new California law, if passed.
Could force companies like Facebook, Tesla, and Alphabet to add more women to their boards.
It's up to Governor Jerry Brown.
Bill SB 826, which passed California State Congress a few weeks ago, and is now on Jerry Brown's desk, would require all public companies with principal executive offices in the state To have a minimum number of women on their boards proportionate to the total number of board members within the next few years.
For some major tech companies including Alphabet, Facebook, Intel, Snap, Apple, Tesla, and Yelp, this means that they'll have to add at least one more female board member by 2021 to meet the bill's quota.
It requires boards with 5 members to have at least 2 women, and boards with 6 or more members to include at least 3.
The bill comes amid growing criticism of the lack of gender diversity in tech and other industries, where at publicly traded companies in the past five years, the percentage of women on boards has only seen single-digit growth, according to data from executive research Equilar.
The glass ceiling in the C-suite is notorious, and this bill calls upon companies to open up their boardrooms.
State Senator Hannah Beth Jackson, a Democrat who co-authored the bill, told Recode, Jackson sponsored a non-binding resolution urging companies to add more women to their boards back in 2013, but says most companies ignored the request and have really not moved the needle at all on the issue.
If companies are found breaking the rule, they will be fined $100,000 initially and $300,000 for subsequent violations.
That's not enough to make a dent in the pocketbook of a company like Alphabet, but it is likely to make a statement.
Recode includes this chart showing the percentage of female board members, and it says that the highlighted companies would have to hire more women.
We can see that Apple, Yelp, Facebook, Snap, Tesla, Intel, and Alphabet would be required to hire more women.
According to legislature.ca.gov, the bill passed in the Assembly on the 29th and in the Senate on the 30th, and they provide reasons as to why they want this law to be enforced.
They say that more women directors serving on boards of directors of publicly held corporations will boost the California economy, improve opportunities for women in the workplace, and protect California taxpayers, shareholders, and retirees, including retired California state employees and teachers whose pensions are managed by CalPERS and CalSTRS.
Yet studies predict that it will take 40 or 50 years to achieve gender parity if something is not done proactively.
The bill lists the results of several studies.
A study in 2017 by MSCI, a study in 2014 by Credit Suisse, and a study from 2012 from the University of California at Berkeley.
And all of these showed that companies with women on their boards do better in a variety of ways, they say.
There has been a greater correlation between stock performance and the presence of women on a board since the financial crisis of 2008.
Companies with women on their boards of directors significantly outperformed others when the recession occurred.
Companies with women on their boards tend to be somewhat risk-averse and carry less debt on average.
Net income growth for companies with women on their boards averaged 14% over a six-year period, compared with 10% for companies with no women directors.
They actually list a ton of different results showing why this will be a good idea.
But there is still some criticism.
From the Recode story, tech investor and diversity advocate Freda Kapoor-Klein said she worries that if the bill passes, women who are placed on boards might be considered diversity hires or quota hires, and that their real contributions could be minimized.
Like so many other initiatives, this bill is well-intentioned, but it is going to have negative unintended consequences, she told Recode.
That being said, I think that if you have a critical mass of women, you actually do change culture.
If I had to make a prediction, I'd say this will probably pass.
I don't see why it wouldn't.
But it might be short-sighted.
A lot of people probably look at these companies with women on their boards and assume that because women are on their boards, the women are causing the positive changes.
But that implies correlation and causation, which may not be the case.
There might be something else at these companies that resulted in both improvement in how much money they make, and the fact that they've added women to their board.
It may be that these companies are younger, tend to be more proactive, or just have younger
staff members, and as we add more women to the workforce, it is more likely that younger
companies will have more women on the workforce.
However, there is a more scientific reason that people have as to why this probably won't
work, and this is something called the Greater Male Variability Hypothesis, an addendum to
our post on the Google memo.
Now, this story is from Heterodox Academy, and it talks about what happened with James Damore, and it talks about how there are more male geniuses, but also more male idiots.
They say, in this addendum, we focus on the greater male variability hypothesis, the idea that men are more variable than women on a variety of abilities, interests, and personality traits, and the possibility that males are overrepresented in the upper and lower tails of such distributions.
This hypothesis was first proposed by Ellis over 100 years ago in 1894.
It is also the hypothesis that Lawrence Summers was referring to in 2005 when, at the National Bureau of Economic Research conference, he weighed in on the gender gap in STEM professions.
Like DeMoore's memo, Summers' comments spurred controversy.
As we noted previously, we think the central empirical claim of D'Amour's memo was, when addressing the gap in representation in the population, we need to look at population-level differences in distributions.
D'Amour then attempted to clarify his position with this figure.
He said populations have significant overlap.
Reducing people to their group identity and assuming the average is representative ignores this overlap.
This is bad, and I don't endorse that.
Yet research on the greater male variability hypothesis suggests that Damore's figure does not correctly capture the state of affairs for some variable.
This because on a variety of abilities, interests, and personality traits, there is no mean difference.
But males are more variable than females, and they are more likely to be overrepresented in the tales of distribution.
To visually demonstrate this, we represent Figure 1 from Hyde and Mertz 2009, which displays theoretical distributions for males and females and takes a closer look at the upper right tail of this theoretical distribution.
So let's take a look at this chart.
The question becomes, why are there more men in positions of power within these large companies?
Now before I come to this, I want to make a point.
This chart we see from companies in California, these tech companies, there are very few of them.
These companies don't have that many board members, which means we're looking at dozens to hundreds, not thousands, not tens of thousands, not millions.
People running these companies represent the highest tier of the workforce, some of the highest paying jobs that require the greatest workload and the highest level of talent and intelligence.
So when we look at this chart, what we can see is...
The males are the orange line and the females are the green line.
The green line has a higher average.
That means there are more females of average intelligence than there are males.
However, there are a lot more men who are below average, but also a lot more men who are above average.
That means if we're looking at companies hiring the greatest talent, when you look at the highest end of the spectrum, there will be more men than women, according to this theory.
And if that's the case, it is likely you will see more men hired to these boards, to these positions of power, than you will see women.
But it would also explain why they are disproportionately more male than female.
Let's say the number was something like, for every 9 female geniuses, you have 10 male geniuses.
You would imagine that you would have almost equal parity at these companies if that were the case.
But in reality, that wouldn't be the case.
Because there are very few jobs at the highest level of talent and wealth.
And that means, if you have 100 men who are overqualified and 90 women who are overqualified, the companies, if they're only hiring 50 people, will pull from the top tier, which tend to be men.
Many of these men will outcompete the women, for a variety of reasons, and thus you will see a disproportionate amount of men than you would see women.
They say thus, if males are overrepresented in the upper tail of the distribution for spatial abilities, mechanical reasoning, and mathematics, it would be possible for Google to end up hiring more males and, at the same time, not be discriminatory in their hiring practice.
This is because the pool of potentially qualified applicants may contain more males.
If this is true, forcing companies to hire women could be detrimental to these companies.
If we need to be competitive with an international market, we want to make sure the best talent are the ones who are running these companies.
And forcing companies to lower their standard to hire people who might not be qualified isn't the right thing to do.
But at the same time, It's also entirely possible that, yes, there absolutely are qualified women, but men also tend to be more aggressive, and thus it might be easier for them to push their way into a position, even if they aren't as qualified as the woman.
Confidence sells.
If you have a man who is super smart and he tells you he's the best man in the world for the job, you feel confidence in that, you hire that person.
If a woman is less likely to assert herself, which tends to be the case whether or not it's social or biological, then she will be at a disadvantage.
So, there is some reason to suggest this law could be a good thing.
But...
I'm not one to typically advocate for equality of outcome.
I think we should let people who are the most qualified for the job earn their position.
At the same time, I think we do need to recognize that discrimination does exist, whether or not it's intentional or just based on natural tendencies that people have, and there may be very many qualified women who aren't getting the positions they should have because they could do some real good at these companies.
But let me know what you think in the comments below.
How do you feel about a law like this?
Do you think companies should be forced, by law, to hire people of a certain identity to fill a quota?
Or do you think it's just equality of outcome that's going to result in a detriment to these companies?
