Thatcher Loved Merit, Decried 'Equal Pay'

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Perhaps it's fitting that former British Prime Minister Margaret Thatcher died the day before America's ill-conceived Equal Pay Day, April 9. "This date symbolizes how far into 2013 women must work to earn what men earned in 2012," according to the National Committee on Pay Equity. It's the day when women's wages, allegedly only 77 percent of men's, catch up to what men have earned the year before.

Thatcher rose to become one of the most powerful women in the world not because the government required the Conservative Party to elect a female leader, and not because the government required the British people to vote the Tories into office in 1979. No, she rose from grocer's daughter to chemist to Prime Minister on her own merits.

Feminists, who say women need affirmative action, pay equity legislation, and a host of other government programs, never claimed Thatcher as one of their own. When she ran in 1979, the feminists' slogan was "We want women's rights, not a right-wing woman." This became "Ditch the bitch" when she ran for reelection in 1983.

On April 9 the well-funded feminist machine springs into action. The National Committee on Pay Equity holds rallies telling the world that women are underpaid, and calling for passage of legislation that would insert government into firms' compensation decisions. The American Association of University Women wants government-funded childcare and laws on employer-provided medical and sick leave.

Thatcher knew that the intrusion of government into compensation decisions will smother hiring, rather than encourage it. She reduced rigidities in the British labor market by taking on the miners' union in 1984. In the succeeding five years the unemployment rate halved, from 12 percent in 1985 to 6 percent in 1990. If Margaret Thatcher had led Portugal, Italy, Greece, or Spain in the 1980s, they wouldn't be the PIGS of Europe today.

The 77 percent figure is bogus because it averages all full-time women, no matter what education and profession, with all full-time men. The latest figures show that comparing men and women who work 40 hours weekly yields a wage ratio of 88 percent. In a comparison of unmarried and childless men and women, women earn more: 108 cents on a man's dollar.

A new book by June and Dave O'Neill, economics professors at Baruch College, City University of New York, entitled The Declining Importance of Race and Gender In the Labor Market explains how differences in salaries of men and women are not due to employment discrimination, but to factors such as time spent in the workplace.

The book will be featured in a panel discussion at the American Enterprise Institute in Washington, D.C., on Thursday. I will be one of the panelists.

The O'Neills conclude that "the factors underlying the gender gap in pay primarily reflect choices made by men and women, given their different roles in the family, rather than labor market discrimination against women due to their sex."

Women frequently choose jobs that enable them to combine work and family. About a quarter work part-time. Some prefer jobs with flexible hours, in the non-profit sector, which pay less. When they choose the same work, they are paid the same.

The O'Neills' work is especially timely because on Equal Pay Day feminists are calling for passage of the misnamed Paycheck Fairness Act, sponsored by Maryland Senator Barbara Mikulski, a Democrat, as a remedy for supposed discrimination on Equal Pay Day.

This bill would harm economic growth by inserting the government into employers' compensation decisions. As the O'Neills show, the pay gap is mostly a statistical artifact, a false conclusion-and a rallying cry for feminist lobbyists who are well paid to advocate bills like this one.

Passed by the House of Representatives in January 2009, the Paycheck Fairness Act failed to pass the Democratic-controlled Senate in 2010. There is no chance of enactment in the 113th Congress because the House has a Republican majority.

The bill would require all employers with more than two employees to submit data on sex, race, national origin, and earnings of employees to the Equal Employment Opportunity Commission, even if no complaint has been filed. The threat of litigation about pay differences between men and women and minorities and whites would raise the potential cost of employment, discouraging hiring.

Employers would face administrative costs that would silently discourage the hiring of those who might catch the attention of EEOC investigators, particularly affecting unskilled, inexperienced workers who start at lower salaries.

The bill would impose litigation costs on employers even as employees are represented with no out-of-pocket expenses by trial lawyers hopeful for a big slice of a big settlement. The result would be a perfect storm of lawsuits and uncertainty, adding to the estimated $300 billion a year America now spends on litigation.

Workers would be included in class-action suits against employers unless they specifically opt out, raising the costs of litigation whether or not the EEOC finds for the complaining employees.

Under the law now, employers found guilty of discrimination owe workers back pay. Under the Act, they would have to pay uncapped punitive damages, with a quarter or a third going to plaintiffs' lawyers.

The bill would allow employers to defend differences in pay between men and women resulting from education, training, and experience if these factors were also justified on the grounds of "business necessity."

The bill even states that the government "shall not require a multiple regression analysis or anecdotal evidence for a compensation discrimination case." In plain English, this means that factors such as fewer hours, less education, and lower performance can't be used to evaluate salary differences.

As Thatcher knew well, our economic system rewards workers on the basis of how much employers willing to pay for their service, for better or for worse. There's no other accepted measure of a job's value.

Feminists didn't like Thatcher. But her policies strengthened Britain's economy, lowered unemployment, and brought women success without victimhood, winning without whining. It's something to ponder on Equal Pay Day.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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