Paycheck Fairness Is a Misnomer

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WASHINGTON-Lucky women. They face an 8% unemployment rate, compared with 10% for men. Women are riding out the recession more easily, so what better time for Congress to put forward an agenda to help those men displaced from construction and manufacturing?

Yet men can wait. Today the Senate Committee on Health, Education, Labor and Pensions holds a hearing on the misnamed Paycheck Fairness Act, a bill designed to raised women's wages. Hillary Clinton introduced the bill when she was still a Democratic senator from New York, and it has 38 Democratic cosponsors. The bill would vastly expand the role of the government in employers' compensation decisions.

The Paycheck Fairness bill would require the government to collect information on workers' pay, by race and sex, with the goal of equalizing wages of men and women, by raising women's wages. (Fortunately for men, depressing their wages to achieve pay equity is not permitted under the proposed law.)

The bill is misnamed because it responds to a false problem. There is far less pay discrimination against women than is alleged by professional feminists. When the data are understood correctly - taking account of choice of vocation and on-the-job years - the putative pay gap largely disappears. The professional feminists try to conceal that, lest they be put out of business.

With Title VII of the Civil Rights Act, the Equal Pay Act, and the Lily Ledbetter Fair Pay Act all on the statute books, women do not need more remedies for discrimination. Courts have sufficient tools, and use them. The pending bill would only burden employers with more regulations and paperwork, further discouraging hiring.

The Paycheck Fairness bill was one of the first bills that the House of Representatives passed in January 2009. Now, Iowa's Senator Tom Harkin, chairman of the Labor Committee, is trying to curry favor with feminists by moving the Paycheck Fairness bill out of committee for a vote on the Senate floor. If the Senate passes the bill, President Obama has indicated that he will sign it into law.

It is unnecessary and could be pernicious. Its rationale is that women are underpaid due to discrimination. Yes, when all women's earnings are compared crudely to all men's wages, women make 77 cents on a man's dollar. But this spurious comparison does not account for differences in hours worked, time in the workforce, education, or choice of vocation.

When these differences are considered, a 2009 study by the economics consulting firm CONSAD Research Corporation, prepared for the Labor Department, shows that women make around 94% of what men make. The remaining six cents are due to unexplained variables, one of which might be discrimination. The study, posted on the Labor Department's Web site under President Bush, was removed when President Obama took office, but can be found here.

The Paycheck Fairness bill, if enacted, would be a boon to lawyers because it would spawn a tidal wave of lawsuits and enmesh employers in endless litigation.

The bill would no longer allow employers to defend differences in pay between men and women on the grounds of seniority and merit. Rather, differences would have to be justified on the grounds of "business necessity." Jane McFetridge, a witness at Thursday's hearing and a partner with Jackson Lewis LLP, a Chicago law firm and, will testify that this change could prohibit male supermarket managers with college degrees from being paid more than female cashiers-because the college degree for the male manager might not be consistent with "business necessity."

Another provision of the Paycheck Fairness bill would expand the number of establishments subject to the law from one to all establishments of the same employer in a county. Now, employees who do substantially the same work in one location have to be paid equally. Including all locations would mean that cashiers in high cost, or unpleasant areas, where the employer has to pay more to attract workers, have to be paid the same as those in low-cost, more pleasant areas. The intent is to raise wages of employees at the lower end, driving up employment costs and encouraging layoffs.

Further, identifying "substantially the same work" is hard to do for disparate jobs in different locations. The bill is a full-employment act for lawyers and courts to decide.

Class-action suits would be facilitated by the bill's opt-out clause. Now, if a worker wants to participate in a class-action suit against her employer, she has to affirmatively agree to take part, or opt in. Under the bill, she would automatically be included unless she opted out. This provision would increase the numbers in class-action suits and would be a boon to plaintiffs' lawyers.

Penalties that the courts could levy on employers would be higher, too. Under the law now, employers found guilty of discrimination owe workers back pay. Under the pending bill, they would have to pay punitive damages, of which a quarter or a third typically goes to plaintiffs' lawyers.

The bill would require the Equal Employment Opportunity Commission to analyze pay data available now, and promulgate regulations to collect more data, including information about the sex, race, and national origin of employees. The paperwork required would be a ruinous burden to employers.

American women have been relatively fortunate in this deep recession. Rather than yet another redundant legal remedy for discrimination against women, how about some help for unemployed men?




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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