The Case Against the Paycheck Fairness Act
The proposed act would create havoc in an already precarious job market
May 4, 2012
The Paycheck Fairness Act looks like common sense, but instead of helping women it will hurt all workers. The legislation, built on 30 years of spurious advocacy research, will impose unnecessary and onerous requirements on employers.
Groups like the National Organization for Women insist that women are being cheated out of 24 percent of their salary. The pay equity bill is driven by indignation at this supposed injustice. Yet no competent labor economist takes the NOW perspective seriously. An analysis of more than 50 peer-reviewed papers, commissioned by the Labor Department, found that the so-called wage gap is mostly, and perhaps entirely, an artifact of the different choices men and women make—different fields of study, different professions, different balances between home and work. Wage-gap activists argue that even when we control for relevant variables, women still earn less. But it always turns out that they have omitted one or two crucial variables. Congress should ignore the discredited claims of activist groups.
The misnamed Paycheck Fairness Act is a special-interest bill for litigators and aggrieved women's groups. A core provision would encourage class-action lawsuits and force defendants to settle under threat of uncapped punitive damages. Employers would be liable not only for intentional discrimination (banned long ago) but for the "lingering effects of past discrimination." What does that mean? Employers have no idea. Universities, for example, typically pay professors in the business school more than those in the school of social work. That's a fair outcome of market demand. But according to the gender theory permeating this bill, market forces are tainted by "past discrimination." Gender "experts" will testify that sexist attitudes led society to place a higher value on male-centered fields like business than female-centered fields like social work. Faced with multimillion-dollar lawsuits and attendant publicity, innocent employers will settle. They will soon be begging for the safe harbor of federally determined occupational wage scales.
This bill also authorizes the secretary of labor to award grants to organizations to teach women and girls how to negotiate better salaries and compensation packages. Where is the justice in that? The current recession has hit men harder than women. Census data from 2008 show that single, childless women in their 20s now earn 8 percent more on average than their male counterparts in metropolitan areas. If Congress is going to enact labor legislation with the word "fair" in it, it cannot limit the benefits to women. Senators may be tempted to vote for the Paycheck Fairness Act out in the mistaken belief that it is a common-sense equity bill. It is not. It won't help women, but it will create havoc in an already precarious job market.