First 100 Days: The mirage of pay equity

January 21, 2009

Diana Furchtgott-Roth-Debate– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –

President Obama takes office facing the challenge of high expectations—of ending the recession, fixing the nation’s financial and housing problems, and withdrawing combat troops from Iraq within 16 months.

In addition, feminists expect him to end inequality in pay between men and women.

To this end the Senate will consider two bills, both passed by the House in early January, the Paycheck Fairness Act and the Lilly Ledbetter Fair Pay Act.  Their stated purpose is to reduce alleged discrimination against working women by making it easier for them to sue their employers.

If passed by the Senate, they will be sent to President Obama, who has said that he would sign them.  But whether these bills would actually help women to get hired and to advance in the workforce is dubious.

They would increase the risks and costs of hiring women, making it more likely that men rather than women would be hired.

The Paycheck Fairness Act would allow women to sue for unlimited compensatory and punitive damages under the 1963 Equal Pay Act. Current law does not allow for punitive damages.

Also, it would encourage class actions by requiring workers who do not want to participate to opt out, rather than opt in, a radical change from conventional law and practice.  Employers would have to collect data on the race, sex, and wage of all workers and give it to the Equal Employment Opportunity Commission.

The Lilly Ledbetter Fair Pay Act would overturn a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire.

The Court upheld an Eleventh Circuit [Court] decision that Title VII of the Civil Rights Act of 1964 requires suits to be filed within 180 days (300 in some states)  of an alleged “discriminatory pay decision.”  Under Title VII “discriminatory pay decisions” mean employers’ decisions about pay made with discriminatory intent.

However, feminists say that women should be able to sue for discrimination beyond 180 days of receiving a paycheck—any paycheck, not just the first—because it can take longer than 180 days for employees to ascertain whether discrimination is occurring.

Under the Equal Pay Act, women can sue within two or three years of receiving allegedly discriminatory pay, because the Act does not require “discriminatory intent” for redress, just discrimination. Women have to show only that they are paid less than men for doing the same work.

Sponsors of the bills predict that they will raise women’s pay. On January 8, Senator Hillary Clinton, the sponsor of the Paycheck Fairness Act, declared: ” It is disgraceful that four decades after the Equal Pay Act was signed into law, women in this country still earn only 78 cents on the dollar. The Paycheck Fairness Act is an attempt to right this historic wrong and I am proud to reintroduce it today.”

That 78 percent figure is bogus because women’s and men’s occupations and hours of work differ. Comparing women and men who work 40 hours weekly yields a wage ratio of 87 percent — before accounting for different education, jobs, or experience, which brings the ratio closer to 95 percent (click here for Dept. of Labor’s full report). Percentages of 87 percent and 95 percent are less dramatic — and less likely to persuade Congress of the need for new laws.

America leads the world in job creation, and almost 60 percent of women work. Even in the current recession, the unemployment rate for adult women, at 5.9 percent, is lower than that for adult men, at 7.2 percent.

Women are closing the pay gap because their education is increasing. They earn well over half of all B.A.s and M.A.s, and half of professional degrees in law and medicine.

Lower pay can reflect individuals’ choices—by men and women–about field of study, occupation, and time in the workforce.  Those who don’t finish high school earn less.  College graduates who major in humanities rather sciences have lower incomes, and more women than men choose humanities majors.  Until these choices change, women’s incomes won’t rise, no matter how many bills are signed into law.

Rather than helping women, these bills would hurt both women and men by increasing the costs of hiring and reducing job creation in the midst of a recession. President Obama may well sign these bills, but the consequences won’t meet expectations.

For previous columns by Diana Furchtgott-Roth, click here.

22 comments

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This is another feminist myth. Check total hours worked to pay – they wages are far more equal than first appears.

Posted by Norm | Report as abusive