June 5 2012

National Review Online: Paycheck Pandering

As seen in National Review Online. 

Paycheck Pandering 
The Paycheck Fairness Act wouldn’t help employees, and might hurt employers.
By Betsy Woodruff

This afternoon the Senate will take up a less-than-crucial issue: an apparently likely-doomed piece of presidentially endorsed legislation meant to narrow the already-shrinking gender pay gap. But rather than address this dubious problem, the Paycheck Fairness Act would in fact complicate the lives of employers and employees.

Despite vociferous endorsements from several women’s groups and prominent congressional Democrats, liberals are pessimistic about the bill’s future — The Nation suggested that it probably won’t gain any congressional traction, even in the Democrat-controlled Senate. But despite the bill’s long odds, Democrats see it as a valuable political tool. (Republicans understand that angle, too, of course; Senator Orrin Hatch (R., Utah) called it a “purely politically motivated show vote.”) The legislation has been used to target Republican presidential nominee Mitt Romney, who has yet to voice his opinion on the bill. And it may prove a helpful PR play for Democrats in tight congressional races, one more example of the GOP’s alleged sexism.

But it shouldn’t be. June O’Neill, a professor of economics at Baruch College and an adjunct scholar at the American Enterprise Institute, tells National Review that the legislation is in fact “insulting to women,” especially one provision establishing a grant to give women salary-negotiation training. O’Neill argues that this element of the “absurd” bill implicitly contradicts its own premise: that gender can have no bearing on people’s ability to do their jobs.

Carrie Lukas of the Independent Women’s Forum notes that the legislation comes at a bad time. “Especially in an era of exploding national debt, it doesn’t seem like a very good use of taxpayer money,” she said.

Ours isn’t the first era to deal with wage differences between men and women. The Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 banned workplace discrimination based on sex, including different pay for the same work. The next significant legislation on the issue came in 2009, with the Lilly Ledbetter Fair Pay Act, which empowers employees or retirees to sue within 180 days of an unequal salary or pension check. That effectively eliminates the statute of limitations by allowing plaintiffs to sue years after a discriminatory salary was negotiated. “It’s great for trial lawyers,” says James Sherk, senior policy analyst on labor economics at the Heritage Foundation.

That notorious Democratic interest group would look forward to more spoils from the Paycheck Fairness Act. Instead of simply requiring employers to prove that salary differences between members of the opposite sex are not the result of sexism, it would force them to show that these differences are a “business necessity” and can’t be rectified — a dramatic encroachment on businesses’ discretion, as a recentWashington Post editorial argued.

Under the bill, if a man and woman had the same job description but the man made more because he was better educated, the woman could suggest the company pay for her to receive similar training, raising her value to the company, and justifying a salary equal to the man’s. James Sherk, senior policy analyst on labor economics at the Heritage Foundation, explains that refusal to fund such training could be grounds for a lawsuit.

“It’s an incredibly high standard to clear there,” Sherk said.

It would also eliminate the current $300,000 cap on punitive damages, giving trial lawyers a much stronger incentive to introduce lawsuits.

And it would change how class-action discrimination suits work. Currently, people choose to sign on for class-action suits. Under the Paycheck Fairness Act, these suits would operate under an opt-out basis. Every employee of the discriminated gender at a particular business would be included by default, Sherk explains, making potential class sizes enormous.

The ensuing cost to businesses — both to insure against frivolous lawsuits and fight them — could be enormous, making “America a less desirable place to do business,” according to Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute.

That leaves the aspect of the bill that its proponents seem to have emphasized most: that it lets workers share their salary information with each other. But there’s one hiccup here: The National Labor Relations Act of 1935 already protects this right. Staffers from the offices of the bill’s sponsors, Senator Barbara Mikulski (D., Md.) and Representative Rosa DeLauro (D., Conn.) were unavailable to explain before press time how the Paycheck Fairness Act differs from the New Deal–era legislation on this issue.

Not surprisingly, many Republicans, including Senator Hatch, strongly oppose the legislation.

“It doesn’t seem to matter to Senate Democrats that federal law already prevents gender-based pay discrimination,” he says. “Why let that fact get in the way of a message-tested bill that would dramatically increase costly litigation on job creators at a time when our economy is so weak?”

Further, many conservatives question the existence of a wage gap in the first place. AEI’s O’Neill argued that the data used to suggest the problem of sex-based wage discrepancies don’t take into account the fact that many women make less remunerative career choices. James Sherk concurred, arguing that data that controls for occupation, education, and other important variables show virtually no wage gap.

So instead of helping workers, the Paycheck Fairness Act could actually make their jobs harder by increasing costs to the businesses that hire them. It’s pretty clear that the legislation is doomed, but it’s also clear that feminist groups and congressional Democrats will use its probable defeat as more grounds of a Republican “war on women.”

— Betsy Woodruff is a recent graduate of Hillsdale College.

 

 

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