April 7 2014

Transcript from Press Call: Why President Obama's executive orders and the "Paycheck Fairness Act" won’t advance equal pay

Victoria Coley

Independent Women’s Forum

April 7, 2014 • 11:00 a.m. EDT
Press Call Transcript

Why President Obama’s Executive Orders and the “Paycheck Fairness Act” Won’t Advance Equal Pay for Women

Participants

Sabrina Schaeffer • Executive Director, Independent Women's Forum?
Carrie Lukas • Managing Director, Independent Women's Forum

Statement of Sabrina Schaeffer, Executive Director, IWF

My name is Sabrina Schaeffer. I'm the Executive Director of the Independent Women's Forum. 

IWF is a nonprofit organization whose mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. 

IWF also pushes back on those who seek to convince women that society, and especially the workplace, is inherently unfair to women.

That's simply not true. Perpetuating the myth that women are a victim class harms women by making them feel weak, and it distracts them from learning smart ways to increase their earnings, expand their influence in the workplace, and pursue the lives they want.

That brings us to Equal Pay Day, which is tomorrow, the fictitious “holiday” liberal women’s groups have manufactured to try to expose the so-called “wage gap.” Supposedly this is the day of the year that women have finally earned enough to make up for last year's wage gap.

But the 77-cent statistic behind the wage gap is grossly overstated, as every serious study—including those done by liberal groups like the AAUW, has demonstrated.  The Department of Labor statistic compares the earnings of the average full-time working man to the average full-time working woman, which shows that women earn about 81 percent of what men earn, isn't the equivalent of comparing coworkers performing the same job.  It’s like comparing apples to oranges. This basic comparison doesn't take into consideration any of the important factors – such as college major, work experience, industry, specialty, hours spent working each day – all of which have a significant impact on how much someone earns. 

When those factors are taken into account, the pay gap shrinks to as little as 4 cents, some of which may be explained due to discrimination.  Yet the president, Democratic lawmakers, and progressive activists continue to use this faulty statistic – and this faux holiday – to try to convince women that they are routinely suffering massive wage discrimination to justify growing government in the name of protecting women.

This year, the President is trying to bolster support for the PFA, by signing two executive orders, neither of which will help women earn more: One executive order will reportedly prevent federal contractors from "retaliating" against workers who discuss their compensation. Yet that's already the law of the land. Under the National Labor Relations Act, employees already have the right to discuss their own salaries and benefits with coworkers.

Employers are allowed, however, to prohibit employees from discussing their salaries and benefits with those outside of the organization, or from discussing the salaries of coworkers who have not disclosed their salaries, both of which are sensible limits

There are legitimate reasons employers might want to discourage too much sharing about salaries:  Sometimes managers have to offer a raise to retain a valued employee who has received a better offer; sometimes someone with fewer years in an organization provides more value and therefore earn more, which can breed resentment among older, longer serving staffers. 

Bottom line: There is a balance that needs to be struck.  Employees have a right to discuss their own compensation and to seek out information about others to insure they are being treated fairly, but clearly individual workers also have a right to privacy and ought not find their salaries posted on Facebook.

The other executive order would require that the Department of Labor collect information about employee compensation—including on the workers' sex and race—from all federal contractors.  This mirrors a provision within the Paycheck Fairness Act, which would also require that the government demand such data from employers. 

Data collection may sound relatively harmless at first – what's a little more red tape for businesses already awash in it? – but one can see how such data collection could quickly morph into new workplace regulations and government standardization of pay.  

And even while the government just collects data, employers will be encouraged to see their compensation decisions through the eyes of a government bureaucrat who won't understand the many factors that businesses consider when making compensation decisions. 

In reaction to this type of government meddling, employers will have an incentive to move toward one-size-fits-all compensation packages and consolidating their workforce to minimize the costs and headaches associated with hiring.  This will ultimately strip an employer of control over their hiring decisions.

It's time to expose this day for what it really is. It's not a day to celebrate equality, but to perpetuate the idea that society is hostile toward women and to encourage the growth of the state.

The reality is there is a positive story to tell about women and girls today, and we ought to replace Equal Pay Day with Grow the Economy Day. Because the best way to ensure fair and equal wages is through robust economic growth and job creation so that men and women have greater opportunity.

That's why it's fitting that Senate Democrats have chosen this occasion to push "the Paycheck Fairness Act," which is also misleadingly named, since it will do nothing to promote fairness and certainly won't help more women get a paycheck.

 

Statement of Carrie Lukas, Managing Director, IWF

The Paycheck Fairness Act is being sold as if it would help women earn more, but the bill's sponsors rarely mention what the legislation would actually do.  That's probably because the legislation's focus isn't increasing economic opportunity for women, it's facilitating more lawsuits against employers.

Consider a few changes that would occur under the Paycheck Fairness Act.  Employees would be force to opt out of, rather than into, class action suits, making it easier for lawyers to get a class certified and increasing the potential for a jackpot award. 

The Paycheck Fairness Act also raises current caps to make the potential payouts from lawsuits much larger.  Under existing law, victims of discrimination can receive back-pay for the earnings they were denied, and punitive damages of up to $300,000 when discrimination was intentional.  The Paycheck Fairness Act would instead allow unlimited punitive damage awards, including for unintentional discrimination. This dramatically increases the motivation for both lawyers and employees to sue in hopes of a super-sized payout.

It would also dramatically limit how employers could justify their compensation decisions.  Under current law, businesses can justify differences in pay based on factors such as experience, job duties, and business necessity.  Yet under the Paycheck Fairness Act, employers would be exposed if an employee could demonstrate that “an alternative employment practice exists that would serve the same business purpose without producing such differential.” What does that mean?  No one knows, and such ambiguity would be an open invitation to lawyers.  Employers would therefore be open to potential lawsuits for essentially any compensation decision, whether that's making a counter-offer to retain a valued employee, giving a bonus for superior performance, or offering an employee more flexible hours in exchange for reduced compensation.

That's why even the Washington Post editorialized that the Paycheck Fairness Act was a flawed approach to job bias. 

Americans should consider how employers would react to the new requirements under the Paycheck Fairness Act.  Employers would have a great incentive to adopt more rigid, one-size-fits-all compensation packages, and they may even try to reduce their workforce to limit their legal exposure.  Businesses would be spending more money on lawyers, and less on hiring workers to grow their core business.  That's bad news for women (and men) who value flexibility and want more job opportunities. 

Americans should ask themselves if they really think what women and the economy need is more class action suits and fewer jobs, because that's what the Paycheck Fairness Act will deliver.

Thank you again for joining the Independent Women’s Forum this morning to hear our concerns about the Paycheck Fairness Act and with the misuse of the wage gap statistics and the continued campaign by the Left to convince women that discrimination is rampant in American businesses today. 

As a reminder, this information and our analysis will be available after this call on the IWF homepage, www.iwf.org.

We will now open the call for questions.  If you have additional questions please contact IWF’s communications director Victoria Coley at victoria@iwf.org.

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