November 9 2010

Position Paper No. 33: The Unintended Consequences of the Paycheck Fairness Act

Executive Summary

This November, the Senate will likely vote on legislation known as the Paycheck Fairness Act, to amend the Fair Labor Standards Act of 1938[i] and the Equal Pay Act of 1963[ii], in the name of giving women extra protection against sexism in the workplace. Proponents of the Act suggest this legislation is needed to close the wage gap between working men and women, arguing that the gap is evidence of persistent gender-based discrimination.

Yet, this assertion is misleading. Research shows that the gap arises out of a multitude of factors that reflect the individual preferences of men and women, such as occupational choice, time spent at work, and non-wage benefits, among others.

Moreover, if passed, the Paycheck Fairness Act would have widespread implications for businesses and their employees, discouraging job creation and economic growth. In particular, the Act would:

•·         Expose employers to far greater liability and potentially frivolous lawsuits

•·         Burden employers with more regulations and paperwork

•·         Vastly expand the role of government in employers' compensation decisions

•·         Discourage flexible working arrangements

Women deserve equality in the workplace. The Paycheck Fairness Act, however, sets out to solve a non-existent problem based on a flawed interpretation of a statistic. Instead of advancing women's interests, the Act would have unintended consequences which would hurt businesses, workers, and the economy, ultimately leaving women with worsened employment prospects.


[i] U.S. Department of Labor Employment Standards Administration, "The Fair Labor Standards Act of 1938, as Amended," March 2004. Available at: http://www.osha.gov/pls/epub/wageindex.download?p_file=F15794/FairLaborStandAct.pdf.

[ii] Department of Labor Office of the Assistant Secretary for Administration and Management, "Equal Pay Act of 1963, as amended," May 14, 1947. Available at: http://www.dol.gov/oasam/regs/statutes/equal_pay_act.htm.

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