NCPA - National Center for Policy Analysis


June 6, 2007

The Fair Pay Act of 2007 -- Introduced by Tom Harkin (D-Iowa) and co-sponsored by senator and Democratic presidential hopeful Barack Obama is misguided, injecting the federal government into the most routine pay decisions, says Cait Murphy, Fortune magazine assistant managing editor.

Granted, Sen. Obama did not write the bill, but he did sign onto it -- the only presidential candidate of either party to do so.  It is troubling that he would associate himself with a bill that is not sound economically, especially since, according to June O'Neill, an economist who served as director of the Congressional Budget Office under President Clinton, there are other factors involved in the pay gap:

  • Women are much more likely over the course of their lives to cut back their hours or quit work altogether than men.
  • More precisely, of women aged 25-44 with young children, more than a third were out of the labor force; of those women who did have jobs, 30 percent worked part-time.
  • All told, women are more than twice as likely to work part-time as men and over the course of their lifetimes, work outside the home for 40 percent fewer years than men.

The labor market is not perfect, which is why there are such things as anti-discrimination laws and safety regulations, says Murphy.  But there is nothing so wrong with it that the federal government needs to wade in, classify every single job for every company with more than 25 employees, and then assume the right to micro-manage every decision over pay.

Replacing a well-functioning system that is regarded as a source of U.S. competitive advantage with statist, centralized, bureaucratized mechanism of a kind more familiar to, say, East Germany in the 1980s than to the 21st century American private sector would only lead to disaster, says Murphy.

Source: Cait Murphy, "Obama flunks econ 101,", June 5, 2007.

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