Washington's Equal Pay Obsession

November 17, 2010

Women in the workplace don't face rampant pay discrimination, and yet the Senate may soon pass a bill -- already passed in the House -- premised on the erroneous charge that they do.  The Paycheck Fairness Act (PFA) would be a harmful addition to the many federal laws that already protect women and men from labor-market discrimination, says June O'Neill, a professor of economics at Baruch College.

Why do we need more legislation?

  • The reason, say the bill's sponsors, is that women earn 77 percent as much as men, according to the Bureau of Labor Statistics.
  • But this figure doesn't compare comparable men and women, and it doesn't reflect that full-time men work 8 percent to 10 percent more hours per week than full-time women.

It also doesn't reflect what research of mine and others have shown:

  • Men typically accumulate more continuous work experience and therefore acquire higher productivity in the labor market.
  • In fact, the gender gap shrinks to between 8 percent and 0 percent when the study incorporates measures such as work experience, career breaks and part-time work.

The PFA ignores research showing that factors other than discrimination explain the current gender wage gap.  The bill would force employers to raise women's pay by sharply reducing their ability to defend what they believe is a justified differential in pay based on merit.

The PFA also empowers complaining employees to propose alternative methods of determining pay that, if accepted by courts, would presumably be imposed on employers.  This unprecedented shift in bargaining power would lead to endless lawsuits.

The PFA is not fair, sensible or warranted, and it will impose great costs on employers.  This new legislation would simply provide a feast for lawyers -- and, by increasing the cost of employing women, would likely harm its intended beneficiaries.

Source: June O'Neill, "Washington's Equal Pay Obsession," Wall Street Journal, November 16, 2010.

For text:

http://online.wsj.com/article/SB10001424052748703326204575616450950657916.html

 

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