Barack Obama is buying votes. The Paycheck Fairness Act (PFA) is a blatant sop thrown to a voting block on which his next presidency may depend: women, specifically, liberal women. Obama also hopes it will weaken Mitt Romney, who is trying to woo women himself and, yet, cannot endorse the PFA without alienating conservatives.
The PFA (HR 1519) seeks to amend the Equal Pay Act (EPA) of 1963 and the Fair Labor Standards Act (FLSA) of 1938, to which the EPA itself was an amendment. The goal is to strengthen protections and sanctions against the currently illegal business practice of paying unequal wages to men and women who do substantially comparable work.
This is the second time around the Congress track for the Democrat-sponsored bill. An earlier version passed the House of Representatives in January 2009 but failed to get the necessary votes in the Senate, where it had lingered for close to two years. In March 2011, at a reception to honor International Women’s Day, Obama vowed to push the act forward. He stated, “If you do the same work as a man, you ought to be paid the same wage as a man.”
The PFA was reintroduced in both houses in April 2011. The prospect of it passing a now Republican-controlled House is dim; passage is more possible in the Democrat-dominated Senate, but still unlikely. And yet, as elections near, the PFA will almost certainly become a battleground bill that is used by Democrats to demonize Republicans as anti-woman. FOX News (March 7) commented, “President Obama and his Democratic allies are hoping to win women voters by a large margin — and part of that strategy involves making equal pay a big issue.”
What is the PFA?
The Paycheck Fairness Act addresses the alleged wage gap between women and men — women are said to earn 77 cents for every dollar earned by men doing comparable work. If a wage gap exists within a company, it is viewed as strong evidence of gender discrimination. An employer targeted by this accusation must prove that the wage disparity arises from something other than gender; for example, disparities in education or experience are considered “bona fide factors” on which to base a defense. In many, if not most cases, the EPA already provides protection against and remedies for gender-based wage decisions. But the new PFA has sharper teeth.
Consider the following amendments, which reflect the core of the new act and its intentions.
Section 2 of HR 1519 extends bureaucratic reach further into business practice. It authorizes and admonishes the Department of Labor and the Equal Employment Opportunity Commission to aggressively pursue and publicize information on “women’s wages.” The clear intent is to assist women in bringing lawsuits. It states,
With a stronger commitment by the Department of Labor and the Equal Employment Opportunity Commission to their responsibilities, increased information as a result of the amendments made by this Act to the Equal Pay Act of 1963, wage data, and more effective remedies, women will be better able to recognize and enforce their rights.
Section 3 is entitled “Enhanced Enforcement of Equal Pay Requirements.” Paragraph (3)(B) of subsection (a) raises the standards that employers must meet when defending against a charge of wage discrimination. To make a “bona fide factor defense,” employers must do more than demonstrate a justified “factor other than sex” for the wage difference as demanded by the EPA. They must also demonstrate that the factor
(i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; and (iii) is consistent with business necessity.
The “business necessity” language includes proving the job in question could not be done in an alternative manner that avoids the unequal pay.
While it raises the standards for defense, the PFA also makes it easier for plaintiffs to bring class-action suits. The EPA requires plaintiffs to give written consent to opt in to class suits. The PFA requires plaintiffs to opt out. Thus, in principle, one worker in a company could bring a class-action suit on behalf of all other female workers without their consent.
The Act also strengthens the Nonretaliation Provision of the Federal Labor Standards Act. This further restricts employers from acting against employees who gather wage information, even against company policy, or who pursue a complaint.
For those employers who are judged to be in violation, the EPA provides for equitable or limited relief for the injured employees, such as the payment of back wages. The PFA states that erring employers
shall additionally be liable for such compensatory damages, or, where the employee demonstrates that the employer acted with malice or reckless indifference, punitive damages as may be appropriate.
In other words, unlimited damages are possible. This applies pressure on innocent private employers to settle rather than face the possibility of unlimited, class-action damages. The only employer exempt from punitive damages is the United States government.
Critique of the PFA
The PFA is profoundly anti-business.
It is also anti-male. For example, the PFA authorizes the awarding of grants to organizations in order for them to teach females how to negotiate better salaries and other compensation. Women’s competitors in the job market are men. Tax money, including taxes paid by men, will be used to advantage one sex over the other in the job market.
But the foregoing objections only scratch the surface. The PFA is a violation of individual rights; it is based on false assumptions; it rests on discredited statistics that come from advocacy research; it is special-interest legislation; it will harm women as well as all workers; and it places a crippling burden on businesses at a time when so many are sinking into bankruptcy or closure.
It is a violation of individual rights. An employer has the same right of free association as any other individual, and this includes the right to refuse or terminate association for any reason. At that point, the employer’s sole obligation consists of fulfilling whatever terms of a contract are outstanding.
He has the same right to use and control his own property as any other individual — that is, he has the right to control the money he pays in wages. The PFA gives government the power to dictate whom an employer must associate with and the rules of that association; for example, he must use his money in a manner prescribed by bureaucracy rather than by his own judgment and business sense.
It is based on false assumptions. An inequality of results does not indicate discrimination (as the PFA assumes it does). The most likely explanation in any current wage gap is choice. As a general statement, women choose jobs with less risk, with fewer hours and with less educational or skill requirements. They do so because children and the home are still considered women’s natural purview far more than men’s.
In practice, the Obama administration acknowledges the false assumption of the PFA. Senior Fellow at the Manhattan Institute for Policy Research Diana Furchtgott-Roth wrote,
Even in 2011, the year after Mr. Obama called for passage of the Paycheck Fairness Act, women on the White House staff made 82 percent of male staffers’ wages. The White House put more experienced men into senior positions, skewing the average. If Mr. Obama can’t pay women the same as men in his own White House, with countless competent women willing to work there, why should he expect employers to do so in their businesses?
It is based on discredited statistics. Or, perhaps, a more accurate term is a misused statistic; namely, the claim that women earn 77 cents to every dollar earned by a man. This may be true if you compare women’s overall wages with men’s, because it reflects the fact that in the aggregate men work at riskier jobs, work more hours, and do not trade off wages for flexible hours as often as women do. The equity feminist Christina Hoff Summers observes,
An analysis of more than 50 peer-reviewed papers, commissioned by the Labor Department, found that the so-called wage gap is mostly, and perhaps entirely, an artifact of the different choices men and women make — different fields of study, different professions, different balances between home and work.
Moreover, the Wall Street Journal (Sept. 1, 2010) reported,
In 2008, single, childless women between ages 22 and 30 were earning more than their male counterparts in most U.S. cities, with incomes that were 8% greater on average, according to an analysis of Census Bureau data released Wednesday by Reach Advisors, a consumer-research firm.
When balancing family with work is factored out, young women make more than young men. By the PFA’s own standards, this indicates discrimination against men.
It is special-interest legislation. Special-interest legislation is acts of the legislature enacted for the special benefit of a certain group, as opposed to the general population. The individuals who are the intended beneficiaries of the PFA are women; the general population includes men. But three categories of people benefit from the PFA: politically correct feminists and litigious women, lawyers, and bureaucrats. To the extent that some women are genuine “victims” of wage discrimination, as defined by law, then they are victims only of an employer exercising his individual right to determine the use of his property. In other words, they are not true victims but legally invented ones.
By its very definition, special-interest legislation benefits one category of people at the expense of another. Special-interest legislation cannot be just, because all rights are universal, or they are not rights at all — they become simply entitlements and legal privileges.
It will harm women — and all workers. The PFA would make women more expensive to employ, not merely by raising their salaries, but also by exposing employers to the risk of unlimited liability lawsuits. Even if they won, the employer would still be liable for the heavy expense of the legal process. When the minimum wage was introduced, it had a devastating impact on the employment rate of young blacks because, suddenly, it cost employers more to hire an entry-level worker. The California government watchdog site Cal Watchdog states,
Black economist Walter Williams has pointed out how a high minimum wage “cuts off the bottom rung of the ladder” of employment. Few people stay for long at the minimum wage. Once they prove competence and show up for work on time, employers usually raise their wages above the minimum, or risk losing such good workers to other employers.
What the minimum wage does is make low-level jobs prohibitively expensive for employers.
The PFA would deny women entry-level jobs and, so, harm poor women the most.
It would also harm women who value “flex time,” by which they trade off wages for a flexibility in hours that allows more time for family. If the trade-off for such flexibility is used as evidence of discrimination, then it will disappear in practice.
Moreover, all workers would suffer. The legal risk of hiring women coupled with the legal risk of not, hiring them can only reduce hiring across the board. Job-seekers do not need more bureaucracy to come between them and employment.
It will place a crippling burden on business. The job market is stumbling to its knees due to the recession and the omnipresent uncertainty about government’s next move. This is a time when government needs to back away from rather than push forward with using the marketplace as a proving ground for its social agendas.
The PFA would require employers to file even more paperwork with the government to establish wages broken down according to sex and race. The burden of paperwork has already driven many small businesses into bankruptcy or closure. Employers would also confront a substantially increased risk of litigation. To avoid this risk, employers may well hire a woman who is a less efficient worker than a man whose skills are better for the business — the PFA turns the usual practice of linking quality of work to compensation into a risk. Or employers may decide not to hire at all.
The PFA is not going away. It will loom large for no other reason than that it is politically useful to the Democrats. The PFA will be used in at least three ways:
- It will convince liberal women that Democrats are on their side and, so, secure their votes.
- Democrats will be seen as trying to do something economically important; and this will distract people from their economic impotence and destructiveness.
- Republicans will be seen as obstructive and continuing in their alleged “War on Women” — a slogan that will also loom large in the upcoming elections.
This act is political theater at its most cynical, because no one expects the PFA to pass. As with most of the upcoming election, it is smoke and mirrors.