Here’s What the Paycheck Fairness Act Is Really About — It’s Not Equal Pay for Equal Work

COMMENTARY Jobs and Labor

Here’s What the Paycheck Fairness Act Is Really About — It’s Not Equal Pay for Equal Work

May 27th, 2019 4 min read
COMMENTARY BY
Rachel Greszler

Research Fellow in Economics, Budget and Entitlements

Rachel researches and analyzes taxes, Social Security, disability insurance, and pensions to promote economic growth.
Here’s What the Paycheck Fairness Act Is Really About — It’s Not Equal Pay for Equal Work Image Source/Getty Images

Key Takeaways

Despite its cunningly ingenious name, the Paycheck Fairness Act is not about equal pay for equal work.

Since pay discrimination already is illegal, you might wonder what the Paycheck Fairness Act really will bring about.

Enacting laws that take away opportunities and choices for all workers is no way to help women.

Despite its cunningly ingenious name, the Paycheck Fairness Act is not about equal pay for equal work. That’s already the law of the land under both the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964.

Moreover, few Americans living today think people should be paid more than others solely because of their gender — or their race, height, eye color, shoe size, or any other biological factor.

Pay should be based on one thing and one thing only: productivity.

Since pay discrimination already is illegal, you might wonder what the Paycheck Fairness Act really will bring about. The answer, unfortunately, is rigid pay scales, hiring discrimination, lower wages, lower productivity, increased business and consumer costs, and lawyers and judges second-guessing employers’ evaluations.

That is a lot of consequences, all in the name of reducing the so-called “pay gap” between men and women. That “pay gap” refers to an apples-to-oranges comparison purporting to show that, compared to men, women make about 20 cents less on the dollar.

The finding hinges on completely ignoring factors that employers consider when setting pay — factors such as occupation, education, experience and hours. When such measurable factors are taken into account, the “gap” all but disappears. For example, a 2009 Department of Labor study estimated a 5- to 7-cent gap. A payscale.com study last year found a mere 2-cent adjusted pay gap.

But even those adjusted pay gaps aren’t necessarily the result of discrimination. Harder-to-measure factors such as differences in workplace flexibility and benefits likely account for some of the remaining gap.

Those harder-to-measure job factors would be the first to go under the Paycheck Fairness Act. Losing the option of flexible work schedules, teleworking, and family-friendly benefits would disproportionately hurt working mothers, who tend to place a higher value on those factors.  

The end desire of proponents of the Paycheck Fairness Act seems to be collective pay scales, similar to those established for the federal workforce or in union contracts.

But even the federal government has a 13 percent pay gap — attributed primarily to differences in occupational choices of men and women. And a study of unionized public transportation drivers found that women made 11 cents less on the dollar compared to men — the entirety of which was explained by women choosing to work less overtime and take more unpaid leave.  

What’s wrong with rigid pay scales? They are not amenable to today’s labor market. Unlike a 1950 assembly line where workers clocked in at 9 a.m. and out at 5 p.m., and all produced 20 widgets a day, fewer jobs today have exactly equal functions or outputs.  

Moreover, fixed-pay regimes don’t let employers offer flexibility or rewards for extra effort. Instead, they create less productive and often frustrating work environments.

Take the federal pay system, which is based almost entirely on title and tenure. The 2018 Federal Employee Viewpoint survey showed that only one of every four non-supervisory employees believes that pay raises depend on how well people do their jobs, and only 34 percent believe that promotions are based on merit or that differences in work are recognized in a meaningful way.

That’s not only a problem for workers who reap little benefit for excelling in their work. It’s bad for overall productivity, workers’ wages and the economy.

Studies show that rigid pay structures result in 6 to 10 percent lower pay and productivity compared to performance-based pay. The combination of lower productivity and significant compliance costs put a double-whammy on workers’ wages.

And instead of higher pay, women and minorities likely would find it harder to get their foot in the door. Employers would be more reticent to hire women and minorities — especially those just re-entering the workforce — since they automatically would be included in future gender- or race-based class-action lawsuits.

The primary beneficiaries of the Paycheck Fairness Act would be trial lawyers who could data-mine through private employers’ pay information and then include all women in class-action lawsuits seeking unlimited damages.

At the end of the day, most workers just want to be paid based on the work they perform. The best way to achieve that is to let workers negotiate directly with their employers instead of having lawyers and judges scrutinize and second-guess the agreements that employers and workers make with each other.

Enacting laws that take away opportunities and choices for all workers is no way to help women. Lawmakers truly interested in helping women should take up policies that promote choice, such as the Working Families Flexibility Act and proposals to let workers choose who represents them in employer-employee negotiations. Moreover, state policymakers should eliminate unnecessary regulations that drive up the cost of child care.

All workers want and deserve equal pay for equal work, but having the government determine workers’ value and paychecks will result in equal pay for unequal work.

This piece originally appeared in The Hill on 3/27/19