How the Paycheck Fairness Act Will Hurt Women

COMMENTARY Jobs and Labor

How the Paycheck Fairness Act Will Hurt Women

Apr 16, 2014 2 min read
Rachel Greszler

Senior Research Fellow, Roe Institute

Rachel researches and analyzes taxes, Social Security, disability insurance, and pensions to promote economic growth.

As a working woman and mother of four young children, I strongly support fairness in the workplace. And that is why the Paycheck Fairness Act worries me. It would unintentionally harm working women by taking away some of the freedoms and choices we currently enjoy.

The Paycheck Fairness Act seeks to equalize wages. Under the Act, employers would have to prove that any wage differential results from a “business necessity” that cannot be remedied through any other means. In practice, this will make it more difficult for employers to pay workers according to their merit.

Everyone supports equal pay for equal work, but often things are not that simple. Shouldn’t the more efficient computer programmer receive more than the less efficient? Shouldn’t a worker who puts in extra hours on a major project be allowed to receive a bonus? Without such merit-based pay, both women and men who deserve higher compensation will be less apt to receive it.

The Paycheck Fairness Act would also send trial lawyers into overdrive by automatically including women in class-action lawsuits and allowing them to sue for unlimited damages. Effectively allowing lawyers to second-guess employers’ business calculations about the value of a worker, the prospects of facing frivolous class-action suits may well discourage business owners from selecting female job applicants, reducing women’s opportunities and choices in the workplace.

“Paycheck Fairness” is an appealing phrase, but in reality, there is no need for further legislation to ensure equal pay for equal work. Both the Equal Pay Act of 1963 and the Civil Rights Act of 1964 protect workers against a multitude of workplace discriminations. Notwithstanding these protections, economic reality creates natural penalties for employers who discriminate.

In today’s highly competitive, global economy, companies that practice pay-based discrimination will be at a competitive disadvantage compared to those who do not. Underpaid women can and will find new jobs that will pay them according to their worth. Companies that overpay men will be undercut by those that pay their workers efficiently, according to the value they produce.

So why, then, do women earn only 77 cents for every dollar earned by men? That’s a statistic cited ad nauseam by proponents of the Paycheck Fairness Act. The short answer is: It’s a bogus number. It doesn’t take into account any differences in the jobs men and women choose, their years in the workforce, continuous service, etc. Factor in those real-world considerations and most of the “gender pay gap” disappears. A 2009 study by the Department of Labor found that all but five to seven cents of the pay gap between men and women could be explained by such differences as occupation, education, experience, and part-time versus full-time work. Part of the remaining gap is the result of individual choices made by men and women.

The Paycheck Fairness Act would place these individual choices at risk. By increasing the risk of lawsuits, it will encourage business owners to limit flexible work options that tend to benefit women more than men.

As a working mother, flexibility is a crucial component of my job. Sick days, doctor appointments, and snow days when school and daycare are closed all take time away from work. There are also accommodations and benefits such as teleworking, “pregnancy parking,” and paid maternity leave. The value I place on these benefits and my use of them is reflected in the paycheck I negotiated to receive. The Paycheck Fairness Act would restrict the availability of such personalized, flexible work arrangements for women and men alike.

Women have come a long way in the workplace, and there is still room for improvement. Yet the Paycheck Fairness Act would impede the freedom and personal choices of women and men alike.

 - Rachel Greszler is a senior policy analyst specializing in economics and entitlements at The Heritage Foundation’s Center for Data Analysis.

Originally appeared in The National Interest