This was originally published elsewhere on 11/10/2010 under the title, “Paycheck Fairness Act will enrich trial lawyers, but further depress the job market”; what follows is an edited version.
The Paycheck Fairness Act would transfer large sums of money from employers to trial lawyers and litigants… money that might otherwise be spent on expanding business and hiring new employees. It would also prevent employers from setting wages based on market forces; hence it’s another government measure undermining capitalism in this country.
President Obama has urged the Senate to pass this bill, saying:
I thank the House for its work on this issue and encourage the Senate to pass the Paycheck Fairness Act, a common-sense bill that will help ensure that men and women who do equal work receive the equal pay that they and their families deserve. Passing this bill is one of the Task Force’s key recommendations, and I hope Congress will act swiftly so that I can sign it into law.
This bill assumes that women are being discriminated against with respect to wages, and it proposes to right this wrong by making it easier to sue employers for gender-based pay discrimination via class-action lawsuits. Women are already protected by the Equal Pay Act, but apparently proponents don’t feel that the Equal Pay Act goes far enough, and the Paycheck Fairness Act amends the Equal Pay Act. Here are some key provisions of the Paycheck Fairness Act:
- It would automatically enroll workers as members of a class action suit unless they opt out.9
- It would allow unlimited punitive and compensatory damages.6
- It would enable women to find out how much their male co-workers are making.3
- It would allow lawsuits to address “lingering effects of past discrimination;” this is code-speak for allowing women employed in so-called “pink collar” jobs (like those in education and nursing) to claim that they are paid less than people in careers which are dominated by men (such as trucking, plumbing, and engineering) because of historical discrimination against women.4
- It would require the Office of Federal Contract Compliance Programs (OFCCP) to use a discredited survey instrument (the Equal Opportunity Survey) to identify potential gender-based discrimination among federal contractors.4
- Only bona fide factors such as experience, education, and training would be permissible reasons for differential pay. However even when these were cited, the employer would be required to justify why these factors constituted a “business necessity”.8 Furthermore Section 3.B states that if an employee can demonstrate that an alternative employment practice exists that would serve the same business purpose, the bona fide factor cited by the employer could no longer be used to defend his compensation practices.
- Employers would no longer be allowed to explain away pay differences by pointing to market factors, previous salary history, or geographic location.8
- Section 5.a.5 sets aside money in the form of federal grants to train women and girls to become better negotiators so they can negotiate higher salaries for themselves. Among those who can apply for these grants are private nonprofit organizations and community-based organizations.
If the National Association of Manufacturers is correct in believing that “market factors, previous salary history, or geographic location” can no longer serve as a basis in determining pay (because the bill would restrict all differences to bona fide factors, like education), this would be a horrible blow to capitalism. Instead of market forces establishing the true value of someone’s labor, professors of Women’s Studies will be determining the value of labor through litigation.
To get an idea of what is meant by the “lingering effects of past discrimination,” the basic idea is that past discrimination has “tainted” the market forces due to sex-based stereotyping. As opponent Christina Hoff Sommers explains9 :
The bill’s language regarding these “lingering effects” is vague… it could prove a legal nightmare for even the best-intentioned employers. The theory will be elaborated in feminist expert testimony when cases go to trial, and it’s not hard to imagine a media firestorm developing from it. Faced with multimillion-dollar lawsuits and the attendant publicity, many innocent employers would choose to settle.
As to re-instituting the Equal Opportunity Survey (EOS), the Heritage foundation explained its opposition by noting that the EOS performed about the same as chance at identifying employers who were actually discriminating. The Department of Labor found the EOS to have a 93 percent false-positive rate and a 33 percent false-negative rate.
I was also angry about the clause in the bill that sets aside grant money to train women to become better negotiators. This is just another way to take money out of my pocket via taxes and give it to organizations like ACORN. However considering the other ways that this bill would damage the economy and undermine capitalism, my opposition to the negotiation-training grants is but a quibble. This bill is certain to further depress hiring in an already slow job market.
I urge people to write to their senators and voice their opposition. Remember, it’s already passed in the House.
- Dem lame-duck agenda shrinking fast after Election Day ‘shellacking’ published by The Hill.
- Why Women Need the Paycheck Fairness Act published by Newsweek
- Media Blitz Against the Paycheck Fairness Act published by Fair Blog.
- The Equal Pay Day Reality Check published by The American
- Women Deserve Equal Pay published by NOW
- The Paycheck Fairness Act: The Heritage Foundation 2010 Labor Boot Camp published by the Heritage Foundation
- Apologizing for America, Administration Touts Paycheck Fairness Act published by Shopfloor
- ManuFACTS: The Paycheck Fairness Act published by National Association of Manufacturers
- Fair Pay Isn’t Always Equal Pay by Christina Hoff Sommers, published as an op-ed in the New York Times