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April 7 2014

The President's Executive Orders on Equal Pay Won't Help Women

National Review
Carrie L. Lukas

As the Senate prepares to consider the misnamed “Paycheck Fairness Act” and the Left prepares to celebrate the also-misnamed feminist pseudo-holiday, “Equal Pay Day,” the president has announced he will sign two executive orders also under the guise of advancing the cause of “pay equity.” 

According to Reuters, one executive order will:

…prevent federal contractors from “retaliating” against workers who discuss their compensation.
“The executive order does not compel workers to discuss pay nor require employers to publish or otherwise disseminate pay data,” the official said. “But (it) does provide a critical tool to encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws and (are) able to seek appropriate remedies.”

That’s fine, but employees already have the right to discuss their own salaries and benefits with co-workers, free of retaliation.  Employers are only allowed to prohibit employees from discussing their salaries and benefits with those outside of the organizations, or from discussing the salaries of co-workers who have not disclosed their salaries, both of which are sensible limits. 

After all, employers have legitimate reasons for wanting to discourage too much sharing about salaries.  Sometimes, managers have to offer a raise to retain a valued employee who has received a better offer; sometimes, someone with fewer years in an organization provides more value and therefore earns more, which can breed resentment among older, longer-serving staffers.  There is a balance that needs to be struck:  Employees have a right to discuss their own compensation and to seek out information about others to insure they are being treated fairly; at the same time, individual workers also have a right to privacy and ought not to be the subject of office gossip, or have their salary information released in their hometown newspaper or posted on Facebook.

The other executive order would require that the Department of Labor collect information about employee compensation–including on the workers’ sex and race–from all federal contractors.  This mirrors a provision within the Paycheck Fairness Act, which would also require that the government demand such data from employers. 

Data collection may sound relatively harmless at first–what’s a little more red tape for businesses already awash in it?–but one can see how such data collection could quickly morph into regulations and government pay-setting.  

And even while the government innocently collects data, employers will be encouraged to see their compensation decisions through the eyes of a government bureaucrat who won’t understand the many factors that business consider when making compensation decisions.  Why allow your female vice president of human resources to scale back her hours in return for a slight reduction in pay?  That would be tough to explain on the government form, so just require her to work from nine to five like everyone else to avoid any potential charges of bias.  Why take a chance on that dynamic new marketing whiz?  If you can’t pay her less for taking the risk on someone with less experience, you may as well stick with the safer, more expensive choice.  

In reaction to this type of government micromanaging, employers will have an incentive to move toward one-size-fits-all compensation packages and to consolidate their workforce to minimize the costs and headaches associated with hiring.  So much for encouraging workplace flexibility and employment opportunity; so much for really helping women. 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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