“At a time when the unemployment rate is 9.6 percent, when 14.8 million Americans are out of work, when 43 percent of the unemployed have been out of work for six months or more, it makes no sense to discourage employers from hiring workers,” Diana Furchtgott-Roth, a senior fellow at the Hudson Institute, said at a Hudson-sponsored panel to discuss the Paycheck Fairness Act (PFA). If you think employers are hesitant to hire now, just wait until the PFA goes into effect. Let’s hope it doesn’t.
The PFA–slated slated to come up for a vote next week–is a lame idea for a lame-duck Congress. Originally proposed by then-Senator Hillary Clinton, the bill solves a “problem” that no longer exists: the so-called wage gap, whereby qualified women earn less than their male counterparts. This is the rationale for the bill. But as June O’Neill, former director of the Congressional Budget Office, pointed out, the wage gap steadily has been narrowing over several decades, and today one group of women-younger ones who have never been married-out-earns male employees in the same demographic.
When the wage gap was wider, the discrepancy between what men and women earned was primarily the result of women’s choices. Unlike men, women were likely to take time off to be at home with children or to work part-time. These choices were reflected in their pay. Somebody who has been in the workforce without interruption since college is simply likely to take home a bigger paycheck than a coworker who has opted out of the workforce for several years. The narrowing of the gap, O’Neill noted, is the result of having more women in the workforce. They tend to make choices more like those of men, ensuring that their earnings are the same as those of men. Christina Hoff Sommers, moderator of the panel, emphasized that the arguments for the law are based on on ideology and flawed information. But these factors haven’t stopped its advocates. “Women’s groups have been waging a massive battle behind the scenes,” she said.
Although I had known that the law was based on the wage-gap–that heady brew of misunderstood raw data–I had not realized before the Hudson event just how intrusive it would be-employers who wanted to pay higher wages to those working in, say, a supermarket in a dangerous neighborhood than to workers in a safer one would risk being sued. A female employee in a safe area could file a suit saying that men who were working in the bad part of town were making more. It would be true. The upshot isn’t likely to be that the supermarket would try to raise wages of every worker-self-service check-outs, which add to layoffs, are the more likely result.
What about the supermarket supervisor who has a college degree, while other employees don’t? Employees could conceivably file a suit alleging that the college degree isn’t necessary for the job and the other employees should rise to the same level of pay as the fellow with the degree. While I don’t put as much stock as some people in having a B.A. as some do, I can see an employer wanting to hire somebody with one. I can certainly see it as the employer’s choice.
There is one group that will benefit from the PFA: lawyers for whom passage next week would be an early Christmas. Furchtgott-Roth emphasized that such regulations can send jobs overseas, where restrictions are fewer. No potential employer wants to risk a lawuit, but you can bet that trial lawyers are already alert to the possibilties of the PFA.
During the panel, I kept thinking about President Obama’s recent statement that our current economic situation, a sluggish economy with high unemployment, may be the “new normal.” When he said that, he must have been thinking that the PFA is definitely going to pass. Let’s hope he is wrong.
P. S. My colleague Romina Boccia has an excellent piece on the unintended consequences of passage that would be good reading for members of Congress before they make a drastic mistake.