INDEPENDENT WOMEN’S FORUM TO TESTIFY AT SENATE BUDGET HEARING ON WHY THE “PAYCHECK FAIRNESS ACT” ISN’T FAIR AND WON’T CREATE EQUAL PAY

“Expanding Economic Opportunity for Women and Families”

(Washington, D.C.) – Even though the Senate voted down the "Paycheck Fairness Act" last month, the debate is not over.  Today, May 13, at 10:30 a.m. ET, Independent Women’s Forum Executive Director Sabrina L. Schaeffer will appear before the United States Senate Budget Committee as a witness on "Expanding Economic Opportunity for Women and Families."  Schaeffer will focus her testimony heavily on why legislation like the “Paycheck Fairness Act” won’t create equal pay, just more government-largesse.

FULL TESTIMONY BELOW (PDF HERE):

STATEMENT OF SABRINA L. SCHAEFFER

EXECUTIVE DIRECTOR, INDEPENDENT WOMEN’S FORUM

BEFORE THE SENATE BUDGET COMMITTEE

ON

EXPANDING ECONOMIC OPPORTUNITY

FOR WOMEN AND THEIR FAMILIES

May 13, 2014

 

Chairman Murray, Ranking Member Sessions, and Members of the Committee: Thank you for inviting me here today to discuss the serious shortcomings of the proposed Paycheck Fairness Act.

My name is Sabrina Schaeffer, and I am the executive director of the Independent Women’s Forum. We are a nonprofit organization, and our mission is to increase the number of women who value free markets and personal liberty. And we respond to those who portray society – and especially the workplace – as inherently unfair to women, because it’s simply not true.

I come to this issue not just as the head of IWF, but also as a working mother. I have three young children ages 6, 5, and 2, and I understand the very real need for plentiful jobs, fair wages, and workplace flexibility. And I'm aware of the different factors women weigh when making decisions about what types of jobs to pursue and how to balance work and family responsibilities.

It's those decisions and tradeoffs that should be at the heart of the discussion about workplace fairness; but proponents of the Paycheck Fairness Act usually begin their argument by citing the faulty 77-cent wage gap statistic – that women only make 77 cents for every dollar a man earns. But to have an honest conversation about the workplace and about women’s earnings, we need to stop blindly repeating this number.

We all know that this statistic is grossly overstated, as every serious study has demonstrated – including those done by liberal groups like the American Association of University Women and the 2009 CONSAD Research commissioned by the Department of Labor under this administration. 

The Department of Labor statistic compares the earnings of the average full-time working man to the average full-time working woman, which shows that women earn about 81 percent of what men earn.  This isn’t the equivalent of comparing coworkers performing the same job. It’s a comparison of averages, and it’s like comparing apples to oranges.

This number doesn’t take into consideration any of the important factors – from college major, work history, industry, specialty, hours spent working each day, to name a few – which have a significant impact on how much someone earns. Because when those factors are taken into account, the pay gap shrinks to as little as 4 cents. 

Discrimination may explain some of this remaining gap, although there could be other causes, such as women being more reluctant than men to negotiate starting salaries and to ask for raises.  And knowing this is important, I can help close that small remaining wage gap by being more proactive on my own behalf and by teaching my daughters to be comfortable talking about money.

Even the White House conceded on “Equal Pay Day” this year that the wage gap statistic is misleading. Betsey Stevenson, a member of the White House Council of Economic Advisers, said she “completely misspoke” when suggesting that gap was evidence of discrimination.

Still, President Obama, Democrats here in Congress, and liberal women’s groups continue to use this faulty statistic to try to convince women that they are routinely suffering massive wage discrimination and to justify growing government in the name of protecting women.

And that’s how they sell the Paycheck Fairness Act.  They suggest that it would advance the cause of pay equity and help women earn more; but the bill’s sponsors rarely mention what the legislation would actually do and whom it would really benefit. That’s probably because the legislation’s focus isn’t on increasing economic opportunity for women – it’s facilitating more lawsuits against employers.

Consider what would happen if this law were to pass. Employees would be forced to opt-out of, rather than into, class action suits, making it easier for lawyers to get a class certified and increasing the potential for a jackpot award.

Currently victims of workplace discrimination can receive back pay for the earnings they were denied, as well as punitive damages of up to $300,000. But the Paycheck Fairness Act would allow unlimited punitive damage awards, including for unintentional discrimination. This dramatically increases the motivation for both lawyers and employees to sue in hopes of windfall payouts.

Most importantly, the proposed law would severely limit how employers could justify compensation decisions. Currently businesses can justify differences in pay based on factors like experience, job responsibilities, and performance. But under the Paycheck Fairness Act, employers would only be justified in paying men and women differently if they can prove to the government it’s a “business necessity.”

Such ambiguity would be an open invitation to trial lawyers. Employers would be targets to potential lawsuits for essentially any compensation decision – whether that’s giving a bonus for superior performance or offering an employee more flexible hours in exchange for reduced compensation. Ultimately employers would have the incentive to create rigid, one-size-fits-all compensation packages, which would hurt all workers.

The Paycheck Fairness Act isn’t necessary because equal pay is already the law. Two federal laws—the Equal Pay Act (1963) and the Civil Rights Act (1964) –protect employees from gender-based wage discrimination. The Lilly Ledbetter Fair Pay Act (2009) extends the amount of time a worker has to bring a discrimination suit against her employer.

So what’s the alternative?

Let’s remember women make up nearly 50 percent of the workforce today, and are incredibly valuable to businesses. What’s more, the workplace is changing – quickly and for the better. Providing fair pay, sensible leave policies, and more generous benefit packages are increasingly being used to attract and retain women.        

And where businesses may still lag behind, there is a robust private industry devoted to not just helping women sue like the Paycheck Fairness Act does, but to overcoming remaining hurdles in the workplace.

Organizations like 85 Broads, Negotiating Women, She Negotiates, and C4CM (Center for Competitive Management) help women maximize their success at work through books, conferences, networking, corporate programs, training courses and seminars.

The goal of public policy ought to be to give women and men equal opportunities to pursue their vision of happiness.  We shouldn't be fixated on creating equal outcomes.  Some people will choose to take lower paying jobs that they find personally fulfilling and some are willing to work 80 hour weeks to maximize their pay.

That’s why job creation and growth—not more lawsuits—is the real key to expanding economic opportunity for women and their families. 

Thank you again for your time, and I look forward to your questions.

HEARING DETAILS

Date: Tuesday, May 13, 2014?
Time: 10:30 a.m. ET?
Location: Dirksen Senate Office Building, Room SD-608?
*Livestream webcast provided by the U.S. Senate Committee on the Budget

Witnesses

Sabrina Schaeffer | Executive Director, Independent Women’s Forum

Dr. Heather Boushey | Executive Director and Chief Economist, Washington Center for Equitable Growth | Senior Fellow, Center for American Progress

AnnMarie Duchon | Associate Director of Accommodation Services, University of Massachusetts Amherst

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Independent Women's Forum works to improve the lives of Americans by increasing the number of women who value free-markets and personal liberty. 

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