The U.S. Senate failed to advance the Paycheck Fairness Act (PFA) for a full vote this week. This is good news for those who recognize that this bill is not about securing equal pay between men and women, but boosting payouts for trial lawyers and leading to negative unintended consequences for women.
In the lead up to Tuesdays vote, policymakers on the left repeated debunked statements about the gender pay gap to justify this legislation, which already passed the U.S. House of Representatives along a party-line vote.
Democratic Senator and bill sponsor Patty Murray of Washington explained that the PFA was needed because “The wage gap still exists in every state in our country. And that means that each United States senator represents people who as we speak are experiencing pay discrimination.”
Calling it an issue of fairness, Senator Chuck Schumer claimed the Senate needed to pass the bill to end pay discrimination, but is he right?
Senate Majority Leader Chuck Schumer (D-NY)
False. Completely make believe.
Senator Schumer and others are referring to the gender pay gap. This is the difference in the earnings of all men and women working full time. According to the Bureau of Labor Statistics, women earned 82 percent (or 82 cents on the dollar) that men earned in 2019 according to weekly earnings.
Left-leaning lawmakers and advocates often stop at that figure and argue that the gap must be driven by gender discrimination. However, the BLS explains that these figures do not control for factors that significantly impact a workers’ pay including the number of hours workers, education, work title, industry, job skills, and specialization. When controlling for those factors, the pay gap shrinks to a few cents. Economists cannot say with certainty that the reason for the small unexplained pay differential is gender discrimination.
Other gender pay analyses find similar occurrences. Payscale.com’s annual Gender Pay Gap Report for 2020 found that women earn 2 cents less ($0.98 to every $1) than men when all factors were controlled for, but 19 cents when uncontrolled. Glassdoor’s 2019 analysis of salaries found that the 21-cent gender pay gap shrank to 5 cents when controlling for those factors.
Also, these raw numbers do not tell the story of each individual man and woman and the choices that directly impact their pay.
A man and a woman in the same job and with the same education, as Senator Schumer referenced, may negotiate with their employer for different work schedules and responsibility levels. A woman, who is juggling caregiving duties for her children or aging parent, may negotiate for more flexibility, less time in the office, and less work travel than her male counterpart.
Similarly, a man may take a job that allows him to work remotely in a different–but less expensive–state. In both cases, they may take lower pay than their counterparts in exchange for the work-life balance and quality of life they prefer. Although those choices directly impact each of their pay, they may not show up in a company’s list of salaries.
The left and the media often omit these factors and ignore the role that choices play in explaining the pay gap.
Instead, lawmakers have put forward the Paycheck Fairness Act as the solution to close the gender pay gap. It will not close the pay gap, which is largely choice-driven, but it will erode choices and flexibility for women in the workforce.
This bill does not outlaw sex-based discrimination, because sex-based wage discrimination is already illegal. Women’s rights to earn equal pay for equal work are protected by the Equal Pay Act (1963) and the Civil Rights Act (1964).
Instead, the PFA would require employers to prove they do not pay men and women differently, making it less likely they would be willing to negotiate flexibility and other benefits for an employee. It would remove the limit on damages that employers with pay disparities could be forced to pay and would grant the government the authority to collect more data from private companies on pay. In addition, the PFA requires that workers opt-out of (rather than into) class action lawsuits against employers.
All of this makes the PFA a great windfall for trial lawyers but would increase legal exposure for employers. As a result, employers would be discouraged from hiring and promoting women and from offering flexible work arrangements to workers (often as a tradeoff for lower pay).