Paycheck Fairness Act: Will Mandating Equal Pay Really Lead to Equal Pay?

In a speech on Monday, President Obama urged Congress to pass the Paycheck Fairness Act. President Obama needs to take a closer look at his legislation, because it will have the opposite effects of what he claims. In his speech, Obama asked businesses to “offer men and women the flexibility to be good employees and good parents,” but his law would make it harder for employers to be flexible. Obama called the Paycheck Fairness Act part of “our broader agenda to create good jobs and to strengthen middle-class security,” but it would actually make jobs harder to come by for middle-class Americans.

The average woman working full-time will earn 77% less than the average full-time male employee, but that isn’t because misogynistic executives decide to cheat their women employees out of hard-earned pay and it won’t be solved by the Paycheck Fairness Act. Women earn less because they make choices that lead to lower pay — choosing less lucrative career fields and getting out of the labor market for years at a time. Once these factors are accounted for, the average woman makes 99.3 cents for every dollar a man makes, according to an analysis by James Madison University.

This doesn’t mean that sexism doesn’t harm women in the workplace. One of the major reasons that women lower their earning potential with extended breaks from the labor market is that they leave work after having children, something men seldom do. Although a record number of women are the primary income-earners for their household, this is mainly concentrated in working-class families. Women who are on track for careers as high-powered executives are still likely to leave work while their children are young.

The reason that women trend towards lower-paying career fields is hotly debated, but the labeling of specific industries as “women’s work” is certainly one factor. These are failings of our society, but the Paycheck Fairness Act does nothing to change them. Instead, it harms men and women alike by burdening employers with unneeded regulations.

Under the current law, companies can defend themselves from suits by showing that the pay discrepancy is for any “reason other than sex.” If the Paycheck Fairness Act passes, companies would have a greater burden of proof, needing to show that the pay discrepancy is both “not sex based” and “is job related.” This may not seem like a big deal, but it would affect companies’ behavior.

Companies would be less likely to offer workers flexible hours, because the lower pay associated with these agreements would open them up to lawsuits. Blue-collar women would be less likely to be move up to entry-level management jobs, because paying these employees less than more qualified or experienced ones would likewise be a litigation risk. Since lawsuits are expensive even if a company wins, employers will err on the side of caution and avoid hiring large swaths of women employees — the very people the Paycheck Fairness Act is supposed to help.

No matter how well-intentioned the Paycheck Fairness Act is, it fails to address the problems it tries to solve, and will end up making some of them worse.