The Gender Pay Gap is Not Due to Sex Discrimination: Oppose the Paycheck Fairness Act  

Lois Digges  

Feminist activists claim that, compared to men, women make 77 cents on the dollar. If data is controlled for occupation, industry, hours, experience, age, education, and marital status, a wage gap remains, but at only 5% less than men (as calculated by Glass Door) or as little as 2% (as calculated by Payscale). Is this a gap wide enough for national legislation to address?  

O'Neill, “an economist who has probably studied wage gaps as much as anyone alive” (Hymowitz), examined data from 5,600 wage-earners and found that the wage gap disappears if only childless women are considered. She also found that, controlling for factors such as hours, experience, education, and type of work, “there is no gender gap in wages among men and women with similar family roles” (O’Neill, p. 33).    

Gender-based discrimination was already made illegal in the Equal Pay Act of 1963 and the Civil Rights Act of 1964 (Title VII). These laws have been effectual. There is no meaningful gender wage gap.  

Under the Paycheck Fairness Act, businesses would be burdened with administrative costs and time wasted on documentation, data, and explanations in an attempt to prove what has already been shown: that wage gaps have a business justification and are not based on sex. Not only would this disproportionately affect small businesses (Boccia), but it would also make it harder for employers to reward employees according to merit (Greszler).  

Economic research has shown that trading performance-based pay structures for rigid pay structures results in a 6-10% decrease in wages (Booth and Frank; Lazear; Pekkarinen and Riddell; Copeland and Monnet; Parent).    

After Denmark passed legislation requiring companies of a certain size to disclose salary information, their gender wage gap closed, but at the cost of overall employee wages. Instead of raising wages for women, it resulted in a lack of pay raises for men. In addition, there was a 2.5% decrease in productivity (Bennedsen, et. al.). This is a natural consequence when performance-based pay is removed, and the result is higher prices for fewer goods (Sandefur).  

Passing the Paycheck Fairness Act would also make it more difficult for employees to negotiate for more flexibility or benefits over higher pay (Greszler, Sandefur). Women, and especially mothers, statistically place a higher value on hour flexibility than pay grade (Pew Research), so this is especially harmful to them.  

Additionally, the Paycheck Fairness Act would expose businesses to frivolous lawsuits (Bocccia), which can cause unfair damage and controversy to the businesses in the public eye. This bill also lifts the cap on punitive and compensatory damages and facilitates class action lawsuits (Ibid.), which could further multiply the harm. Lawyer Christine Sandefur warns that employees could weaponize information without context and create a public relations storm. In such cases, it is difficult to explain that wage gaps are due to differences in negotiation practices, in efficiency, or in market value.  

Debbie Georgatos, a former lawyer and current political activist, notes that The Paycheck Fairness Act may make employers less keen on hiring women if they are seen as a potential liability in court, having an unintended effect of reduced opportunity for women. Economists Rachel Greszler and Romina Boccia share this concern.  

In conclusion, the Paycheck Fairness Act tries to address a gender wage gap that is due to factors such as type of work and hours worked, not sex discrimination. This bill would do more harm than good to employers, consumers, and employees, particularly working mothers.  

The poorly-named Paycheck Fairness Act should be opposed in Congress.  

...or at least greatly amended. Parts worth salvaging from this legislation are the prohibiting of employers from asking about an applicant’s wage history, and the prohibiting of employers from penalizing workers for discussing their pay with other co-workers.  


Bibliography

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Alison L. Booth and Jeff Frank, "Earnings, Productivity, and Performance-Related Pay," Journal of Labor Economics, Vol. 17, No. 3 (July 1999), pp.447-63.

Adam Copeland and Cyril Monnet, "The Welfare Effects of Incentive Schemes," Review of Economic Studies, Vol. 76, No. 1 (2009), pp. 93- 113, 01.

Morten Bennedsen, Elena Simintzi, Margarita Tsoutsoura, Daniel Wolfenzon. “Do firms respond to gender pay gap transparency?” 5 November, 2018. https://wpcarey.asu.edu/sites/default/files/daniel_wolfenzon_seminar_november_9_2018.pdf 

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Greszler, Rachel. “Here’s what the Paycheck Fairness Act is really about – it's not equal pay for equal work.” The Hill. 27 March, 2019. https://thehill.com/opinion/finance/435495-heres-what-the-paycheck-fairness-act-is-really-about-its-not-equal-pay-for 

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