Fair Pay: Trying To Find Discrimination Where It Doesn’t Exist
Democrats are up in arms after Senate Republicans blocked a vote on a bill that would circumvent the strict 180 day deadline for employees to file pay discrimination claims. Democrats made their obligatory denunciations of Republicans for being in bed with Big Business, while Republicans cited the costs imposed by plaintiffs’ lawyers who opportunistically extort settlements from innocent employers.
I want to provide some comforting thoughts to those out there who feel that somehow women’s civil rights were eroded today…
First, the notion that a gender income gap exists as a result of discrimination is exaggerated and simply specious. Women in the aggregate earn less than men, not because they’re judged by different standards, but because of childbearing and rearing, and differences in experience and interests. Most women give birth to children, after which many decide to stay out of the workforce for some time. Interruptions of their careers costs them work experience and seniority, which affects their incomes relative to men who work continuously in the meantime. Moreover, most studies measuring income differences only compare weekly salaries, which overstates the gap because women generally work fewer hours per week. In contrast, women who are similarly situated to men and don’t have children earn slightly more.
Simple statistics don’t take these factors into account, yet women’s groups continue to make vacuous claims like “women earn 77 cents to a man’s dollar.” Such assertions become silly once you disaggregate the numbers and realize that the gap is predominantly attributable to preferences and choices between the sexes rather than bias and discrimination. The differences in domestic responsibilities and their effect on income cannot be dismissed in the debate.
Second, employers face competitive labor markets. If they discriminate against women with similar experience and skills, employers run the risk of being left at a competitive disadvantage in industries where there is a high demand for labor. A simple Google search for “Best Employers” will bring up thousands of employer websites, all boasting that one publication or another has named them this year’s best employer for women. The fact that firms so vigorously try to enhance their reputations as ‘women-friendly’ further suggests that competition for labor absolutely includes women, and that it’s to their advantage to attract the most qualified job applicants, irrespective of gender. The implication of this, of course, is that to attract the most qualified job applicants you must offer competitive and equal pay.
Third, don’t underestimate the deterrent effect of litigation, especially when punitive damages are involved. With the plaintiffs’ bar more than happy to play “Gotcha!”, an employer would be committing financial suicide by short-changing women. But make no mistake, too much deterrence can be dangerous. The threat of punitive damages is often leveraged by plaintiffs’ lawyers to exploit innocent firms’ fears of protracted and costly litigation in order to extract settlements. The easier it becomes to sue, the more tempting it becomes to abuse the power of litigation. If the 180-day limit was extended to apply to any paycheck, as the Democrats wanted, you would certainly be opening the door to more abusive lawsuits. Employers’ resultant higher cost of doing business would harm everyone –firms, employees, consumers– except the lawyers.
John McCain was right: This kind of legislation does open all kinds of problems.
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