Would the Paycheck Fairness Act Close the Gender Pay Gap?
A few weeks ago I was quoted in Cindy Goodman's column in the Miami Herald on the issue of the gender pay gap. There is a significant pay gap -- on average, women earn about 78% of what men earn. But is the cause of the pay gap gender-based pay discrimination, i.e. women earning less than equally qualified men for the same work? Or are other factors primarily responsible? I argued that women's choices -- the majors they choose in college, the jobs they apply for, and later, the child rearing choices they make -- are far more important than pay discrimination in creating the pay gap .
I caught some flak for my politically incorrect comments. But my comments were not off-the-cuff opinions -- they were based on the conclusions of numerous studies on the issue. For example, take a look at the American Association of University Women's 2007 study, "Behind the Pay Gap," which is available online. The study explains that women tend to go into fields like education, psychology and the humanities, which typically pay less than the fields men tend to go into, such as engineering, math and business. Women are also more likely than men to work for nonprofit groups and local governments. And, many women choose to leave the workforce or go part-time to raise families. When they re-enter the workforce in a full time capacity, they don't earn as much as men who continued working full-time all along. The study concludes that only a small portion of the pay gap might be attributable to discrimination.
Still not persuaded that the pay gap is mostly the product of choices women and men make? Read this article from Reason Magazine, in which Harvard economist Claudia Goldin is quoted as saying that there isn't evidence of systemic pay discrimination. "There are certainly instances of discrimination, she says, but most of the gap is the result of different choices. Other hard-to-measure factors, Goldin thinks, largely account for the remaining gap -- 'probably not all, but most of it.'"
Which brings us to the Paycheck Fairness Act. The PFA would amend the Equal Pay Act to "provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex," according to this summary of the bill from GovTrack. One of the ways the PFA would accomplish this is to revise the "any factor other than sex" defense. The summary states that the PFA:
Revises the exception to the prohibition for a wage rate differential based on any other factor other than sex. Limits such factors to bona fide factors, such as education, training, or experience.
States that the bona fide factor defense shall apply only if the employer demonstrates that such factor: (1) is not based upon or derived from a sex-based differential in compensation; (2) is job-related with respect to the position in question; and (3) is consistent with business necessity. Avers that such defense shall not apply where the employee demonstrates that: (1) an alternative employment practice exists that would serve the same business purpose without producing such differential; and (2) the employer has refused to adopt such alternative practice.
It's not clear how these new legal standards would play out in practice. One thing is clear, though: Employers would have a more difficult time defending cases of alleged pay discrimination brought under the Equal Pay Act.
Proponents of the PFA argue that new legislation is necessary to close the pay gap. But because the pay gap is, for the most part, not the product of pay discrimination, the legislation would not close the gap significantly. Besides, Title VII and the current version of the Equal Pay Act, as well as state and local laws, already prohibit gender-based pay discrimination and impose significant penalties against employers that are found liable. So it's hard to see why the PFA is necessary.
What's the status of the PFA? It passed the House in January and is currently pending in the Senate. If if it passes the Senate, there is little doubt that President Obama will sign it. Stay tuned.
