Thursday, November 11, 2010

Paycheck Fairness Act aka Another Job Killer Act

Here's an excellent study done by Diana Furchgott-Roth on how passing the Paycheck Fairness Act (passed by the House) will result in even more jobs being exported out of the country.

President Obama has frequently called for passage of the Paycheck Fairness Act. For example, on July 20, 2010, he declared, “Yet, even in 2010, women make only 77 cents for every dollar that men earn…So today, I thank the House for its work on this issue and encourage the Senate to pass the Paycheck Fairness Act, a common-sense bill that will help ensure that men and women who do equal work receive the equal pay that they and their families deserve.”

But the Paycheck Fairness Act is not a common-sense bill. Rather, it would lower hiring in America and increase hiring abroad. Further, it would hurt women, the very group it is designed to help, by depriving them of jobs. Within groups of women, the lowest-skilled might be hit the hardest, because it might be harder for employers to justify their salaries in lawsuits.

Lower levels of employment are never justified. But at a time when the unemployment rate is 9.6 percent, when 14.8 million Americans are out of work, when 42 percent of the unemployed have been out of work for six months or longer, it makes no sense to discourage employers from hiring workers.

Furthermore, the bill is misnamed because it responds to a false problem. As will be discussed below, there is far less pay discrimination against women than is alleged by professional feminists. With numerous anti-discrimination laws, such as Title VII of the Civil Rights Act, the Equal Pay Act, and the Lily Ledbetter Fair Pay Act (signed into law by President Obama in January 2009), women do not need more remedies for discrimination. Courts have sufficient tools, and use them. The pending bill would only burden employers with more regulations and paperwork, further discouraging hiring.

I decided that I would check the disparity between men and women's income within my own accounting/tax practice.

See, in Ohio, when both spouses work it is often advantageous for the taxpayer to file separate returns (tax tip for those of you who do your own returns). Out of 446 married couples, I filed 58 separate returns indicating that both spouses were probably employed.

In that scenario, men earned an average of $56,566. The wives earned $55,593 Meaning that women earned a disgusting 98.3% of the men's income. They're so hosed.

The PFA is attempting to equalize income based on skills sets. For instance, it doesn't take a high school education to be a roofer but it probably does to be a clerical person. Under PFA that clerical person should be paid more than the roofer. Nevermind, that no one wants to be on top of a blistering roof in July the nice cushy indoor job should pay more.

But hey, let's go ahead and pass the law and Obama can just take up job orders the next time he makes a run to India, Indonesia and South Korea.


Anonymous said...

There is nothing ‘fair’ about this proposed bill. It was created to close the so called salary gap. Well, I have been in the payroll industry for over 25 years and I can tell you that differences in people pay have nothing to do with their sex.

Paycheck Fairness Act would protect employees who share salary information with co-workers and require employers to show that wage differences are job-related, not gender-based. Employers beware! This bill will create more reasons for employees to file frivolous lawsuits. The only people that will benefit from this bill are the lawyers that take on the discrimination lawsuits.

It will do NOTHING to increase women’s salary. This bill would not discriminate. The end result will be MEN will be offered lower starting rates for fear of upsetting the women work force.

Just as each individual has different fingerprints, each person is wired differently. How can you measure and prove someone’s negotiating skills? How do you measure and prove a person’s drive, determination, perseverance, and other qualities that put them ahead of the competition? Everyone knows that managers with different levels of responsibility and experience are paid differently. How can you even compare apples with apples? You can’t. That makes this bill unfair.

The Paycheck Fairness Act requires the government to collect MORE data from employers on the sex, race, and national origin of employees, adding to the red tape, paperwork, and hiring costs. It would only allow employers to defend differences in pay between men and women on the grounds of education, training, and experience if these factors are justified on the grounds of “business necessity”. Meaning that male managers with college degrees couldn’t be paid more than females clerks with college degrees if the employer can’t prove that the manager position wasn’t consistent with ‘business necessity’. In addition, the penalty would include back pay.

Even if you are not an employer, this bill affects you. Workers will automatically be included in the class action suit unless they opt out.

In a nutshell, it does not simply ensure “paycheck fairness” between men and women. It would make it much more difficult for employers to defend against wage discrimination claims, allow for unlimited damages, and make class action status far easier to obtain.

Funny how the name of the bill always sounds good but when you dig deeper, it's a nightmare.

Anonymous said...

Great post! Free markets are the answer to this. Let people work for the best wage. Speaking as a conservative I can say with all honesty I have observed that men, women, gays, minorities are all equivalent in productivity. Wages, if they are disparate, will equalize when people decide to excercize their right to work for employers that will pay their worth. Forcing wages based on some arbitrary outside rule will make companies less competitive and cause society's wages to fall across the board as a result.

One other thing. The least productive employees I've ever seen tend to be those who think their job is a platform for running their internal company social justice league.