Romney Flirts With Pay Equity

Mitt Romney, a businessman who should know better, has been flirting--politically speaking--with feminists. In recent days his spokesmen declared that he is for "pay equity," and that he would not change current law, including the Lily Ledbetter Fair Pay Act, signed by President Obama in January 2009.

Not satisfied with those undertakings, feminists, including the National Organization for Women, the American Association of University Women, and the National Committee for Pay Equity, are pressing the presumptive Republican nominee also to say that he would support the Paycheck Fairness Act, a bill that would entangle employers in new regulatory mischief.

No doubt Mr. Romney is worried because some polls show that he is trailing President Obama among women voters. An April CNN poll showed that female voters back Obama over Romney by 16 percentage points.

On April 11, in the U-T San Diego, the president wrote, "Women are a growing number of breadwinners in their households, but they’re still earning just 77 cents for every dollar a man does - even less for African-American or Latina women."

Someone should tell the president that in his own White House in 2011, women made 82 percent of men’s earnings, according to publicly available records.

But endorsing totems of feminism is the wrong way for Mr. Romney to try to close the gap, because feminists exaggerate the extent of pay discrimination against women.

Federal, state, and local governments have formidable laws and rules prohibiting discrimination in hiring and pay. Enforcement agencies, equal opportunity commissions, prosecutors, and trial lawyers respond to reports of employment discrimination with legal actions. If a male receptionist is paid more than a female receptionist for the same job, law enforcement will not be silent.

The result, not surprisingly, is that dispassionate economic research on compensation, such as that by University of Chicago Professor Marianne Bertrand and Cornell University Professor Kevin Hallock, or City University of New York Professor June O’Neill, finds only a five percent gap in compensation between men and women when relevant economic factors are considered, such as hours worked, experience, training, and the risk and difficulty of a job.

Why the difference between the popular 77 percent and the actual 95 percent?

Full-time women work fewer hours than men, and 24 percent of women work part-time. Many women leave the workforce after child birth, or work shorter hours afterwards. Some choose flexible jobs, paying less, to enable them to combine work and family.

Inevitably, election year politics figures in all of this. The Democratic-controlled Senate is expected to take up the Paycheck Fairness Act, according to The Washington Post’s Greg Sargent, even though there is no chance that the Republican-controlled House would pass it, or even vote on it.

American Enterprise Institute resident scholar Christina Hoff Sommers told me that the Democrat Senate is responding to feminists who want to highlight the so-called Republican War on Women. "They will stop at nothing," she said in a phone conversation on Tuesday. "The bill would create havoc in the economy. But it may be helpful to their gender war."

Some women believe the feminist rhetoric and don’t grasp the larger economic reality, that more regulatory folderol will not lead to more jobs for women or higher pay. Women, like men, must qualify for better-paying jobs on the basis of education, training, on-the-job performance, and commitment to the workplace.

The Lilly Ledbetter Fair Pay Act changed Title VII of the Civil Rights Act to allow workers to argue that their current compensation flows from intentional discriminatory decisions made years back, even if the firm no longer exists, or a former boss has quit or is no longer alive.

The Lilly Ledbetter Act resulted in some 73 lawsuits during 2009 and 2010, according to a paper by the American Bar Association Section of Labor and Employment Law. Of these, 35 were brought by women, 26 by men, and 2 by the Equal Employment Opportunity Commission. The provenance of the remaining 10 was unclear to this writer. Some cases brought by women also alleged discrimination on the basis of age, race, and disability status, as well as sex, and some were class action suits.

With 72 million women in the labor force, 35 lawsuits over two years is a tiny fraction of one percent. It shows that discrimination is not a systematic problem in the economy.

Even so, the Paycheck Fairness Act, sponsored by Connecticut Representative Rosa DeLauro and Maryland Senator Barbara Mikulski, both Democrats, is next on the list of feminist demands.

It would require practically all employers to give to the government information on workers’ pay, by race and sex, with the goal of equalizing wages of men and women in different job classifications. This would represent a substantial intrusion of government into wage-setting.

There are reasons behind wages of men and women in different jobs. Miners’ work may be of equal social value to that of daycare workers, but companies have to pay people more to toil underground because the work is dangerous and dirty.

The feminists’ prescriptions are harmful medicine. They would expand the web of entangling regulations that employers must cope with and so discourage hiring of women. They might even give employers additional reason to locate jobs overseas.

International businesses can shift jobs overseas with less regulation, less litigation, and lower overall costs. Over the past two years, according to an April 27 Wall Street Journal analysis, 35 large American multinationals have created nearly three-fourths of their new jobs overseas.

Data on hiring and unemployment in April are due out on Friday. Economists who track these issues closely expect another month of subpar payroll expansion.

The economy has 5 million fewer jobs now than when the recession began in December 2007. Recovery has been slower and more tentative than in previous recessions. The last thing we need is legislation that discourages hiring. By favoring women over men, Congress will stall the recovery even further.

This piece originally appeared in RealClearMarkets

This piece originally appeared in RealClearMarkets