Paycheck Fairness Act makes workplaces less flexible and fair

DENVER—Imagine a world where any difference in pay could be grounds for a lawsuit, even if the pay disparity was warranted by different work arrangements. Employers would say no to requests to for greater flexibility like the ability to work from home or set one’s own hours out of fear that this and the reduced pay that comes with it might seem like discrimination and would invite a lawsuit.

Employers would likely create pay schedules like used by governments to standardize pay and jobs for everyone. Negotiation would be a thing of the past and employers might well hire and promote fewer women—opting instead to advance male workers to reduce their legal exposure. This is the world offered by the badly-named Paycheck Fairness Act (PFA). Many women and men support this legislation because they presume it would outlaw sex-based discrimination in wages although that was already accomplished by the 1964 Equal Pay Act. Instead the Payment Fairness Act would force employers to essentially prove their innocence when it comes to pay equity. Employers would have to demonstrate a “business necessity” for all pay disparities, even if employees are happy with their existing compensation. The bill would also expand the damages employers could face in discrimination lawsuits and require workers to opt out of class-action suits. All of this increased legal exposure for employers will not boost women’s paychecks, but only increase the paychecks of trial lawyers.

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For women in particular, this legislation will backfire. Women—especially mothers—value flexible workplaces more than men. According to Werk, a technology company that helps firms offer more flexibility, 70 percent of women who left the workforce say they would have stayed had they been offered greater flexibility. By making workplaces less flexible, the PFA will only worsen the gender gaps in workforce participation, workplace leadership and ironically, pay. The PFA also takes aim at “pay secrecy” policies in the workplace that ban employees from discussing pay. Like pay discrimination, this practice is already illegal. Importantly, greater transparency in pay—no matter how it’s achieved —is not likely to help reduce the pay gap. That’s because the premise of the Paycheck Fairness Act is wrong: The gender wage gap that exists today is not a metric of discrimination and closing it should not be a public policy goal. The raw gender gap by itself doesn’t tell us much about the amount or type of discrimination against women in our economy.

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Rather, it simply tells us that women, on the whole, earn less money than men. It doesn’t tell us why. It’s just a comparison of averages, not a comparison of women and men in the same jobs with the same experience, education, hours and labor-market conditions. Often, these factors—education, hours worked, etc.—are the result of personal choices that workers have made and they often break down along gender lines. Men are simply more likely to value higher pay, while women— particularly mothers—are more willing to trade high pay for other benefits, like flexibility. A recent Harvard Business School survey shows that 64 percent of highly-qualified women value flexibility as extremely or very important compared to 42 percent who value its role in “earning a lot of money.” If lawmakers really want to further combat pay discrimination, they should look for ways to do so that don’t unnecessarily burden employers —many of whom are women—by removing disincentives to the flexible careers that women workers want. Truly supporting fairness for women in the workplace means allowing individual workers to work together with their employers to customize their compensation. The Paycheck Fairness Act, despite its name, runs counter to this goal.