White House Shelves Coercive Obama-Era Gender ‘Pay Gap’ Rule

“Equal pay for equal work” – the phrase has a nice ring to it. But like other unsound egalitarian ideas, this one hasn’t earned the hype. And the Trump administration recognizes as much. On August 29, the White House announced it was temporarily blocking an Obama-era rule from taking effect that would require businesses with at least 100 employees to report payroll data by sex to the Equal Employment Opportunity Commission. Defending the move, the Office of Management and Budget noted that parts of the rule “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” Supporters are outraged, and no more so than at President Trump’s daughter Ivanka, supposedly their ally. Such critics, true to form, are overlooking some practical economic realities.

Pay discrimination by sex has been illegal in this country for more than half-century. And the strictures have become increasingly detailed. In 1963, Congress passed and President Kennedy signed the Equal Pay Act (EPA), outlawing sex-based wage disparities. The law, which amended the Fair Labor Standards Act, prohibited employers from paying wages to employees “at a rate less than the rate [paid] to employees of the opposite sex…for equal work [requiring] equal skill, effort, and responsibility, and which are performed under similar working conditions.” The law did not require proof of intent to discriminate. But it did stipulate that an employer is liable for damages in lieu of successfully invoking at least one of four statutory affirmative defenses. Soon after, Congress passed the Civil Rights Act of 1964, Title VII of which incorporated much of the EPA. In 1972, Congress extended Equal Pay Act coverage to white-collar and sales employees.

The years since might not have yielded the results desired by advocates of mandatory gender pay equity, based on the principle of “comparable worth.” But it has not been for want of trying. In 1994, during the first term of President Bill Clinton, congressional Democrats introduced the Fair Pay Act to address compensation disparities by sex. The bill did not pass. Three years later, in 1997, lawmakers sponsored the Paycheck Fairness Act. That legislation would have closed the ostensible loopholes in the Equal Pay Act, punish violators more severely, and ban employer retaliation against persons who discuss their wages/salaries with fellow employees. Though the measure has yet to become law, supporters have reintroduced it in every Congress since.

Pay equity zealots hit a jackpot of sorts early in 2009 when Congress enacted the Lilly Ledbetter Fair Pay Act. The measure bore the name of an Alabama woman, a production supervisor at a Goodyear tire plant, who had filed a lawsuit with the EEOC pursuant to Title VII of the Civil Rights Act. That case, Ledbetter v. Goodyear Tire and Rubber, eventually made its way to the U.S. Supreme Court, which in 2007 ruled 5-4 that Ms. Ledbetter’s complaint had no standing because the allegedly discriminatory decisions by Goodyear regarding her compensation had been made more than 180 days prior to the date she had filed her suit. Feminist groups such as National Women’s Law Center and the National Partnership for Women & Families were livid, as no doubt were trophy-hunting plaintiffs’ attorneys seeking windfall payouts for clients based on effectively moot claims. Overturning the case now was a top priority for the Left. Lilly Ledbetter herself spoke at the 2008 Democratic Party National Convention in Denver. The following January saw sizable Democratic majorities taking over both houses of Congress. Lawmakers quickly introduced the Lilly Ledbetter Fair Pay Act. The Senate and House, respectively, passed the legislation on January 22 and January 27, 2009. Two days later, President Obama signed it. Contra the Supreme Court, the law stated that the statute of limitations for a lawsuit begins on the filing date.

Lilly Ledbetter may not be quite the public figure she was back during 2008-09, but the pay equity debate has raged on. Rarely a month goes by without an organization somewhere in the country announcing that women are paid significantly less than men for the same work. When the Equal Pay Act was enacted 54 years ago, supporters said that women received only 59 cents for every dollar paid to men for similar full-time, year-round work. The putative gap has narrowed by about half. A 2011 White House report, Women in America: Indicators of Social and Economic Well-Being, concluded that women made only 75 cents for every dollar that men make. In 2014, the Shriver Report placed the figure at 77 cents. The most recent (Spring 2017) report on comparable worth by the American Association of University Women, The Simple Truth about the Pay Gap, estimated the ratio at 80 cents per dollar. The coin of the realm these past several years appears to be 79 cents per dollar, a figure derived from research by the Economic Policy Institute and the Pew Research Center.

The Obama administration, dissatisfied, decided to take action. In January 2016, the White House, citing the 79 cents figure, proposed a rule that would give the Equal Employment Opportunity Commission (EEOC) greater authority to take private-sector employers to task for paycheck discrimination. Starting in March 2018, companies with at least 100 employees would have to report more detailed salary data to the EEOC than that indicated on the current reporting form. The threshold for federal contractors would be only 50 employees. Although the EEOC would not share compensation numbers with the public, it would release an annual report showing how much workers make, by sex and race, across more than 3,300 categories of wage data, way up from the present figure of around 130. Then-Commission Chairwoman Jenny Yang explained the rationale at a news conference: “Pay discrimination goes undetected because of a lack of accurate information about what people are paid. Collecting this pay data would help fill a critical void we need to ensure American workers receive fair pay for their work.” Given that the new regulation would cover roughly 63 million employees, the void appeared to be pretty large.

Supporters of the rule received a boost in April of this year with the publication of a briefing paper published by the Washington, D.C.-based Institute for Women’s Policy Research, the nation’s leading advocate of mandatory pay equity. The report, “The Impact of Equal Pay on Poverty and the Economy,” hit standard talking points with a certain alarm:

Women make up almost half of the workforce, yet they continue to earn less than men on average in nearly every single occupation for which there is sufficient earnings data for both men and women to calculate an earnings ratio. In 2015, women working full-time, year-round earned just 80 cents for every dollar that men earned. The pace of progress toward pay equity has been slow, and if progress continues at the same pace, it will take until 2059 for women to finally reach equality. For women of color, equal pay is even further away. Hispanic women will have to wait until 2248 to reach pay equality with White men and Black women will have to wait until 2124 for equal pay.

Unfortunately for the Institute for Women’s Policy Research and its allies, the regulation had hit an unexpected speed bump the previous November: Donald Trump was elected president. While not the anti-feminist his political opponents frequently made him out to be, neither was he an egalitarian zealot. His Democratic opponent, Hillary Clinton, by contrast, was indeed the latter. During the 2016 campaign, she emphasized her intention to close the pay gap. Her website read: “Women earn less than men across our economy – and women of color often lose out the most. We should promote pay transparency across the economy and work to pass the Paycheck Fairness Act to give women the tools they need to fight discrimination in the workplace.”

Yet even with Donald Trump in the White House, the Obama rule stood a good chance of being launched. Supporters were pinning their hopes on the president’s eldest daughter, Ivanka Trump. Even before her father took office this January, Ms. Trump, a married mother of three young children, had made this a leading issue. Last July, she remarked at the Republican National Convention in Cleveland: “As President, my father will change the labor laws that were put into place when women were not a significant portion of the work force. And he will focus on making quality child care affordable and accessible for all.” Once her father took office, Ivanka continued to make gender pay equity and expansion of paid parental leave domestic policy issues of the top rank. She wrote editorials and hosted discussion groups on issues facing working women. On April 4, 2017, she tweeted: “#EqualPayDay is a reminder that women deserve equal pay for equal work. We must work to close the gender pay gap!” Feminist activists thus had good reason to believe she could work her feminine wiles on her father to deliver for them. But their hopes for now have been dashed. And that’s a good thing.

It is easy, at least on the surface, to oppose sex-based wage discrimination. After all, it is illegal. And “equal pay for equal work” is a phrase that connotes fair play. Why shouldn’t a woman be paid the same as a man if she does the same work? The problem here is that word “same,” in practice, tends to be subjective. Two positions, one held by a man and the other held by a woman, may appear to be identical but on closer inspection may be quite different in their requirements. Moreover, the level of education and job experience may differ between the job holders. That is why “discrimination” isn’t necessarily a sinister word. Brookings Institution economists Henry J. Aaron and Cameran M. Lougy defined wage discrimination this way in their 1986 book, The Comparable Worth Controversy: “Labor market discrimination occurs when one group of workers is paid less than another for the same work, or when some workers are prevented from entering particular occupations, getting training, or winning promotion because of some characteristic irrelevant to job performance.” The authors, while not opposing comparable worth legislation, were cautioning that discrepancies in pay for similar jobs at the same work site aren’t necessarily due to an employer’s willful discrimination. Advocates of mandatory comparable worth, such as the National Organization for Women, seem to operate on the assumption that statistical disparities result from arbitrary male decisions to hold back women’s progress. They argue as if employers routinely maintain dual pay scales for men and women. They downplay, if not ignore, factors affecting compensation levels that don’t point to employer malevolence.

The reality is this: Careers, and a specific job one holds in the advancement of a career, result from choices. While luck, both good and bad, is a fact of life, a career is very much the result of one’s conscious efforts to become more attractive to potential employers or clients. Graduating from college, acquiring vocational job training, enlisting in the military, taking on extra responsibilities in an entry-level job, and learning how to write a convincing resume each make one more employable. The fact that pay discrepancies occur between men and women for similar work does not mean that an employer has violated the law or common decency.

More than anything else, the choice that defines female mobility in the labor market is the decision to marry and have children. Becoming a mother, in particular, reduces a woman’s income. It is not a coincidence that the adult male-female wage gap is smallest – and in some cases nonexistent – within the youngest age brackets, where marriage and children for many are not a fact of life. Indeed, on average, unmarried females without children in a given age cohort make more than their male counterparts doing similar work. Summarizing the literature, economist-historian Thomas Sowell offered an explanation in his book, Civil Rights: Rhetoric or Reality:

The economic ramifications of marriage and parenthood are profound, and often directly opposite in their effects on men and women. Marriage increases a man’s rate of participation in the labor force compared to single men and reduces a woman’s labor force participation rate compared to single women. A married man’s hours worked annually increase with the number of children. A married woman’s hours decrease as the number of children increase. Married men work more and earn more than single men, while it is just the reverse with women. Married men with children work the most and earn the most, while married women with children work the least and earn the least. Altogether, married women living with their husbands average only 25 percent of the annual income of married men living with their wives. The big difference is not between men and women, but between married women and everyone else.

While marriage and family cannot explain all discrepancies, they do explain why women as a whole seek work experiences that are less stressful, less dangerous and more flexible in scheduling. Examples:

Longer work weeks. Men tend to work more hours per week than women. As wage-earning employees, they are more apt to work overtime hours; as salaried employees, they are more apt to take jobs that require working weekends and evenings. The American Time Use Survey for 2016, conducted by the U.S. Labor Department’s Bureau of Labor Statistics, provides a wealth of data here. According to the BLS, employed men averaged 56 more minutes on the job than employed women on a working day. Among full-time workers, men worked about 8.4 hours, compared with about 7.8 hours for women. Among full-time employees who worked Saturdays, Sundays or holidays, the respective percentages for men and women were 36.3 percent and 30.2 percent.

Voluntary exit from the labor force. The family factor is never more pronounced than here. A woman’s likelihood of participating in the full-time labor force goes down markedly if she is married with children, especially of preschool age. At the same time, many are willing to re-enter the work force at a later date. According to a New York Times/CBS News/Kaiser Family Foundation poll of U.S. nonworking adults aged 25 to 54 conducted in November 2014, 61 percent of the women surveyed said that family responsibilities were a reason why they weren’t working; only 37 percent of the men responded this way. Of women who identified themselves as homemakers and had not looked for a job in the last 12 months, nearly three-fourths said that they would consider going back to work if a job offered flexible hours or allowed them to work from home.

Physical risk. The Bureau of Labor Statistics for years has compiled an extensive data base of fatal and non-fatal workplace injuries. These BLS studies have found a consistent tendency: Dangerous jobs are those in which men predominate. In order of fatalities per 100,000 full-time equivalent workers, they are: loggers; fishers; aircraft pilots/engineers; roofers; structural iron and steel workers; refuse and recyclable material collectors, electrical power line installers and repairers; drivers; farmers/ranchers; and construction laborers. In 2012, fully 92 percent of all on-the-job fatalities were among men; a BLS study for the period 1992-94 yielded the same percentage. Higher pay is a logical inducement for people to take a job that puts them in harm’s way.

Money as a motive for running a business. Women business owners make less than half of what male business owners make. By definition, a business owner has no boss and hence cannot be the victim of an employer’s “discrimination.” A study of MBA holders by researchers at Rochester Institute of Technology found that money was the primary motivation for 76 percent of male entrepreneurs but only 29 percent for female entrepreneurs. Women tended to place a higher premium on shorter work weeks, proximity to home, emotional fulfillment, autonomy and safety.

Benefits. Base wage or salary is the largest portion of an employee’s compensation, but not the only one. Health, retirement, training, vacation and other benefits are major criteria in a person’s job search. Unfortunately, studies of the “gender gap” rarely take benefits into account. As labor policy analysts Rachel Greszler and James Sherk of The Heritage Foundation explained a few years ago: “If women – particularly working mothers – tend to place a higher value on some benefits than men do (such as more paid time off or better health coverage), this would artificially inflate the pay gap. They would accept lower pay in exchange for better benefits, but surveys asking about wages would report only the lower pay.”

The phrase “equal pay for equal work” looks fair on the surface, but what lies beneath are very real constraints on what can be done to close the gap. Achieving equality of result arguably would require coercion of a sort that most people (and certainly most men) would find intolerable. Controlling for certain factors affecting wages, in fact, substantially reduces if not eliminates the gender gap. Mark Perry, an economist-research scholar with the American Enterprise Institute, in responding to a BLS report that had concluded full-time women employee median earnings in 2011 were 82.2 percent those of men, discovered that controlling for certain factors, the pay gap partially or fully disappears. He calculated that among full-time workers putting in 35 to 39 hours a week, women earned 109.9 percent more than what their male counterparts earned. Among full-time workers who put in 45 to 48 hours a week, women were paid 91.1 percent of what men were paid. Women in the 20-24 and 25-34 age brackets, respectively, made 93.2 percent and 92.3 percent of what males in those brackets made. Looking at median earnings in hourly rather than weekly terms, women made 86.8 percent of what men made. And single female employees with no minor children at home earned 96.0 percent of what their male counterparts made. The gender pay gap is a manufactured crisis. To reiterate: Differences in female and male earnings may appear sizable in the aggregate, but narrow or disappear when one controls for specific work, domestic and demographic characteristics.

A great many “equal” jobs are anything but that. The pay gap looks real because those who call for its abolition engage in “apples and oranges” comparisons. While men and women inevitably seek to maximize their work incomes, they do so bounded by their desired situations at work and at home. That is why appropriate compensation levels are best determined through negotiation between employer and employee; i.e., people who are most familiar with what a particular job entails. Their frame of reference, and not that of EEOC bureaucrats, ought to prevail. One dreads to imagine the surge in lawsuits resulting from the adoption of the Obama reporting rule, coupled with congressional passage of the Paycheck Fairness Act. Ironically, fearing lawsuits, many employers in response may adopt pay structures allowing for far less workplace flexibility of the sort valued by many working mothers.

For now, neither initiative is happening. Whether out of analysis or instinct, the Trump administration has instructed the Equal Employment Opportunity Commission to hold off on promulgating the Obama-era regulation. The White House, for now, is framing the issue in terms of efficacy. In a letter to EEOC Acting Chairperson Victoria Lipnic, Neomi Reo, administrator of the Office of Management and Budget’s Office of Information and Regulatory Affairs, stated that various parts of the plan “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” In an interview with the Wall Street Journal, Ms. Reo reiterated her view, saying that the regulation would not “actually help us gather information about wage and employment discrimination.”

Nonprofit activists of the Left are putting things differently. Fatima Goss Graves, president and CEO of the National Women’s Law Center, undermines President Trump’s assertions of seeking prosperity for all. “It’s not enough to say ‘equal pay,’ she said. “It matters what policies you stand behind.” In several tweets, the center claims it had requested meetings with OMB to discuss the issue, but had been denied. The tweet read: “Equal pay experts worked hard on this rule, but somehow @IvankaTrump on her own decided this policy ‘would not yield the intended results.’” In even more heated language, NWLC tweeted: “Unsurprisingly, @IvankaTrump & her dad would rather listen to billionaire corporations than those fighting for the rights of working people.” The Lawyers Committee for Civil Rights charged that the Trump administration had “surrendered to corporate special interests” and undermined efforts to close pay gaps by gender and race.

Ivanka Trump suddenly has found herself on the hot seat. She’s finessing the issue, arguing that closing the gender pay gap is a sound idea, but the Obama administration rule is an inappropriate vehicle with which to advance it. Ms. Trump explained her position: “Ultimately, while I believe the intention was good that pay transparency is important, the proposed policy would not yield the intended results. We look forward to continuing to work with EEOC, OMB, Congress and all relevant stakeholders on robust policies aimed at eliminating the gender wage gap.” A reboot is inevitable. And hopefully, the next time around, the Trump White House will reject the Obama mandate on principle. Mandating pay equity on the basis of sex is economic unreality. In order to close the existing “gap,” women would have to do the following: work longer hours; commute longer distances; take less sick time; take less vacation time; take on more physically taxing and risky jobs; take less time off for family; be more willing to travel or relocate; and sacrifice personal fulfillment. These things are not likely to happen – even if we waited until 2059.