News Story

Dem Bills Make Companies Prove Innocence On Equal Pay

Yet important new Harvard study undermines basis of workplace sex discrimination claims

Members of the Michigan Legislature have joined politicians from around the nation in saying that new laws and rules on employers are needed to close pay gaps between men and women in American workplaces. The argument for more regulation is often bolstered by the claim that women who work full time earn only 79 cents for every dollar paid to their male counterparts.

Economists who have studied the matter regularly find evidence showing that when benign factors are considered, the pay gap largely or entirely goes away. In addition, equal pay for equal work became the law in 1963, when President John F. Kennedy signed the Equal Pay Act, which prohibits sex-based discrimination in pay.

Yet “79 cents for every dollar” and similar claims persist. For example, an Obama-era White House task force concluded: “Decades of research shows that no matter how you evaluate the data, there remains a pay gap — even after factoring in the kind of work people do, or qualifications such as education and experience — and there is good evidence that discrimination contributes to the persistent pay disparity between men and women.”

Government activism in workplace compensation practices has also become a feature of Democratic presidential politics. California Sen. Kamala Harris has said she will impose a mandate that employers with at least 100 workers create and retain detailed records that would enable them to prove they have not paid women less than men for comparable roles. An inability to do so would subject an employer to a fine of 1% of its profits for every 1% of the remaining wage gap.

In Michigan, Democratic lawmakers have introduced a legislative package that, among other things, would create a state commission on pay equality to “develop definitions, models, and guidelines for employers and employees on pay equity,” according to MichiganVotes.org.

The site reports that the commission would include “the directors of the Department of Civil Rights and the MEDC, and representatives from the Michigan Women’s Commission, the National Organization of Women, and the Michigan Women’s Studies Association, the AFL-CIO, the UAW, the Farm Bureau, the Michigan Chamber of Commerce, and the Small Business Association.”

Similar bills have been introduced in every Michigan legislative session going back to at least 2001. In 2007, Democrats passed one such measure when they controlled the House, but it went nowhere in the Republican-controlled Senate.

Now in her final term, Rep. Leslie Love, D-Redford Township, has been the primary sponsor of a similar bill in this session, as well as in the previous two. In a 2015 state Capitol rally she told attendees, “Women are increasingly the sole or primary wage-earner in their families, so when they aren’t paid their worth, the whole family suffers.”

Love’s bill is part of a legislative package that includes House Bill 4639, which would require companies that bid on larger state contracts (those worth over $500,000) to purchase an “equal pay certificate of compliance” to prove they are not violating sexual discrimination laws. To get the certificate, firms would have to provide detailed records and disclose the methodology they use to set compensation and benefits. Along with the proposal for an equal pay commission, this bill is co-sponsored by most members of the House Democratic caucus.

Despite allegations that sexual discrimination is running rampant in American workplaces, there is a good deal of empirical research indicating that pay differences are explained by various benign factors, including the different work choices of men and women.

To cite one basic factor in total pay, according to the Bureau of Labor statistics, men worked an average of 8.05 hours per day in 2017, while women worked an average of 7.24 hours.

One recent study challenging the comparable-worth claims was done by researchers at Harvard University. It used data from the Massachusetts Bay Transportation Authority. Men and women at the agency are promoted by seniority rather than job performance, and they receive uniform hourly wages and benefits. Options for overtime, vacation and scheduling are also equal for employees of the same seniority level.

This suggests that total pay for male and female employees of the agency should be similar, but researchers discovered that men made more, for reasons that had nothing to do with workplace discrimination. Male workers were twice as likely to take overtime shifts.

Those shifts pay time-and-a-half, raising the male workers’ wages.

Men also used roughly half as much unpaid medical leave as their female counterparts, while women preferred to work shifts that maximized the time they could devote to their families.

Men with families also tended to work more overtime shifts than men without children.

“The gap . . . in our setting can be explained entirely by the fact that, while having the same choice sets in the workplace, women and men make different choices,” the Harvard researchers concluded.