Why Fair Pay is About More than Fairness
This year marks the fiftieth anniversary of the Equal Pay Act. At the time of the Act’s ratification, Congress recognized that paying women a discriminatory salary burdened “commerce and the free flow of goods in commerce,” and prevented the “maximum utilization of available labor resources.”1 Unfortunately, today the debate regarding equal pay focuses more on fairness than on the socioeconomic benefits that would be obtained by equal pay. People simply believe that it is unfair to pay women less for performing the same jobs as men simply because they are women. However, by using an argument premised on fairness-, a much more powerful rationale is lost. Equal pay not only benefits the women receiving a higher salary and their children and spouses, it also benefits their employers, service providers, and merchandisers. In fact, it benefits the entire economy and society at large because the increased spending would stimulate the economy and reduce dependence on public assistance.2 Therefore, the issue of pay discrimination is about much more than fairness.
In order to forcefully argue for equal pay, the focus of the debate should be shifted away from fairness and towards a more socioeconomic approach. By altering the framing of the debate in this way, measures like the proposed Paycheck Fairness Act will have an improved chance of ratification. In other words, if employers and decision makers are made aware that everyone should be concerned about pay discrimination and not just women, the slow progress towards equal pay may finally gain the strength it needs and deserves.
THE CONTINUED WAGE GAP
The last fifty years have been revolutionary for women’s rights and women’s roles in society. In 1960, 96 percent of lawyers and 94 percent of doctors were white men. Today, white men only account for 61 percent of lawyers and 63 percent of doctors.3 When former Supreme Court Justice Sandra O’Connor graduated from Stanford Law School ranked as third in her class, the only private sector position she could get was one as a legal secretary.4 Today, women account for 45.4 percent of law firm associates (but only 19.5 percent of partners and 15 percent of equity partners).5 Women today are better educated than men, and they have been for more than two decades. Since the early 1980’s, women have earned more bachelor’s and master’s degrees than men, and today women earn more doctoral degrees than men do.6 Women’s participation in work outside the home is now equal to that of men and women’s earnings are increasingly important to their families’ survival and well-being.7
Yet, women still make significantly less than men when performing the same work. When the Equal Pay Act was passed in 1963, women earned only about fifty-nine cents of every dollar men made.8 Today, women make an average of seventy-seven cents of every dollar men make.9 This means that fifty years of legislation against pay discrimination has not brought women more than eighteen cents closer to equality.10 Some argue that women’s entrance into traditionally male-dominated professions could be a reason for the wage gap, and that time will close the gap as women earn the same experience and seniority as their male colleagues. However, contrary data shows that men earn more than women—even in professions that have been female dominated for a long time, such as education and nursing. For example, female elementary and middle school teachers earn 85.7 percent of what their male colleagues earn, female social workers earn 89.6 percent, and secondary school teachers 91.4 percent of their male colleagues’ salaries.11 The pay gap persists even after factors such as choice of college major (men tend to major in fields such as engineering and computer science, which often lead to higher-paying jobs than typical female-dominated majors such as education and the social sciences) and numbers of hours worked have been accounted for.12 The result is an otherwise unexplained pay gap that can only be the result of gender discrimination.13
WHY PAY DISCRIMINATION IS NOT JUST A WOMEN’S ISSUE
The significant change in women’s role in society over the last fifty years affects American society at large. With women today comprising half of the U.S. workforce, it would be naïve to think of the pay gap as only a women’s issue. It is an issue that directly affects half of the U.S. workforce and indirectly a much larger part through those worker’s dependents. For example, in the typical married American household today, the wife’s salary accounts for over one third of the family’s income. In 2008, 38.1 percent of all American working wives made as much or more than their husbands. In addition, because the industries that were most affected by the Great Recession were male dominated industries, women’s earnings have had an increasingly important role for many families since 2009. In 2009, women were the only employed adult in one out of three families with children. Women’s salaries are also increasingly important to unmarried women and their children. Today, over one quarter of working mothers are single moms and the sole earner of the family.9
The importance of women’s salaries for the American society is further illustrated by the fact that women today make up 77.4 percent of workers in education and health services, which is the fastest growing sector of the U.S. economy. In fact, women comprise the majority share of all but three of the fifteen occupations with the largest projected employment growth between 2006 and 2016. Moreover, women-owned businesses grew at twice the pace as male-owned businesses in the years between 1997 and 2007.9
Lastly, even though women still earn less money than men, they are in charge of the majority of household spending. Women control nearly three quarters of household spending, which translates to over $4 trillion annually.14
These numbers clearly show the crucial role of women’s earnings for both their families’ well-being and for the potential growth of the economy. With women accounting for half of the U.S. workforce, their salaries comprising one third of their family’s income, and with women dominating the fastest growing sectors of the American economy, the importance of women’s salaries cannot be stressed enough.15
Forbes contributor Lisa Gates, who discovered that she was being paid less than a male predecessor, points out that by being paid 32 percent less, she was also 32 percent less able to participate in and stimulate the economy by, for example, paying a housekeeper, buying a car, contribute to charity, or travelling to spend time with family.16 Economist Heidi Hartmann further illustrates the economic impact of unfair pay by estimating that the elimination of the gender wage gap would cause a stimulus effect that grows the U.S. economy by at least 3 to 4 percent. Hartmann compares these numbers with the $800 billion economic stimulus package that Congress passed in 2009 which is estimated to have grown the GDP by less than 1.5 percent.17 Moreover, by reducing the number of working women earning unfairly low wages, their dependence on public assistance would also be reduced.18
THE PAYCHECK FAIRNESS ACT
On January 23, the Paycheck Fairness Act, approved by the House of Representatives in 2009 but twice rejected by the Senate, was reintroduced in the House. The Paycheck Fairness Act was designed to improve the Equal Pay Act of 1963 by, for example, replacing the clause “any other factor other than sex” in the Equal Pay Act with “a bona fide factor other than sex, such as education, training, or experience.”19 It would require the employer to show that the differing salary is truly caused by something other than sex, related to job performance, and consistent with business necessity. The bona fide factor requirement would make employers unable to defend any actions that may actually be “based on sex,” such as a man’s stronger salary negotiation skills or higher previous salary.20 The Paycheck Fairness Act would also prevent employers from firing their employees for sharing salary information with their colleagues, a rule that would be important because it would enable employees to find out about existing pay disparities.21 Moreover, this rule would allow compensatory and punitive damages for any breach.
Opponents to the Paycheck Fairness Act have voiced concerns that the bill would place an unfair burden on employers and that their increased liability could “have a chilling effect on wage growth and hiring at a time when business should be encouraged to increase both.”22 It has also been argued that the Paycheck Fairness Act would “mak[e] it difficult for employers to defeat frivolous lawsuits, foster larger class action cases, and creat[e] an unprecedented level of remedies regardless of the intent to discriminate.”23
Reevaluating how women’s earnings are so important to both their immediate families and the economy, these arguments should be addressed and discussed. For example, when programs designed to raise workers’ wages in female-dominated job classes were implemented in twenty states in the late 1980’s, women in some states gained considerably in non-female-dominated jobs as well as in female-dominated jobs. Therefore, it appears that “the pay equity process stimulated wage increases for women in all jobs.”24 Moreover, pay transparency will, among other things, improve employees’ work effort and productivity, and will enable employers to correct pay disparities before becoming entangled in expensive litigation.25 By focusing on the economic stimulus that the bill is likely to bring rather than its fairness, its proponents would make a stronger argument for the bill’s necessity. Obtaining the necessary support for the bill requires meeting the antagonists’ arguments and convincing them of the bill’s socioeconomic benefits, rather than trying to convince them of the unfairness of pay discrimination, which no one is questioning.
The shift in legislative framing towards the socioeconomic benefits of equal pay and away from the unfairness of paying women less than men may be required to gain the support necessary to pass important laws such as the Paycheck Fairness Act. Therefore, it is of greatest importance to keep emphasizing that “[t]he gender wage gap comes at a cost to the economy as a whole.”26 Women not only have a dominating purchasing power and thereby serve as critical financial decision makers for their households, they also play an increasingly important part in the American labor market. When women are being paid discriminated salaries, they bring home fewer dollars to their families and they have less dollars to spend, with a slower economic growth as a result. It is therefore necessary to stress that eliminating the gender pay gap has the potential to improve not only the conditions for women and their families, but also to strengthen the American economy.
- 1. Equal Pay Act of 1963 (EPA), Pub. L. No. 88-38, 77 Stat. 56.
- 2. Paycheck Fairness Act, H.R. 1519, 112th Cong. (2011), available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1519ih/pdf/BILLS-112hr1519ih.pdf.
- 3. Chrystia Freeland, Equal Rights Makes Sense for U.S. Economy, N.Y. TIMES (May 17, 2012), http://www.nytimes.com/2012/05/18/us/18iht-letter18.html?_r=0&g=4711074DFEDA43CF64940C850012FB66.
- 4. Chang-Tai Hsieh et al., The Allocation of Talent and U.S. Economic Growth (Nat’l Bureau of Econ. Research, Working Paper No. 18693, 2012), available at http://www.nber.org/papers/w18693.
- 5. A Current Glance at Women in the Law, ABA (Sep. 2012), http://www.americanbar.org/content/dam/aba/marketing/women/current_glance_statistics_2012.authcheckdam.pdf.
- 6. Deborah Thompson Eisenberg, Money, Sex, and Sunshine: A Market-Based Approach to Pay Discrimination, 43 ARIZ. ST. L.J. 951, 973 (2011).
- 7. Heather Boushey, The New Breadwinners, in THE SHRIVER REPORT: A WOMAN’S NATION CHANGES EVERYTHING, CTR. FOR AM. PROGRESS 30 (Heather Boushey & Ann O’Leary eds., Oct. 2009), http://www.americanprogress.org/issues/women/report/2009/10/16/6789/the-shriver-report/.
- 8. How the Paycheck Fairness Act Will Strengthen the Equal Pay Act, NAT’L WOMEN’S L. CTR. (May 2012), http://www.nwlc.org/sites/default/files/pdfs/broadpaycheckfairnessfactsheet.pdf.
- 9. a. b. c. Id.
- 10. More strikingly, between 2001 and 2011, the wage gap decreased less than one percent. Unaffordable: the Wage Gap in Every State, NAT’L WOMEN’S L. CTR. (Apr. 2012), http://www.nwlc.org/sites/default/files/pdfs/2012equalpay-factsheets/allstates_equalpaystatefactsheet.pdf.
- 11. Eisenberg, supra note 6, at 975.
- 12. CHRISTIANNE CORBETT & CATHERINE HILL, AM. ASS’N OF UNIV. WOMEN, GRADUATING TO A PAY GAP: THE EARNINGS OF WOMEN AND MEN ONE YEAR AFTER COLLEGE GRADUATION (Oct. 2012), available at http://www.aauw.org/graduatetoapaygap/.
- 13. REP. CAROLYN B. MALONEY, MAJORITY STAFF OF THE JOINT ECON. COMM., INVEST IN WOMEN, INVEST IN AMERICA: A COMPREHENSIVE REVIEW OF WOMEN IN THE U.S. ECONOMY (Dec. 2010) hereinafter INVEST IN WOMEN, INVEST IN AMERICA], available at http://www.jec.senate.gov/public/?a=Files.Serve&File_id=57cfaf04-f297-4c61-964b-6321af47db03.
- 14. See generally id.
- 15. Men and women today are much more likely to graduate with debt compared to their parents and grandparents. This is especially troublesome for women, who will face a discriminated paycheck once they begin their post graduation employment. Even though they paid the same amount for their degree as their male peers, they will make less money and their student loan repayments will therefore make up a larger part of their earnings. These women will have less money to spend on themselves and their families. Therefore, women and their families struggling with unpaid debt also lack the ability to stimulate the economy. A large debt further discourages risk tolerance and the ability to start new businesses. John Tozzi, Easing Student Loan Burdens for Entrepreneurs, BLOOMBERG BUSINESSWEEK (Oct. 26, 2011), http://www.businessweek.com/smallbiz/running_small_business/archives/2011/10/easing_student_loan_burdens_for_entrepreneurs.html.
- 16. Lisa Gates, The Personal and Global Stimulus Effect of Ending the Wage Gap, FORBES.COM (Oct. 30, 2012), http://www.forbes.com/sites/shenegotiates/2012/10/30/the-personal-and-global-stimulus-effect-of-ending-the-wage-gap/.
- 17. Laura Bassett, Closing the Gender Wage Gap Would Create ‘Huge’ Economic Stimulus, Economists Say, HUFFINGTON POST (Oct. 24, 2012), http://www.huffingtonpost.com/2012/10/24/gender-wage-gap-economic-stimulus_n_2007588.html.
- 18. Paycheck Fairness Act, H.R. 1519, 112th Cong. (2011), available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1519ih/pdf/BILLS-112hr1519ih.pdf.
- 19. Equal Pay Act, 29 U.S.C. § 206(d) (2011); Paycheck Fairness Act, H.R. 1519, 112th Cong. (2011), available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1519ih/pdf/BILLS-112hr1519ih.pdf.
- 20. How the Paycheck Fairness Act Will Strengthen the Equal Pay Act, supra note 8.
- 21. Eisenberg, supra note 6, at 989.
- 22. Elizabeth Dwoskin, Why the Argument Against Fair-Pay Laws Is A Farce, BUSINESSWEEK.COM (June 6, 2012), http://www.businessweek.com/articles/2012-06-06/why-the-argument-against-fair-pay-laws-is-a-farce.
- 23. Id.
- 24. Heidi I. Hartmann & Stephanie Aaronson, Pay Equity and Women’s Wage Increases: Success In the States, A Model for the Nation, 1 DUKE J. GENDER L. & POL’Y 69, 82 (1994).
- 25. Eisenberg, supra note 6, at 1008.
- 26. INVEST IN WOMEN, INVEST IN AMERICA, supra note 13.