Hillary Underrates Women
To listen to Senator Hillary Clinton proposing gender pay equity legislation last week, one might reasonably conclude that she is paid only 77% of Senator Obama's $165,200 salary.
According to Senator Clinton, "More than forty years after the Equal Pay Act was signed into law by President Kennedy, women still earn only 77 cents for every dollar men earn for doing the same work."
That's why last week she reintroduced the Paycheck Fairness Act that she had sponsored in the previous Congress. The bill would require the government to set wage guidelines for different occupations, with the goal of equalizing wages of men and women. "If the president will not sign my bill to ensure equal pay for equal work, then as the next president, I will," she said last week at a Washington fund-raiser.
The senator's claim of unequal pay is exaggerated and distorted. Worse, her remedy might cause employers to favor hiring men, to avoid the possibility of being sued or boycotted under federal "guidelines."
Mrs. Clinton tries to obscure the trend toward equal pay and the reality that men and women generally have equal pay for equal work now — if they have the same jobs, responsibilities, and skills. Mrs. Clinton and Mr. Obama are paid identically, as are many other men and women with the same job.
Two entry-level cashiers at a supermarket, one male and one female, are usually paid the same, as are male and female first-year associates at Cravath, Swaine, and Moore, the New York law firm. Otherwise, they sue for discrimination under current law — as Wal-Mart employees are doing now.
The 77% figure cited by Mrs. Clinton comes from comparing the 2005 full-time — defined as 35 hours a week or more — median annual earnings of women with men compiled by the Census Bureau. The 2006 Department of Labor data show that women's full-time median weekly earnings are 81% of men's. New York women do better, with salaries at 83% of men's. Comparing men and women who work 40 hours weekly shows women's earnings at 88% of men's.
These statistics are computed from government data and do not take into account education, job title and responsibility, regional labor markets, work experience, occupation, and time in the work force. When economic studies include these major determinants of income, rather than simple averages of all men and women's salaries, the pay gap shrinks even more.
The standard economic literature in analyzing pay gaps between men and women is centered on measuring these varying factors. A professor of economics at Baruch College, June O'Neill, in a 2003 study found a wage ratio of 95%, using data on demographics, education, scores on the Armed Forces Qualification Test, work experience, and workplace and occupational characteristics.
And economics professors Marianne Bertrand of the University of Chicago and Kevin Hallock of Cornell University found already in a 2001 study almost no difference in the pay of male and female top corporate executives when accounting for size of firm, position in the company, age, seniority, and experience.
Lower pay can reflect decisions — by men and women — about field of study, occupation, and time in the work force. Those who don't finish high school earn less. College graduates who major in humanities rather than in science have lower incomes. More women than men choose humanities majors.
Employers pay workers who have taken time out of the work force less than those with more experience on the job, and many women work less for family reasons. A choice of more time out of the work force with less money rather than more time in the work force with more income is not a social problem. A society that gives men and women these choices, as does ours, is something to applaud.
The Paycheck Fairness Act would have Washington interfere with employers' ability to set wages. Section 7 of the proposed bill reads "The Secretary of Labor shall develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions, and responsibility. …"
These factors are not only difficult to measure, but also favor white-collar and service jobs over manual, blue-collar work. Mrs. Clinton's language omits experience, risk, inflexibility of work schedule, or physical strength, factors that increase men's wages relative to women's. The bill does not include effort, so there is little leeway to promote those who work harder.
Although the guidelines in the Clinton bill would be "voluntary," this can be a slippery slope that leads to compulsory standards. President Hillary Clinton could instruct federal agencies to do business only with those firms that meet the guidelines.
Rather than helping women, the Paycheck Fairness Act would hurt them by increasing the costs of hiring. Employers would be likely to choose the male to avoid litigation.
America leads the world in job creation, and almost 60% of women work. The latest unemployment rate for adult women, at 3.5%, is lower than that for men, at 3.7%. Women are closing the pay gap because their education is increasing and they earn well over half of all bachelor and master's degrees awarded, and nearly half of professional degrees in law and medicine.
Senator Clinton wants the government — not you, and not your boss — to determine how much you make. This is the most radical idea in American labor law today. For Senator Clinton to say that she would sign the Paycheck Fairness Act into law if elected president shows a complete lack of understanding of the reasons behind women's extraordinary economic progress.
Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.
