Unfair Pay Act Perpetuates Myths

An evil, greedy company deprived a hard-working woman of her full earnings, aided by a bad court ruling and an unfair outgoing president. The United States Congress heard the victim’s cry, and came riding to the rescue with the Fair Pay Act, the first bill signed by new president Barack Obama, righting a widespread injustice and enabling all working women to live happily ever after.

That was how the events of January 29 played out, a carefully staged political drama that, predictably, drew much applause from the chattering classes and the benches of political correctness. Unfortunately, things are much more complicated, beginning with Lilly Ledbetter, for whom the Fair Pay Act is named.

She worked for the Goodyear Tire & Rubber company from 1979 to 1998, when she retired as an area manager. Around 1992, she reportedly learned that she did not receive raises as high as some of her male colleagues. (Reports vary on the quality of her performance reviews, but they could have something to do with it.) Lilly did not take action then, however, but waited until she retired in 1998. By then her former boss had passed away.

Ledbetter v. Goodyear Tire & Rubber worked its way through the system, with a lower court awarding Ledbetter $360,000. She apparently decided that would not be enough and opted to appeal to the United States Supreme Court. The high court ruled 5-4 against her on the grounds that the Civil Rights Act required that claims be filed within 180 days of the discrimination, or in some cases 300 days, depending on the state. The bill signed by President Obama reverses that ruling but, despite its name, the Lilly Ledbetter Fair Pay Act is anything but fair.

Those who endorse it say, in effect, that the Civil Rights Act of 1964 has been defective for 45 years. Instead of swift action, the change in the statute of limitations means that companies must address issues years or even decades after the fact, when key players have moved, retired, or even died. This dilutes evidence and degrades employers’ ability to mount a defense. The Ledbetter bill also removes limits on punitive and compensatory damages, so trial lawyers are the prime beneficiaries.

Lilly Ledbetter, interestingly enough, still does not get her money, and it’s hard to see how the Act helps workers, who now lack the incentive to resolve issues swiftly. Worse, the bill saddles companies with new burdens and will be particularly hard on small firms. It also perpetuates some discredited orthodoxies.

True to form, a New York Times piece on the case says that “women still make, on average, only 78 cents for every dollar earned by men for performing substantially the same work. To narrow that tiresome wage gap, tighter rules are plainly in order.” As the Contrarian has noted many times, the “yawning wage gap” is fallacious and fails to account for personal differences, effort, and choice. As former NOW board member Warren Farrell points out in Why Men Earn More, if women get paid so much less on the dollar (the claim used to be 59 cents) why would anybody hire a man?

In the broader politically correct mythology, any disparity in pay between women and men is always caused by deliberate discrimination. Therefore, it must be remedied by government action, such as the Lilly Ledbetter Fair Pay Act, which has another fascinating subplot.

During the election campaign, Michelle Obama cast herself as mom-in-chief but she is now running around giving speeches at federal agencies. From here it looks like we have another co-presidency, with Barack and Michelle, presented as tres bien ensemble, just like Bill and Hillary Clinton.

Michelle Obama is on record that the Lilly Ledbetter Fair Pay act is an important step forward and a cornerstone of a broader commitment to address the needs of working women. What a relief! Thanks to this legislation, and oversight from Michelle Obama, I can now sleep at night.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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