"Fair" Pay Act isn't Fair

Last week Obama signed the Lily Ledbetter Fair Pay Act. The act is intended to end pay discrepancies between men and women and circumvent a Supreme Court ruling that workers had 180 days to file a discrimination claim. Under the new law each discriminatory paycheck is a new event, thereby extending the 180 day statute of limitations.

In his remarks at the bill signing, Obama said:

It is fitting that with the very first bill I sign - the Lilly Ledbetter Fair Pay Restoration Act - we are upholding one of this nation's first principles: that we are all created equal and each deserve a chance to pursue our own version of happiness.

For nearly nineteen years Ledbetter had been paid less than her co-workers. One can only conclude that her pay during that time was satisfactory, or she would have sought employment elsewhere. She had ample opportunities to pursue her own version of happiness.

The right to the pursuit of happiness means that we have the right to choose our values and the means for attaining them. We have the right to act without interference from others, so long as we respect the mutual rights of others. This right includes accepting a job for any wage that is agreeable to both the employer and the employee. Nobody held a gun to Ledbetter's head to accept the job or the pay she was offered. Yet, Obama and Congress will now hold a gun to the head of every employer in America.

So in signing this bill today, I intend to send a clear message: That making our economy work means making sure it works for everyone. That there are no second class citizens in our workplaces, and that it's not just unfair and illegal - but bad for business - to pay someone less because of their gender, age, race, ethnicity, religion or disability. And that justice isn't about some abstract legal theory, or footnote in a casebook - it's about how our laws affect the daily realities of people's lives: their ability to make a living and care for their families and achieve their goals.

It is certainly bad for business when the government forces employers and employees to act contrary to their own judgment. It is certainly bad for business when government intervenes in the private contractual arrangements between two individuals.

Obama's means for achieving this "justice" is through coercion, which makes a mockery of the concept. There are many valid reasons why a person would be paid less than co-workers. Thomas Sowell has written about this many times. In Civil Rights: Rhetoric or Reality? he writes:

The economic ramifications of marriage and parenthood are profound, and often directly opposite in their effect 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 compared to single women. (page 93)

There are often significant differences in the type and duration of that participation as well. Women often spend years outside of the work force while raising children. This has an effect on their skill sets, their experience, and other factors that can impact pay rate. In others, statistics that show that men and women are paid differently do not take into account the myriad factors that ultimately determine wages.

This of course, is of no concern to the egalitarians. They demand equality of results. They demand, for example, that all people performing a certain job be paid the same--they regard all other factors as irrelevant. The quality of the work performed, additional skills or experience the worker brings to the job, leadership and "team skills" are all factors that an employer considers when setting wage rates. A sullen, grouchy complainer is usually far less valuable than a personable team player.

These personal skills, traits, and virtues are precisely what the egalitarians regard as insigificant. To the egalitarian, all humans are equal because they are human, and their choices and actions have no bearing on their successes or failures. They take any difference in results as evidence of bigotry, discrimination, and other "unfair" attitudes.

The implication is that business owners are ignorant Neanderthals who have no rational basis for any other of their decisions. Business owners will discriminate arbitrarily and take advantage of employees. Business owners will sacrifice their employees just to squeeze out another dollar of profit. Business owners have no understanding of cause and effect--they are clueless as to the relationship between treating employees fairly and having a motivated, competent work force.

The truth is, it is the egalitarians who do not understand cause and effect. It is the egalitarians who try to squeeze an extra dollar (or millions of them) out of the business owner. It is the egalitarians who seize on any random fact and arbitrarily assert that it proves discrimination. They don't like the fact virtue is the cause of success, and some workers are more virtuous than others.