Equal Pay: A Battle Is Brewing in the Senate

women's pay inequality
women's pay inequality

For decades, the question of why women are paid less than men has vexed political and business leaders. Now, as the midterm elections loom, the debate about this issue is heating up in the U.S. Senate over the Paycheck Fairness Act (PFA).

Among other things, the bill would make it easier for women who allege discrimination to file class actions against their employers. It also removes caps on punitive damages under the Equal Pay Act. The bill passed the House last year.

Both the Obama Administration and Senate Majority Leader Harry Reid, who's facing a tough reelection battle, support PFA. Republicans and business interest are against it, alleging it would open employers to needless lawsuits. The bill's backers say that claim is baseless.

"There is really strong support for it," says Terry O'Neill, president of the National Organization for Women, in an interview. She describes the changes proposed by PFA as modest. "Think of the middle-class families who are struggling," she says.

Up to $2 Million Less Over a Lifetime

Women, who are either the sole or co-breadwinner for about two thirds of U.S. households, earn $11,000 a year less than men annually because they make less than men who do the same work, according to NOW. That disparity equals $400,000 to $2 million over a lifetime. A report released today by the Government Accountability Office bolsters that argument, finding that female managers earn 81 cents for every dollar that a man earns. That represents progress from seven years ago when the figure was 79 cents.

The GAO also found that women held 40% of management jobs in 2007, compared to 39% in 2000. Traditionally male bastions such as Wall Street also continue having difficulty retaining women. And female MBAs earn $4,600 less than male MBAs during their first year out of business school, according to a recent survey by Catalyst cited by Newsweek.

White House senior adviser Valerie Jarrett recently said the PFA affords "common sense" protections to workers. Under the bill, employers would be required to prove in court that factors other than sex accounted for wage differences. Critics, such as the National Association of Manufacturers, say the bill is the last thing businesses need in a struggling economy.

"And really, you can't be for 'jobs' -- that is, new hiring and a lower unemployment rate -- and seriously support the bill," writes Carter Wood on NAM's Shopfloor website. "The additional rules and legal liability the bill would create would substantially raise the marginal costs of every new hire."

"There Will Be More Litigation"

In an interview, Jane McFetridge, managing partner of the Chicago law office of Jackson Lewis, says the law would be good for her business -- and that's not a good thing because that would mean more lawsuits get filed.

"I will be busier than I ever have been before," says McFetridge, who represents employers in discrimination cases and testified against PFA before Congress. "Whether it's meritorious or not, litigation is expensive. . . . There will be more litigation of this nature" if the law is passed.

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Sometimes such cases have no clear good guys or bad guys. Many of the executives who deal with these claims in areas such as human resources also happen to be women, according to McFetridge. "There's a ton of legal redress right now" in state and local courts, she says.

In an editorial today, The Washington Post argues that though well-intentioned, the law is flawed because it "would allow employees and courts to intrude too far into core business decisions." The debate will rage on for a while longer. Says a spokesperson for Senator Reid: "This is on a list of possible items that could come up when we return after the elections."