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President Trump Should Repeal This Obama-Era EEOC Rule on Pay

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President Trump Should Repeal This Obama-Era EEOC Rule on Pay

WSJ's MarketWatch March 31, 2017
EconomicsOther
OtherCulture & Society

The gender wage gap doesn’t really exist, says Diana Furchgott-Roth

Feminists have always wanted to give Uncle Sam the right to compare men’s and women’s earnings in individual firms. But even with a Democratic Congress and Democratic president, they failed to persuade Congress to pass the Paycheck Fairness Act, which would have allowed the government to request such data. However, they succeeded in getting the Obama administration to require such reporting through expanding an obscure form at the Equal Employment Opportunity Commission called an EEO-1.

One signal the Trump administration is serious about encouraging job growth would be to roll back this monstrosity.

On average, over the whole economy, women earn less than men — but because of different choices, not systemic discrimination.

Women choose different subjects to study in college, with more majoring in the humanities and fewer majoring in higher-paying math and science. Women accounted for just 12% of the petroleum engineers graduating between 2010 and 2012 and 22% of those earning a civil engineering degree. At the other end of the scale, women represented 65% of history majors, 72% of French majors, and 84% of art history majors. When they graduate, more women choose nonprofits and social work.

Although feminists put wage differences down to discrimination, Cornell University professors Francine Blau and Lawrence Kahn concluded in a January 2016 paper that “recent research suggests a continued and especially important role for workforce interruptions and shorter hours in explaining gender wage gaps in high-skilled occupations than for the workforce as a whole.”

Some women prefer jobs with flexible hours so as to combine work and family, and these jobs often pay less. Moreover, the rate of women 20 and older working part-time is 23%, compared to 10% for men. And men 20 and older who usually work full-time work 43.4 hours a week, compared to 41.2 hours for women. That’s a difference of 5%.

Yet when women are compared with men in the same jobs, with the same experience and job tenure, the wage gap practically disappears.

A study by the economics consulting firm CONSAD Research Corp. shows that women make around 94% of what men make. The remaining six cents are due to unexplained variables, one of which might be discrimination.

Yet feminists want to give the government new powers to police the workforce. In that way, regulators can compute simple averages of men’s and women’s pay and levy fines on companies with disparities—even if men and women work in different fields. That’s a recipe for discouraging hiring and encouraging firms to leave.

Second, the occupational categories are too wide to suggest, to say nothing of prove, discrimination. One category, “professionals,” includes artists, computer programmers, designers, dietitians, editors, engineers, lawyers, librarians, scientists, nurses, physicians, surgeons and teachers. Companies can await lawsuits and investigations if their female “professionals” are paid less than their male “professionals”—even if the former are dietitians and the latter are computer programmers.

That’s the real story. The commission could use data from the form to justify random checks on firms and accuse them of underpaying, just as the Internal Revenue Service does random audits. Or the EEOC and the Labor Department could try to regulate wages for occupations in which women dominate—say, if the government decides that secretaries or nurses are underpaid.

The EEOC says that completing the form would take each company only eight hours the first year and 6.6 hours thereafter. On that basis, the commission estimates that the annual burden nationally would be $10 million. These estimates are preposterously low. The EEOC assumes that 60,886 firms will file, when the number of firms with 100 or more workers was 101,642 in 2012. These firms had 1.6 million locations, many of which would have to complete their own forms. The U.S. Chamber of Commerce calculates more realistically that the cost of compliance would be at least $693 million annually.

Without increasing the deficit by a dime, the Trump administration has an opportunity to encourage hiring by withdrawing the EEOC form. It should do so without delay.

This piece originally appeared on WSJ's MarketWatch

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Diana Furchtgott-Roth is a senior fellow and director of Economics21. She also served on the transition team for President Donald Trump. Follow her on Twitter here.

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