One year ago, Obama signed the Lilly Ledbetter Fair Pay Act into law, ensuring that workers can go to court to protest pay discrimination. Now it’s time for the next step.
For almost twenty years, I got paid less than my co-workers. I was a woman doing the same work as the men on my team — and apparently, my gender was all the excuse my employers at a Goodyear tire plant needed to cut my paychecks. My salary was far lower, and I got lower raises – over and over again.
But one year ago today, to my amazement, the President signed the Lilly Ledbetter Fair Pay Act into law, which restored the law to make sure workers can go to court to protest pay discrimination.
And now it’s time for the next step. The right to go to court is important, but it isn’t enough. We need to do more to keep women from being discriminated against in the first place.
We need to pass the Paycheck Fairness Act. This bill gives teeth to the protections against pay discrimination. And women, who are still shortchanged in the workplace, deserve just that. The bill would empower women to negotiate for equal pay, create stronger incentives for employers to follow the law, and strengthen federal outreach and enforcement efforts. It would also strengthen penalties for equal pay violations.
But from where I sit, one of the most important aspects of the Paycheck Fairness Act is a provision that would prohibit retaliation against workers who ask about employers’ wage practices or disclose their own wages to co-workers. This would have been particularly helpful to me, because Goodyear prohibited my colleagues and me from talking about our wages. This policy delayed my discovery of the pay inequities between my male counterparts and me by — literally — decades.
For the past year, I’ve been speaking out to build up support of this bill, with the help of my friends at the National Women’s Law Center.
The bill has already passed the House, and now it’s up to the Senate. It is time to improve the law, not just restore it. You can count on my continued commitment to passing this Act and to ensuring that women will some day, as the President called for in his State of the Union, truly have equal pay for equal work.
About the Author: Lilly Ledbetter is a volunteer and mother of two. She resides in Jacksonville, Alabama.
A recent Time magazine poll found that 71% of Americans who responded want the government to place limits on the executive compensation at firms that received bailout money. Yet accomplishing this task selectively is impossible to do.
The government did appoint a czar of executive compensation for these corporations, but he approved a $7-million salary/$3.5-million bonus plan for the head of AIG, 80% of which is now owned by taxpayers. Few workers, executives included, would agree to work for less than the going rate. Executives are simply used to earning millions of dollars, and there is little that either the czar or shareholders can do about it unless Congress limits all executive compensation. But the chance of such legislation passing is slim.
Why is limiting executive compensation so difficult? Because executives have a seemingly unassailable argument — market forces — that University of Chicago professor Steven Kaplan defended in an October debate: “Market forces govern CEO compensation. CEOs are paid what they are worth.”
Of course, market forces are cited not only to justify outsized compensation for executives but also poverty wages for workers. Textbooks claim that minimum wage laws and union wages create unemployment. Just what are these market forces, and should we let them determine executive compensation and wages?
When British economists David Ricardo and Adam Smith examined this question 200 years ago, they concluded that what a person earns is determined not by what the person has produced but by that person’s bargaining power. Why? Because production is typically carried out by teams of workers, managers and machines, and the contribution of each member cannot be separated from that of the rest. A driver and a bus, for example, generate $100,000 of income a year. The driver is paid $25,000. Is this because the driver had transported 10 of the passengers without the bus while the bus had transported 30 of the passengers without the driver? The driver’s pay is so small only because the driver is so weak at the bargaining table.
It was Smith who explained that the bargaining power of each party is determined by the laws that the government passes and the way that it enforces them, and that, as a rule, the government sides with employers against employees. He was particularly concerned with anti-unionization laws. Had he witnessed the largesse that boards of directors are permitted to offer executives, and the government’s behavior toward executives in the current crisis, he probably would have added that the government also sides with executives against shareholders and taxpayers.
Despite the logic of Ricardo and Smith’s explanation that it is power, not productivity, that determines what people earn, the notion that people earn what they “deserve” persists. It dates to the Haymarket riot of 1886 in Chicago — in which police and labor protesters clashed and several policemen and demonstrators were killed — and the labor unrest that followed. Concerned about this unrest, John Bates Clark, a Columbia University professor, warned in an 1899 book: “The indictment that hangs over society is that of ‘exploiting labor.’ If this charge were proved, every right-minded man should become a socialist.”
It was thus with a clear political agenda that Clark took it upon himself to prove that the charge of exploitation of workers was dead wrong. Clark’s “proof” was to ignore the fact that production is carried out by teams and that individual contributions cannot be measured. He simply declared that the contribution of each individual worker and each machine could be measured, and that the earnings of either workers and executives or machines are simply the values of these contributions.
In this view, if the government were to raise wages by law, employers would have no choice but to fire workers, because no employer can pay out more than the worker puts in. And if the government were to set limits on executive compensation, the bright and the talented would choose to work less or limit the level of their performance.
Evidence that Clark’s theory is wrong — that production is carried out by teams and that astronomical compensation is not a requirement for good performance — can be found everywhere. In 1941, Wassily Leontief, a Nobel Prize-winning economist, tried to alert economists to the fallacy of Clark’s theory. But Leontief, like Ricardo and Smith, was ignored. And Clark’s tale that earnings are determined by productivity alone is still being taught around the globe.
Corporate executives take a different approach: picking the argument that suits them. When it comes to their workers’ wages, Clark’s theory rules: The wage of each worker is equal to the value of his or her product, and raising wages will cause unemployment. When it comes to the executives’ own compensation, however, they hide behind the idea that an individual’s contribution can’t be measured. So even when the corporations they run lose big and their stocks decline, they still collect millions in pay. Executive compensation is now so large that executives’ work effort no longer has any relation to the level of their compensation.
Adam Smith got it right: The remedy for the rule of power is the rule of law. We need new laws to check the unfair distribution of the fruits of our labor. One such law could set a maximum ratio at any given company between the highest executive compensation and the lowest worker’s wage. Another could set a minimum ratio for the division of income between labor and shareholders. Still another could raise the minimum wage and tie it to the median wage, which would make the minimum wage a consistent living wage.
Overpaid executives take more than their fair share and leave too little for the rest of us, threatening our health — and that of society.
Moshe Adler teaches economics at Columbia University and is the author of “Economics for the Rest of Us: Debunking the Science That Makes Life Dismal.”
*This article originally appeared in The L.A. Times on January 4, 2009. Reprinted with permission from the author.
Today is Pay Equity Day. The National Committee on Pay Equity came up with the idea in the mid-1990s to acknowledge a day in April to remind us that it takes women a full year PLUS an extra four months of earning a salary (or a total of 16 months) to equal the amount male colleagues net in just one calendar year (12 months). That is what it means when you hear the statistic that women who work full time earn about 78 cents for every dollar men earn (See U.S. Census Bureau and the Bureau of Labor Statistics). Minority women are subject to a far greater wage gap.
Not mad yet? Those twenty-two cents add up. The Center for American Progress reports that women who work year-round earn less than men in comparable jobs and at all educational levels. The wage gap increases over a woman’s lifetime and adds up to $434,000 over a 40-year career for the typical woman. A woman with a bachelor’s degree or higher can lose more than $713,000 (See Center for American Progress, “Wage Gap by the Numbers“).
“Well,” you’re thinking, “that sounds pretty bad, but this is someone else’s problem; surely I am not being paid less than my male colleagues!” Think again. The statistics say otherwise. The gender wage gap is documented in all 50 states and is at a national average rate of 78 percent (Source: National Women’s Law Center’s calculations from the U.S. Census Bureau, Income, Earnings and Poverty Data from the 2007 American Community Survey (August 2008). You do the math – chances are, if you are a woman in the workforce, it is highly likely that you are earning less than had you been a man.
If you are a man reading this, then it should trouble you that the gender wage gap is harming your wife, sister, mother, daughter, friends and colleagues. According to the AFL-CIO, working families lose $200 BILLION every year due to the wage gap! Your women are bringing home less bacon than they should be, and it is affecting everyone’s bottom line.
Or think of it another way: the current recession is especially hitting male-dominated industries, such as construction and manufacturing. Four out of every five jobs being lost in this recession affect men. Women are becoming the main breadwinner, but, on average, make up only one-third of a family’s income. Prolonged, systemic pay inequity will further hurt families who have lost the earnings of the male breadwinner and must solely depend on the woman’s wages, to say nothing of single mothers who struggle year in and year out independent of economic downturns.
In honor of Pay Equity Day, it is reasonable and even encouraged to express your well-earned outrage. There are a number of legislative efforts seeking to close the wage gaps between men and women, and minorities as well. A number of organizations’ web sites today will detail current and soon-to-be-introduced legislation to close loopholes, enhance provisions under the Equal Pay Act, and prohibit employer retaliation against workers who inquire about employers’ wage practices. I encourage you watch one of the more amusing Equal Pay legislation videos out from the Center for American Progress. Check out EQUAL PAY: Batgirl vs Chamber of Commerce.
Fixing this issue legislatively is one important approach, but cannot be achieved exclusively in this manner. If you have any doubts, consider that it was President Kennedy who signed the Equal Pay Act into law more than forty-five years ago. If Kennedy’s challenge to land a man on the moon were as successful as the Equal Pay Act, Neil Armstrong’s ‘giant leap for mankind’ would have been referring to a cool telescope.
The same business groups, such as the Chamber of Commerce, who fought against the Ledbetter Fair Pay Act, which restores the right of victims of pay discrimination on the basis of sex, race, national origin, age, religion and disability to challenge the discrimination in court, are the same groups waging war against the Employee Free Choice Act – the bill that will give workers the freedom to choose a union to represent them. The more women unionize, the more they rightfully earn and the narrower the wage gap becomes.
Help pass the Employee Free Choice Act, and soon we might be celebrating Pay Equity Day when it should be celebrated – in December.
About the Author: Eileen Toback is a political strategist and labor relations expert. To read more of Eileen’s commentary on labor issues, check out unionmaiden.wordpress.com. If you have a question for Eileen, contact her via eileentoback@gmail.com.
In a ceremony rich with symbolism, President Barack Obama signed into law The Lilly Ledbetter Fair Pay Restoration Act on January 29, 2009. In front of a cheering throng who applauded enthusiastically when Ledbetter was introduced, the President said, “This is a wonderful day. It is fitting that the very first bill that I sign is The Lilly Ledbetter Fair Pay Restoration Act.”
The president described the Act as, “upholding one of this nation’s founding principles that we are all created equal and we each deserve a chance to pursue our own version of happiness.”
The president effusively praised the woman whose fight led to this day. “Lilly Ledbetter did not set out to be a trailblazer or household name. Lilly could have accepted her lot and moved on. But…she decided there was a principle at stake, something worth fighting for. Her fight took us to this day. It is the story of women still earning 78 cents for every dollar men earn. Today in 2009, countless women are still losing countless income….”
He continues, “Signing this bill today sends a clear message that making our economy work is to make sure that it works for everybody. It is not just unfair or illegal, it’s bad for business. Today I sign this bill not just in her honor, but for women who came before; women like my grandmother who worked in a bank…and for my daughters and all those who come after us so that there are no limits to there dreams.”
Ledbetter demonstrates the power of the grassroots to bring change from the bottom up. It is that power that will lead to a similar signing ceremony for the Employee Free Choice Act allowing workers to freely organize to improve their lives.
“This grandmother from Alabama kept fighting because she was thinking about the next generation. This bill is an important step. A simple fix. Thank you Lilly Ledbetter.”
It is not yet time for a “Mission Accomplished” banner, but we are finally moving in the right direction.
About the Author: Ron Moore is a freelance writer living in Silver Spring, Maryland with decades of service in the grassroots community as a local union president, union organizer, national AFL-CIO staff, and writer for the A. Philip Randolph Institute.
This article originally appeared in the Washington DC Examineron January 29, 2009. Reprinted with permission of the author.
To many, the 2007 decision of the U.S. Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co. marked a low point for protecting women against pay discrimination in the workplace.The case held that Lilly Ledbetter, the plaintiff, could not hold her employer, Goodyear, accountable for pay discrimination that had occurred over many years under Title VII because her statute of limitations for such a claim had run out before she even knew about the discrimination.
The Ledbetter decision creates an absurd result. Individual pay decisions by themselves are usually small, incremental changes, not as obviously motivated by discriminatory intent the way that more serious discrete acts such as terminations or failures to promote do. It is not until many discriminatory wage decisions have occurred that the discriminatory injury becomes clear to the employee. Often, it takes many years for this pattern to develop before the employee realizes that she might have a claim.
The Ledbetter decision is inconsistent with the purposes of Title VII to both make victims of discrimination whole and to eradicate employment discriminatory practices from society at large. It leads to an absurd situation where employees must bring pay claims prematurely when they cannot be sure there has been unlawful pay discrimination. If the employee waits to a later time when there exists more substantial evidence of pay discrimination the employee will be barred from bringing the claim at all by the statute of limitations (as in Ledbetter). This inequitable state of affairs cannot stand and, it is my hope, it will be legislatively nullified.
But legislative nullification depends on both what the next Congress and President plan to do to address this glaring gap in ensuring pay equity in the workplace.Even if Congress continues to support the Lilly Ledbetter Pay Equity Act and passes it in both houses next year, the identity of the next President may determine whether that legislation is signed into law.
John McCain has stated that he is “in favor of pay equity for women, but this kind of legislation, as is typical of what’s being proposed by my friends on the other side of the aisle, opens us up to lawsuits for all kinds of problems . . . . This is government playing a much, much greater role in the business of a private enterprise system.”McCain chose not to return to Washington to participate in the Senate vote on the Ledbetter bill (See Washington Post article.) Barack Obama, on the other hand, has pledged his unequivocal support for the Ledbetter bill and returned to Washington for the bill’s Senate vote in April. (See Washington Post article.)
On this Labor Day, while we praise all the workers throughout this country for their dedication and selflessness in making the United States the economic power that it is today, let us not forget that without equal wages for an equal day’s work for all members of our workforce, we really have accomplished very little.Let’s hope that regardless of who is elected president that women are no longer afforded merely second-class status in the workplace and the Ledbetter decision’s days are numbered.
About the Author:Professor Paul Secunda joined the Marquette University Law School as an associate professor of law in the summer of 2008. He teaches employment discrimination, employee benefits, labor law, employment law, civil procedure, and seminars in special education law, global issues in employee benefits, and public employment law. Professor Secunda is the author of nearly three dozen books, treatises, articles, and shorter writings. He is also the author, along with Rick Bales and Jeff Hirsch, of the treatise, Understanding Employment Law, along with Sam Estreicher and Rosalind Connor, of the case book, Global Issues in Employee Benefits Law, and of the Teacher’s Manual to the 14th Edition of the Cox, Bok, Gorman & Finkin Labor Law casebook.
Professor Secunda is a frequent commentator on labor and employment law issues in the national media and has written numerous columns and op-eds for the National Law Journal and Legal Times. He co-edits with Rick Bales and Jeffrey Hirsch the Workplace Prof Blog, recently named one of the top law professor blogs in the country, which is part of the Law Professors Blog Network.
Note: Workplace Fairness is a nonprofit organization and does not make political endorsements. The opinions expressed by our guest bloggers are their own.
Today is Pay Equity Day. 
