California senator Kamala Harris has unveiled a new plan to close the gender-pay gap.
Under Harris’s proposal, companies with 100 or more employees would have to report pay differentials between men and women, controlling for “differences in job titles, experience, and performance.” If they could not show that men and women were paid the same after factoring these controls in, they would be fined 1 percent of profits for every 1 percent gap in pay.
This “solution,” at one level, is curious. The statistic on which widely reported claims of a “gender pay gap” are based — that full-time female workers are paid only about 80 percent of what full-time male workers make — doesn’t account for job types, experience, or performance. In that sense, Harris’s legislation recognizes that such metrics are meaningless or, at least, too crude. But that means there’s also no reason to think that beefing up “equal pay for equal work” legislation by putting the presumption of compliance onto employers will close the headline rate everyone discusses.
In short, Harris’s plan does not really target the “gender pay gap” at all. It attempts to further stamp out gender pay discrimination by “policing at the elbow.” That aim will have fewer opponents. Yet the truth is, more factors than she accounts for determine wages. Her legislation would create significant compliance costs and avoidance strategies, lead to potential surpluses and shortages of workers, and could even hurt women who currently enjoy flexible working arrangements.
To see why, consider the Game of Thrones cast. Playing each character really constitutes a different “job.” The company producing the show could easily argue it has no pay gap at all then, in a literal sense, even before collecting any information. Yet suppose there were two extras running from Drogon in King’s Landing in that penultimate episode — one male and one female — with the same role, number of lines, screen time, and measurable prior experience. There still might be good reasons why they could command different pay rates