The most threatening piece of anti-employer, anti-jobs legislation in the lame-duck session is S. 3772, the Paycheck Fairness Act, which could come up for a cloture vote in the Senate on Wednesday.

The bill extends federal government control over wage decisions made by employers to reflect their business’ specific circumstances, setting a rigid “pay equity” standard as the priority above all other factors. The Chicago Tribune summarized the problems in an editorial, “Paycheck Fairness?”

The proposed law says that in cases where a pay disparity between men and women is challenged in court, an employer would have to prove there is some reason for the gap other than discrimination. The employer would also have to prove that the gap serves a necessary business purpose. And even then, the employer could be in trouble if a court determines that an “alternative employment practice” would serve the same purpose without skewing the salaries.

Those judgment calls go by another name: management decisions. The legislation would open businesses to wide second-guessing of decisions they made to hire and promote the most effective work force in a competitive environment. It would leave businesses with one eye on the competition and one eye on what a judge might decide in hindsight is a preferable “alternative employment practice.”

Uncle Sam to the nation’s employers: We’ll tell you how to run your business.

The bill would also be a bonanza for the trial lawyers, because it removes limits on awards in employment discrimination litigation and makes participation in class-action lawsuits a matter of opt-out, rather than opt-in.

The Hudson Institute on Wednesday, Nov. 10, sponsored a forum on Capitol Hill on the legislation, “The Negative Employment Effects of the Paycheck Fairness Act.” Papers and presentations:

• June O’Neill, Baruch College, City University of New York, “The Paycheck Fairness Act”
• Diana Furchtgott-Roth, Huson Institute, “The Employment Effects of the Paycheck Fairness Act”
• Lauri Damrell, Orrick, Herrington & Sutcliffe LLP, “How Would Employers Comply?”
• Nita Beecher, Mercer ORC Networks, “How Would Employers Comply?”

The Hudson Institute is sponsoring a forum on Capitol Hill Wednesday, “The Negative Employment Effects of the Paycheck Fairness Act.” If jobs are the priority, then this bill has to fail.

When the Senate reconvenes for its lame-duck session later this month, senators will consider the Paycheck Fairness Act, a bill that would vastly expand the role of government in employers’ compensation decisions. The bill would require the government to collect data from employers on the sex, race, and national origin of employees, significantly adding to red tape, paperwork, and hiring costs, and trapping firms in costly litigation.

At a time when the unemployment rate is above 9 percent and almost 15 million Americans are out of work, the Paycheck Fairness Act would impose substantial new burdens on employers that would encourage hiring overseas and discourage hiring in America. As the Washington Post concluded in a recent editorial, “Discrimination is abhorrent, but the Paycheck Fairness Act is not the right fix.”

Please join Hudson Institute to analyze the costs of the bill and its effects on employment from the economic, legal, and small business perspectives at this Capitol Hill event. Luncheon keynote speaker is the 24th U.S. Secretary of Labor Elaine L. Chao, now a Distinguished Fellow at the Heritage Foundation.

The event starts at 9:45 a.m. at the Capitol Visitors Center.

From AP, “In Tuesday speech, Obama to promote new job ideas“:

WASHINGTON — In his latest job creation effort, President Barack Obama is trying to find practical and politically feasible ways of spurring hiring among skittish employers.

Among the ideas expected in his economic speech Tuesday is an expanded program that gives people cash incentives to fix up their homes with energy-saving materials, senior administration officials have told The Associated Press. Obama is leaning toward new incentives for small businesses that hire new workers and new spending on roads, bridges and other public works, the officials said.

An impressive effort by the White House to synthesize the results of Thursday’s jobs forum so swiftly.

In a letter to President before the forum, the NAM identified spending on transportation and energy infrastructure as good policies to encourage private-sector jobs creation, and the hints above are encouraging.

Irwin Steltzer of the Hudson Institute, writing at The Weekly Standard in “Recovery on the Horizon?“, sees positive signs of private-sector recovery — more manufacturing activity, declining inventories, even jewelry sales. He also identifies a dichotomy to come out of the jobs summit that will shape the President’s speech Tuesday.

It is fashionable these days to talk about “take aways,” what attendees take away from a conference. My guess is that President Obama’s “take away” is consistent with his view that activist government cannot leave job creation to the private sector, but also that he must dispel the notion that he is hostile to the private sector — something that some of his staff want him to do. So a mix of spending and incentives for small businesses to hire will be laid out in the Tuesday speech.

Obama’s goal will be to keep the unemployment rate heading down, even if he has to create government-funded jobs to do it. My Hudson Institute colleague, Diana Furchtgott-Roth points out in a recent column that in 1850 Frédérich Bastiat noted that jobs provided by the government are seen, those displaced by higher taxes or snatched from private sector firms are not. At least, not in the short run. And the president’s congressional allies have no interest in the long run — in which they will be dead, electorally, if the economy suffers a relapse. They want action this day. Which is just what their president intends to give them.

More …

• ABC News, “President Obama to Pitch More Job Creation Proposals on Tuesday”
• New York Times, “Obama Eyes Bank Bailout Funds to Spur New Jobs”

From The Washington Examiner, “Union officer pension funds remain flush as rank-and-file retirement plans deteriorate.”

“This issue of rank and file pension plans being funded less than the officer pension plans is extraordinarily serious and shows a great moral failing on the part of the unions,” said Diana Furchtgott-Roth, a senior fellow with the Hudson Institute who authored the study.

“They’re just not putting enough money into the rank and file plans. My suspicion is that when unions bargain with an employer for a benefits package they are focusing on wage increases because this is more visible to the membership and they are not focusing on pension benefits.”

And an earlier commentary from Furchtgott-Roth, former chief economist at the Department of Labor, “The Hidden Agenda Behind Card Check.”

Organized labor has finally found a way to replenish the coffers of its underfunded pension plans. The key is mandatory binding arbitration between newly-formed unions and employers, one of the main provisions of the misnamed Employee Free Choice Act.

The full House Committee on Education and Labor is marking up today (1 p.m.) H.R. 1338, the Paycheck Fairness Act, a gender pay equity bill. The Committee held its hearing on the legislation back in April 2007, and the bill had just been hanging around then, waiting for the politically propitious moment.

So last Thursday, July 17, there was a Capitol Hill rally organized by Sen. Barbara Milkulski (D-MD) to make a push for the legislation and its Senate version (S. 766). Also speaking were House Speaker Pelosi, chief sponsors of the bill in the Senate and House, Senator Hillary Rodham Clinton (D-NY) and Representative Rosa DeLauro (D-CT). (Coverage from Ms Magazine and the Hartford Courant.)

Profile elevated, the politics primed, markup follows and the bill could soon be on the House floor.

Despite the title’s invocation of “fairness,” in an effort to end the “wage gap,” this legislation would radically expand government involvement in employment decisions, encourage a flood of litigation, and create disadvantages for a new group of employees.

Sue them until they cry uncle, and then sue them again for not crying aunt.

Section 3 is particularly danger-rife, creating a section “enhanced penalties” that broadens the grounds for suing and removes any limits on compensatory and punitive damages. The provisions would become a powerful tool for attacking, harassing and damaging any company that got on the wrong side of organized labor, the plaintiffs’ bar, and the grievance industry. 

In her committee testimony last year, Diana Furchtgott-Roth of the Hudson Institute detailed supporters’ erroneous premises about pay and gender disparities and examined the negative consequences of its provisions.

The “Paycheck Fairness Act” would have Washington interfere with employers’ ability to set wages. Section 7 of the proposed bill reads “The Secretary of Labor shall develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions, and responsibility…”

These factors are not only difficult to measure, but favor white collar and service jobs over manual, blue collar work. The bill’s language omits experience, risk, inflexibility of work schedule, or physical strength, factors that increase men’s wages relative to women’s. The bill does not include effort, so there is little leeway to promote those who work harder.

Ultimately, as Furchtgott-Roth suggests, this looks like a stalking horse’s nose under the tent for yet another run at “comparable worth” legislation. As if government setting salaries and benefits would be fair.