The New Jersey Assembly voted 46-17-9 in favor of A883, the employment statistics bill, this Thursday. NJCJI is concerned that this bill will create a treasure trove of data on employers that could be used by the trial bar to gin up lawsuits.
This bill has been described as a measure that would deter discrimination and ensure that the state does not do business with employers who are breaking the law. However, the standard under the bill would not be the “equal pay for equal work” that is already the law of the land. Rather, this legislation would hold employers responsible for the amorphous standard of equal pay for “comparable work,” distorting the labor market and generating significant unwarranted litigation in the process.
Under this legislation, employers seeking to bid on state contracts would be required to submit data detailing their employee compensation, broken down by gender and occupational category, among other criteria. A state agency would be tasked with developing a system for employers to remedy gender-related statistical disparities in wages and jobs. State contracts would then be awarded with preference for employers demonstrating a greater degree of statistical gender neutrality.
There are a number of troubling consequences that would flow from this complex and intrusive legislative scheme.
First, the mystery of what constitutes “comparable work” means a state agency will be tasked with valuing specific jobs and responsibilities, independent of prevailing market levels. Market wages are useful not only because they are a good measure of what a particular job is worth. Wage premiums for particular jobs also serve the important function of encouraging people to take jobs for which demand exceeds supply.
The second problem would result from the reporting requirement itself. By requiring all bidders on state contracts to submit compensation data broken down by gender, the bill would create a treasure trove of employment information of any employer doing business with the government. Combing through the files in search of litigation opportunities is not simply a matter of catching law-breakers.
Employment data always reflect disparities. The frequently cited statistic that women make 81 percent of men’s salaries is simply a comparison of all men and women in full-time employment, without controlling for even obvious differences, such as education, profession, experience, or hours worked. Controlling for just number of hours worked shrinks the wage gap to 11 percent. Beyond that, countless individual, voluntary, choices add up to statistical disparities in the aggregate. Indeed, the Consumer Financial Protection Bureau and the current presidential administration have both advocated the use of such data to fight discrimination, and yet both have found that they themselves are plagued with the very same disparities in their own compensation statistics.
Enforcing statistical parity through litigation is costly, burdensome, and significantly hampers effective business practice. The reality is that the existing anti-discrimination legal framework reflects a strong social consensus against discrimination based on sex. The attempt to further regulate employee compensation and expose employers to litigation will succeed primarily in distorting labor markets and increasing the cost and risk of hiring new employees.
NJCJI is keeping a close eye on this legislation, which has now been sent to the Senate for consideration.
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