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State of the Union address made misleading claim about gender pay gap

President Obama at the 2014 State of the Union Address
President Obama at the 2014 State of the Union Address
Liberty Unyielding

Commentators recently took issue with the President’s wage gap claim in the State of the Union address. They noted that labor economists like Diana Furchtgott-Roth have found that “men and women make about the same” per hour in each “individual” occupation after taking into account factors like “job responsibility,” hours worked, and years of “experience.”

What’s noteworthy is that now, even fact-checkers for some liberal newspapers such as The Washington Post are taking issue with the president’s claims in this area. In his State of the Union address, which he gave here in Washington on Tuesday night, President Obama said,

Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment.

But as the fact-checker for The Washington Post (which hasn’t endorsed a Republican for President since 1952) noted yesterday, this figure is quite misleading, since it involves comparing apples to oranges: Women on average do not work the same number of hours men do per year, nor do female workers have the same individual or occupational characteristics as male workers:

Obama is using a figure (annual wages, from the Census Bureau) that makes the disparity appear the greatest. The Bureau of Labor Statistics, for instance, shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.

In other words, since women in general work fewer hours than men in a year, the statistics used by the White House may be less reliable for examining the key focus of legislation pending in Congress — wage discrimination. The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories.

Economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.” They cited one survey, prepared for the Labor Department, which concluded that when such differences are accounted for, much of the hourly wage gap dwindled, to about 5 cents on the dollar.

While the Post was debunking Obama’s claims, it was unfortunately helping perpetuate the misleading claims of Lilly Ledbetter, the unsuccessful pay discrimination plaintiff who spoke at the 2008 and 2012 Democratic National Conventions. In a January 19 Washington Post op-ed entitled “One Law Isn’t Enough to Ensure Fair Pay,” Lilly Ledbetter misstated why she lost her pay discrimination case in the Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007). She claimed the Supreme Court had ruled that her “employer had been paying” her “unfairly for long enough to make it legal.”

But the Supreme Court emphasized that wasn’t true. Early in its opinion, the Court noted that she might have won had she bothered to press her pay discrimination claim under a law with a longer deadline for suing, called the Equal Pay Act. But instead, she inexplicably “abandoned her claim under the Equal Pay Act” on appeal, and chose instead to argue her case under a law with a very short deadline, which had expired by the time she complained. Moreover, in footnote 10 of its ruling, the Court said that she also might have won if she had argued that she learned about the discrimination too late to sue before the deadline passed.

We earlier discussed Ledbetter’s case, and the controversial Paycheck Fairness Act that she and the President have been asking Congress to pass. I also discussed these subjects in this 2013 law journal article. The Paycheck Fairness Act could undermine employers’ ability to set pay based on merit rather than sex. Equal pay for unequal work is a bad idea, but that is what the Paycheck Fairness Act could lead to in some cases.

Ledbetter knew of the pay disparity she complained about for years, yet waited so long to sue that by the time her case went to trial, her allegedly sexist supervisor had died and could not rebut her charges. She learned of the pay disparity by 1992, as excerpts from her deposition, filed in the Supreme Court as part of the Joint Appendix, make clear. In response to the question: “So you knew in 1992 that you were being paid less than your peers?” she answered simply “yes, sir.” (See Joint Appendix at pg. 233; page 123 of Ledbetter’s deposition). But she only filed an EEOC complaint over it in July 1998, shortly before her retirement in November 1998. Her lawsuit was filed even later. See Ledbetter v. Goodyear, 550 U.S. 618, 621 (2007).

Ledbetter still could have pressed her case in the Supreme Court under the Equal Pay Act, which not only has a longer deadline for discrimination claims than the Title VII statute that Ledbetter chose to press her claim under, but also apparently has a limitations period (period for suing) that begins anew each time the worker gets a paycheck affected by discrimination.