The Glass Wallet


November 19, 2010 | 4:12 PM

The Glass Wallet

The Glass Wallet

Blogging about topics like this one are similar to holding a soon to detonate “Bouncing Betty” – you know the nails are going to fly and someone is going to take a load of shrapnel. In this case it is most likely me. 

Two days ago, the Paycheck Fairness Act was rejected in the US Senate. Two of my high school friends, both female, lamented the defeat of this bill. They have argued, quite strongly I might add, that this “fairness” needs to be added to the growing list of federal burdens companies have to endure. Their logic was this is needed to close the “Pay Gap” between men and women in the workplace.

To this I say – hogwash. Someone has to state the ugly truth. So I am going to share my perspectives as a small business owner, a former employee of 2 Fortune 500 Companies who hired and fired people, and someone who has been a regular guy employee. Not to mention that I have been raised around some pretty spectacular women.

I have never seen a woman with drive and talent that cannot get the same job as a man with equal or better pay. I have been raised around them, worked with them, had my butt kicked in performance by them, and yes – had to pay more to hire them. I have been in the sales and marketplace for over 30 years and I stand by this.

While I do not deny pay inequities exist, legislating the employer to death is not the answer. The increasing load of federal and state legislation is killing small business and forcing larger corporations to seek more overseas opportunities for labor and reduced liability. Think this is untrue? Go back and look at any landmark legislation on employers and within less than 2 years you see a negative correlation to lost jobs. Outsourcing jobs overseas has more to do with nutty legislative compliance and potential litigation costs than hourly wage. Employers know the benefits of employing local talent and the returns to the economy. When the cost to operate and comply with our own laws drives away jobs as it is doing now, there has to be a change. Are there companies moving jobs overseas to be cheap? Yes. You know who they are so avoid doing business with them.

America is a capitalist economy. Wikipedia defines capitalism as “… an economic system in which the means of production are privately owned and operated for a private profit; decisions regarding supply, demand, price, distribution, and investments are made by private actors in the market; profit is distributed to owners who invest in businesses, and wages are paid to workers employed by businesses and companies.” Notice the repeat of “private” several times? Do you see the words “fair” incorporated into this? Capitalism is, by nature, survival of the fittest. Being better than your competition through products and services offered. Survival means making the most profit the market can and will allow while controlling costs. Labor is a component of cost. If you doubt any of this, take a real risk and gamble on yourself and take your savings to open a business for yourself. When you can no longer run the ship on your own and need some help, welcome to the Wage War.

The opposite of capitalism is communism. Wikipedia defines communism as “… a sociopolitical movement that aims for a classless society structured upon common ownership of the means of production, free access to articles of consumption, the end of wage labor and private property.” Sorry, we don’t serve that lunch here is spite of the best efforts from the recent liberal Congress and Barry O. So if you do not agree with capitalism, go to a country that serves communism.

Oh yes, back to my lamenting friends. They may not have been aware of some damage already done to employers in the last 2 years. One of the first pieces of legislative graft Barry O gave to the trial lawyers was the Lilly Ledbetter Fair Pay Act of 2009. This eliminated the 180 day statute of limitations on pay discrimination to be redefined as starting with each new discriminatory act – effectively eliminating any statute of limitation. What does this mean to employers? An open-ended potential lawsuit for someone who might recall some pay inequity done years ago. A current or former employee can sue in a heartbeat and your innocence means squat – you must defend yourself. Can you say frivolous lawsuit? With this law, the basis is someone’s accusation and you’re off to trial. This means more claims on employer liability insurance policies and higher premiums. Hmm, let’s see, can we think of any other industries that were damn near put out of business from nutty lawsuits, higher insurance, and a bull’s-eye on their back? How about the medical industry and manufacturing? How many doctors were driven out of business in the last 20 years due to growing medical malpractice insurance premiums and the fear of being sued at the drop of a hat? Have you seen what is happening to OB Gyn’s? Take a hard look at the manufacturing sector that flat-out up and left the US in the last 40 years over punitive regulation on liability. How much more “fairness” do you want?

The Paycheck Fairness Act sought to amend the Equal Pay Act of 1963 (Lord, a law already on the books?) and essentially remove the boundaries in current litigation on punitive and compensatory damages. So let’s say an employer did screw up and make a legitimate discrimination toward pay, it won’t be enough to pay back the difference and legal bills that the current law allows. You will need to be made an example of for others by paying enormous penalties. Shame on you for risking your capital and offering an opportunity for employment in the first place.

So why does the inequity exist between men and women? I have a few theories. Wait – I have to find my body armor. OK, ready to go. Keep in mind these are my opinions and are based on the theory of Majority Management. There are and will always be exceptions to the rule. I do not address the exceptions here.

The first is that men get a head start on women at an early age in life. Around 13 boys are becoming young men and our motors are turning in a number of areas. If we are not getting into trouble we want to start making money. In my day it was magazines, comic books, pinball machines, needing parts for my bike, and not having to ask dad for date money. Today its Xbox, WII, Playstation, Ipods, laptops, and not asking dad for date money. My two oldest boys, who are 15 & 13, are mowing lawns in the summer for money and that works out just fine for dad. My 12-year-old daughter has other things on her mind and is quite satisfied with where she is. Dad is good with that one as well. Don’t misunderstand – I plan on my daughter being Chairwoman of the Board if she chooses and will prepare her when he motor starts turning that way.

The second reason is that women make a conscious decision on their career paths. With the possible exception of professional and executive positions, most jobs today post the pay range. You know going in what the high and low is. Facts are women are more likely accept a lower pay than men if the range meets their criteria. Guys always think we are worth more than we truly are and that attitude contributes to prolonged periods of unemployment for men between involuntary job losses. Women also see the sacrifices required seeking certain positions and they opt out, choosing to pass on early heart trouble and ulcers. Then they get tattooed with the family issue. Women have an unfair, double standard here and I have no advice that will ever change this.

Women consider benefits more carefully than men and will accept lower pay for greater benefits.  The male ego says “grab the most cash and make the most of it” whereas female logic tells them to “take care of your hide in the manner that costs the least”. I have been guilty of this sin and so are most men. It took me being in my mid 30’s before I started really looking at benefits. Women check out benefits from day 1.

Last, but not least, men negotiate more than women for salaries. I did not write “better” here – I wrote more, as in more often. Whether you want to call it being polite, non combative or just uneducated to the process, the ugly truth is that women are far more likely to accept the first salary offer than men. How does this happen you ask? It gets back to that pesky capitalism. When employers fill executive or professional positions, they also have a range but will not usually post it. Why would an employer avoid posting executive pay? Employee jealously and keeping harmony in the business is why. If you subscribe to open policy on all compensation for all positions – good luck with that in the real world Pollyanna. I do not care if you are overpaying the mail clerk by 30% of market, if someone is making more than them and they find out it impacts attitude and performance. So when an offer is made it is always on the low-end of the scale. If the prospective employee accepts, the employer has added an asset for the lowest cost factor. The sex of the person had not a thing to do with it. Imagine that.

This blog is dedicated to my two hard-working high school friends. God bless them both for perseverance in their beliefs and for being inspiration for my keyboard.

I just hope this body armor works.