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More government intrusion into private sector pay

Yesterday my colleague Jay Tea mentioned the suggestion by Federal "pay czar" Kenneth Feinberg that the government should give bank management the power to reduce or postpone executive bonuses when their banks are struggling financially.

The White House is currently supporting an even bigger intrusion into business payrolls -- the so-called "Paycheck Fairness Act."

In an orchestrated effort that included a statement by President Barack Obama and an event at the White House featuring Vice President Joe Biden, Attorney General Eric Holder and Labor Secretary Hilda Solis, the president and his cabinet endorsed the Paycheck Fairness Act.

The House approved the act in 2009, but the Senate did not approve it. In the 111th Congress, both the House and the Senate have offered legislation that covers a wide range of workplace requirements and regulations, including training girls and women to become better at negotiating pay and benefits, and the establishment of a data base of U.S. workers' pay in both the public and private sector.

At the White House on Tuesday, Biden was the keynote speaker at a Middle Class Task Force event where he told invited guests that the Obama administration is "on the right side of history" by passing legislation to ensure women are paid the same as their male counterparts.

The Equal Pay Act of 1963 outlawed base pay discrimination between men and women hired to perform the same work, but it gave businesses some leeway in adjusting pay rates based on seniority, merit, performance-based incentive systems, or other adjustments applied equally to men and women.

It is standard practice for businesses to consider any number of factors when determining employee pay -- age, marital status, education, professional accomplishments, experience, previous compensation level, on-the-job performance, etc. Most professional employees are also given the opportunity to negotiate the base salary offered to them by their employer.

Regardless of how "fair" it may sound, when the government tries to tamper with private sector salaries, the result can only be lower wages across the board, because businesses will choose to settle for "lowest common denominator" pay rates, rather than run the risk government lawsuits and fines because of pay differentials between men and women, or between employees of different races.

The Paycheck Fairness Act would also give the government the power to to compile a massive database of private sector salaries and benefits. Armed with this data, the Department of Labor would suddenly be in a position to begin mandating "fair" compensation rates for certain kinds of work, and then threatening businesses that deviate from those rates.

None of this type of government interference will lead to more jobs or better pay. Even if a handful of employees see some immediate benefits, the result across the business market will be negative.

"Unexpectedly", of course.


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Comments (12)

More big brother....... (Below threshold)
GianiD:

More big brother....

And as capitalism gains foo... (Below threshold)
DaveD:

And as capitalism gains footholds in Asia and might be piqing interest in Europe, we have elected a government with a fever for communism - a proven economic failure. We are lost if we fail to do something about this in November.

Do Obama and Biden realize ... (Below threshold)
GarandFan:

Do Obama and Biden realize that if they were paid what they were worth, they'd get nothing?

Do Obama and Biden reali... (Below threshold)
914:

Do Obama and Biden realize that if they were paid what they were worth, they'd get nothing?


Yes, that is why they became politician's. They dont have to worry about 'work' and earning 'pay'. Just keep suckling on the public teet.

Okay, why can't we do this ... (Below threshold)
Rich Fader:

Okay, why can't we do this to government employees when the government's finances are struggling?

gotta wonder who's next, fi... (Below threshold)
John:

gotta wonder who's next, first Bank CEOs, now "overpaid" executives. They act as if they will always be in power, what will happen when a republican president with this power says union leaders can only $50K a year or our worthless celebrity class can only make $7.50 an hour. Seriously who the hell wants this bunch (both democrats and repulicans) determining how much money you can make. Next thing we'll all be living 3 families to a government apartment.

Michael: "None of this t... (Below threshold)
P. Bunyan:

Michael: "None of this type of government interference will lead to more jobs or better pay."

Except lawyers. As is the case with most all pieces of democrat legislation there'll be lots more jobs and money for lawyers.

Armed with this da... (Below threshold)
Marc:
Armed with this data, the Department of Labor would suddenly be in a position to begin mandating "fair" compensation rates for certain kinds of work, and then threatening businesses that deviate from those rates.
What's "fair" in one state may not be in another.

Prices for products vary from state-to-state and cost of living varys dependent on location because of these discipencies in costs.

As a result the differences effects wages paid to workers. There's no "Fair" way to "level that playing field."

Wonder if anyone - BERNAKE!... (Below threshold)
GarandFan:

Wonder if anyone - BERNAKE! - is having second thoughts about banks TO BIG TO FAIL?

That would have been one way of cleaning house. Bankruptcy court - where everything would have been out in the open.

Instead, the same people who tanked the system are now getting their multi-million dollar rewards.

We already do this with the... (Below threshold)
rich K:

We already do this with the minimum wage but I see they need EVEN more goalposts.

GranFan - "Wonder if ... (Below threshold)
Marc:

GranFan - "Wonder if anyone - BERNAKE! - is having second thoughts about banks TO BIG TO FAIL?"

Bernake, along with obummer, should be more concerned with the "little banks."

Friday the FDIC took-over/closed the 102nd bank since Jan. 1. It's the second year in a row that over 100 banks have failed.

Biden: "It's a 'recovery summer.'"

obummer: "We've turned to corner."

Liars both.

Congress wants to get this ... (Below threshold)
JGalt:

Congress wants to get this one off the books so they can get to the "Anti Dog Eat Dog Rule".

When asked about this, the president responded...
Who is John Galt?




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