President Obama’s unilateral move Tuesday to try to close the pay gap between the sexes will force federal contractors to tell the government what their employees earn, broken down by race and sex, giving the administration extraordinary new powers to pursue discrimination cases.
One legal analyst said the two orders Mr. Obama issued would drive up the costs of federal contracts, leaving taxpayers stuck with higher bills. Businesses feared the orders would lay ground for the government to take legal action against them.
“Equal treatment is an admirable goal, but smaller companies who already have difficulties competing with larger firms for federal contracts are now going to need to consider a new set of issues: reporting compliance, the ability to award merit pay or the possibility of wage data being used as grounds for discrimination lawsuits,” said Simon Brody, a spokesman for the National Association of Government Contractors, which represents firms doing business with the federal government.
Mr. Obama issued the orders in conjunction with Equal Pay Day, telling the Labor Department to write rules requiring businesses that take federal contracts to report their employees’ salaries — though he said he wanted the effect on small businesses to be minimized.
“America should be a level playing field, a fair race for everybody, a place where anybody who is willing to work hard has a chance to get ahead. And restoring that opportunity for every American, men and women, has to be a driving focus for our country,” Mr. Obama said during a speech in the East Room of the White House, where he was flanked by about a dozen women. “We don’t have second-class citizens in this country, certainly not in the workplace.”
Beyond requiring companies to open their books, the president barred federal contractors from retaliating against employees who discuss their salaries openly.
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The White House said the measure is designed to provide “a critical tool to encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws and are able to seek appropriate remedies.”
The actions are the latest example of Mr. Obama using his direct authority in the arena of government contracts to pass partial proposals he cannot get through Congress. Earlier this year, he signed an order requiring all federal contractors to pay their employees at least $10.10 per hour after it became clear there would be no general increase in the minimum wage.
But by trying to drive social change and provide equal pay for women through the contracting process, analysts said, the government will end up spending more to hire contractors.
“It is disappointing to see additional cost drivers or inefficiencies imposed upon on the procurement process at a time when the same administration — and, more broadly, the government — claims to be concerned with squeezing savings out of the system,” said Steven Schooner, co-director of the Government Procurement Law Program at George Washington University Law School.
“The bottom line is simple: Imposing social policies on the procurement process drives up the prices the government pays for the goods and services it buys,” said Mr. Schooner, who served in the White House Office of Management and Budget and in the Justice Department.
While promoting equal pay, the White House also has had to contend with charges that it isn’t practicing what it preaches.
A study last year by the American Enterprise Institute found that male White House staffers earned a median salary of $73,729, while female employees earned $65,000.
The administration’s explanation for the discrepancy is that lower-paid positions may be filled by more women than men, but those who hold the same jobs are paid equally regardless of their sex.
There also are many questions surrounding the White House’s and Mr. Obama’s repeated contention that women are paid, on average, 77 cents for every dollar a man earns.
Critics say that measure fails to take into account government figures showing that men are almost twice as likely as women to work more than 40 hours a week, are much less likely to interrupt their work histories to have or raise children, and have other differences in labor market participation, including concentrations in higher-paying fields.
Indeed, the White House’s explanation for its own pay gap echoes such reasons, often cited by companies being sued over pay discrimination in the manner the administration wants to make easier.
Mr. Obama made the executive moves a day before the Senate was slated to vote on the Paycheck Fairness Act, which would require all employers to provide data on their pay breakdowns along gender lines. The act is unlikely to survive a filibuster, with Republicans and many business and retail groups arguing that the proposal would make it far too easy to sue companies and create a legal morass.
Republicans said Mr. Obama’s orders were election-year efforts to revive the “war on women” message that served the president’s 2012 campaign so well.
“All of us support equal pay for equal work. Let’s put the politics aside, and let’s get to work to see how we can make sure if there are problems with the law being implemented that we can address that,” said House Majority Leader Eric Cantor, Virginia Republican.
Although the open discussion of salaries may create headaches for employers, it could lead companies to be more mindful of their pay scales and to avoid inadvertent discrimination against women, said Deborah Thompson Eisenberg, associate professor of law and director of the Center for Dispute Resolution at the University of Maryland.
“If employers know they have to report what people in similar jobs are making and do that based on sex and race, then employers are more likely to be mindful about how they’re setting salaries,” she said.