On January 29, 2009, the Lilly Ledbetter Fair Pay Act of 2009 was passed into law.  The law was designed to protect people like Lilly Ledbetter, the plaintiff in the case Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007) (United States Equal Employment Opportunity Commission).  Ledbetter had received less compensation than her male counterparts during her time with the company (United States Equal Employment Opportunity Commission). While the Supreme Court of the United States did not side with her, the Obama Administration felt that this case was an injustice that required legislation (Cook). The Equal Pay Act of 1963 mandates that businesses provide equal compensation to workers who perform tasks that "require the same skill, effort, and responsibility."  The Lilly Ledbetter Fair Pay Act of 2009 was an extension of the 1963 law, and removed part of the time limit during which complaints of discrimination must be filed (USEEOC).  This law came in the wake of a growing awareness of the gender pay gap of 79 cents that women earn to every dollar that men earn (Cook).  The idea behind legislation passed was to improve the lives of women and continue the fight toward equality and away from sex-based wage discrimination (Cook).

The intent behind legislation designed to promote equitable treatment of women in the workplace is commendable.  Women have been treated as second-class citizens in many societies for most of recorded history (Wojtczak, 2009) and on the surface, it seems that legislation is the solution to women's lower earnings.  However, there is economic evidence that legislation that either mandates higher wages or penalizes businesses could harm women by leading to unemployment (Higgs).  Since the goal is to improve the lives of women in society, it is counterproductive to attempt to legislate away the pay gap. 

Some economists consider the idea that the gender wage gap occurs due to sex-based discrimination impossible given their understanding of macroeconomic laws.  In economics, wages are determined by the marginal utility (the revenue that each additional worker brings to a business) of a worker (Mises, 590-591).  When factors other than marginal utility are allowed to influence hiring practices, businesses will be outcompeted on a macroeconomic scale (Higgs).  Since Goodyear is a large company that paid Lilly Ledbetter wages for an extended period of time, this practice should have led to the company being outcompeted and forced change its compensation practices (Higgs).  The reason offered for why women earn lower wages on a statistical scale is lower marginal utility caused by differences between men and women (Block).  Within various fields of employment, men and women choose different positions that pay differently and work different hours as well as different numbers of hours (Tobak).  Men take jobs that pay more, but that offer less flexibility, have greater stress, and require longer hours (Tobak).  Additionally, men and women take different loads of domestic and childcare duties (Albanesi, 81).  This is offered as another reason for differences in male and female wages since there is an opportunity cost (what a person could have otherwise done with a given resource) to women taking on more childcare and household duties (Block).  Thus, the gender pay gap must be caused by factors apart from systematic sex-based discrimination.

The marginal utility of labor is the amount of revenue that an additional unit of labor earns for a firm (Mises, 591).  In the process of wage determination, businesses go through a process of bidding on factors of production (Mises, 590).  A point, called equilibrium, is eventually reached in which if a business were to bid higher, they would be taking a loss, but if they bid lower, they would lose the benefit of the laborer or piece of machinery in their production process (Mises, 595). For this reason, wages (the price of labor as a factor of production) are determined by the productivity of a worker (Mises, 591).  If a firm bids too low, the firm "Would not recruit the type of men that the most efficient utilization of [its] equipment requires," meaning that another firm will have an opportunity to pay the worker a slightly higher wage and become more productive (Mises, 595).  If a firm bids too high, "The loss incurred from the employment of every worker will force the firm to eventually discharge workers." (Mises, 595) This means that eventually, either the firm will stop employing workers to remain profitable or will stop employing workers when it goes bankrupt.

In the case of women, they are humans and their labor follows economic laws (Higgs).  For example, assume that men and women in the market for a particular job and that they have equal productivity.  Further, assume that the market wage being offered to men is 50 dollars while the wage being offered to women is 40 dollars, eighty-percent of what men are offered.  Firm "A" hires 10 men and 10 women at a total cost of (50*10) + (40*10), 900 dollars.  Firm "B" hires 8 men and 12 women at a total cost of (50*8) + (40*12), 880 dollars.  Firms "C-F" hire progressively fewer men (20 laborers total) so that firm "F" employs only women at a cost of (40*20), 800 dollars.  Firm "A" employs the least women, with a total of 10 employed and has the greatest costs, 900 dollars.  Firm "F" employs the most women in this example, with 20 women employed, and has the lowest costs, 800 dollars. The company that employs the most women relative to men, firm "F" with a 20:0 ratio (20 employees total in each firm), incurs the lowest labor cost while receiving the same product.  Lower labor costs mean that all other factors equal for the firms, firm F will have lower production costs and thus be able to undercut and outcompete competition.  In other words, "employers who had no yen to sacrifice net income for the pleasure of such discrimination would be able to profit" from the underpaid women they could hire (Higgs).  Since firms tend to work toward maximizing profits by minimizing costs (Mises, 595), on the market firms would tend to hire mostly women, but they don't (United States Department of Labor).  Women have been and still are discriminated against by some employers, as even now, "Promotion and appointment procedures can exacerbate gender pay gaps," (Arulampalam, 181).  However, on a scale as large as a regional market or that of the world, employers who discriminated would eventually be forced out of the market.  Thus, the "height of wage rates for each kind of labor is determined by its marginal productivity," (Mises, 691) and factors would eventually be mitigated by market forces that punish those who discriminate. 

There are a number of factors that could lead to women having a lower average marginal utility than men.  Men and women do not perform an equal amount of domestic and childcare tasks (Albanesi).  Further, women that are married perform an even greater proportion of domestic and childcare tasks than men do (Hersch, 158).  This has been correlated statistically with women's earnings so that as women who are married or who have been married earn significantly less than women who have never been married (Hersch, 158).  An economic mechanism that can be offered for this is the concept of opportunity cost.  As women marry and take on more domestic tasks, there is a correlation with a lower number of hours worked (Hersch, 158).  This correlation can be explained by the fact that a person cannot be in two places at one time.  The opportunity cost (what a person could have otherwise done with a given resource) of additional domestic work is fewer hours spent in market employment.  This leads to lower future earnings not only because of less time actually earning money, but also because less on the job experience can be gained (Block and Ragan).  This explains why the gender wage gap tends to grow as men and women age (Albanesi), since male gains in experience add up over time.  

Based on economic modeling, increases in wages for males relative to females leads to a feedback system (Albanesi).  Since individuals respond to incentives (Mises), as men earn more per unit of time, they face a greater opportunity cost of not working.  This leads to a greater disincentive to take part in housework.  The Albanesi model shows women picking up the slack in housework as men perform less and less over time due to male earnings increases.  This leads to lower female earnings due to less time available (Albanesi).  One thing to note is that since men and women that are married live in a household and often have combined incomes, as a man's earnings increase, so does a female's earnings as a member of the household.  As long as total earnings in the household increase, the tradeoff of male and female market participation would benefit both members of the household from an earnings standpoint.  This benefit would give the female member of the household an incentive to earn less from her own personal job (because of corresponding male gains), leading to a lower reported individual income.

According to a survey, within households, women's jobs do not generally take precedence to men's jobs even if the woman earns more than the man (Block and Ragan).  Men are less willing to move in order for women to take a better job than women are for men.  While this may reflect poorly on men in society, this is another factor apart from employer discrimination that could lead to women earning less, since promotions that require moving would be accepted at a lower rate for women than for men.  

Men and women also have different priorities as far as what is desired from a job.  When surveyed, women preferred flexibility and regular hours at a greater rate than men preferred them (Dubner).  Men take dangerous jobs at a far greater rate than women do and are much more likely to be killed on the job (Tobak).  These conveniences that women prefer at a greater rate than men lead to lower compensation since men are able to demand compensating differences (wages increases or decreases based on the convenience of a job).  

Additionally, within a given field, men are more likely to hold jobs that are higher stress and higher paying such as surgery or sales (Tobak).  Men and women statistically don't hold the same jobs within a given field and this accounts for many of the pay differences that exist (Westley).  Thus, equal work for unequal pay is not occurring if different types of jobs within a field are held.  Rather than systematic discrimination by employers, differences in lifestyle choices by men and women lead to pay differences.

Evolution can offer an explanation for why men and women would tolerate different levels of risk and choose different lifestyles. The evolutionary explanation approaches the question from the standpoint of first determining what tendencies men and women actually have and then determining an evolutionary mechanism for why these traits would have evolved (Brown).  Men tend to be greater risk takers in terms of both the jobs chosen and in terms of an experiment performed to quantify this (Dubner).  In this experiment, it was determined that men were more willing than women to compete against another individual and risk getting no reward in exchange for a higher payoff.  Women were more likely to choose an assured payoff showing a greater aversion to risk (Dubner).  

From an evolutionary perspective, men's higher likelihood of taking a risk in exchange for a chance at a greater reward makes sense from a reproductive standpoint (Brown).  A man is capable of producing many offspring in a reproductive cycle, potentially hundreds depending on how many women he can impress (assuming voluntary reproduction and no monogamy).  If a male moved away from the tribe for a time (a risk) in order to accrue more of some substance that was considered valuable, and succeeded, women would have considered him a better prospect for mating because his success indicated his fitness (Brown).  As long as the rate of success multiplied by the average number of offspring was greater than the average number of offspring produced by a more risk averse male, then aversion to risk would have been selected against leading to more males in a population willing to take risks (Brown).  In terms of translation into earnings of men relative to women in modern society, riskier and more competitive jobs tend to pay more (Tobak).  

The flip side this evolutionary example is a mechanism for how women could become more risk averse over time.  Women can generally only have one child per reproductive cycle in contrast with the many that a man can potentially sire.  If a woman were to take a risk with the intention of attracting more suitors and succeed, a female could still only produce one child or set of offspring (Brown).  Given that a risk entails failure and possibly death or absence from one or more reproductive cycles, women who took risks would not be rewarded as men could have been (Brown).  Instead, risk-taking women would have been selected against since they would have produced fewer offspring on average (Brown).  Overall aversion to risk tends to translate into lower salaries for women relative to men (Tobak).

To further elaborate on men and women as risk-takers, consider a population of human ancestors living long before modern times.  In the event that a threat approached, the tribe would have several options assuming that they chose to defend themselves (Block).  Only the men could face the threat, a mixture of men and women could face the threat, or only the women could face the threat (Block).  The loss of a single male or many of the males in the population would be less harmful to the future of the population than the loss of females since a male is capable of siring many offspring but a female is only capable of being impregnated by one male at a time (Block).  Since evolutionarily, a measure of a population's success is its ability to reproduce, the loss of male members would be less detrimental in terms of ability to produce future offspring.  In terms of toleration of risk, it would have been better for men to be more aggressive, competitive, and risk averse so that they would face the threat rather than the women.  Thus, greater risk-aversion for women relative to men would have been selected for and approached over time.  Again, this leads to a trait in women so that they tend to hold jobs that don't pay as highly.

A statistical trend of note is that women who have never been married out earn or earn very similar pay to their male counterparts (Block and Ragan).  Additionally, there are a number of cities where women out earn men (Hindman).  Currently, there are more women than men enrolled in college (Cook), as a result this education leads to increased average marginal utility for women.  This is evidenced by the number of cities where young women, aged 22-30, are earning more than men (Hindman).  Young women out-earn men by eight percent in the 366 largest metropolitan areas in the United States as well as in 39 of the 50 largest cities (Hindman).  This is an illustration of wage increases following increases in marginal utility of laborers.  Since more women are going to college than men, that accounts for the increases in relative wages as opposed to a decrease in employer discrimination.  While some may celebrate the idea that, "Women's equal pay for equal work" can be brought about by legislation (Cook), economics would dictate that wages can only increase in response to marginal productivity increases (Mises, 591).

It is very possible for women in today's society to earn as much as or more than their male counterparts (Goudreau).  It requires a combination of skill set from education (Hindman) and arrangement of priorities so that earnings outrank other things, similar to male priorities (Dubner).  The idea that women receive and have largely as a whole received unequal pay for work that is substantially the same is incorrect on economic grounds as well on grounds comparing occupations.  While the gender pay gap does exist within aggregated data at around 80 cents to every dollar a man earns (Cook), the men and women being compared have different levels of experience and education, work different hours and different numbers of hours, and hold different jobs (Syrios).  Additionally, according to "marital asymmetry hypothesis" (Block and Ragan), male earnings increase as a result of a marriage while female earnings tend to decrease relative to male earnings.  This trend is illustrated in unmarried college educated men and women between the ages 40 and 64 (Syrios).  Women actually out earn men $47,000 to $40,000 in this category (Syrios).

Legislation such as the Lilly Ledbetter Fair Pay Act of 2009 and the Equal Pay Act of 1963, the law that the Lilly Ledbetter Fair Pay Act of 2009 supplemented, assert that women do not and have not received equal pay for equal work.  The idea behind such legislation is that women are not being paid what they are worth, however in the event that they indeed are, this would have the same effect as wage and price controls (Syrios).  Since people tend to be paid based on marginal utility (Mises), mandating that some women be paid above their marginal utility would lead to more unemployment in women (Syrios).  Additionally, the looming thought of a female employee potentially bringing a gender discrimination suit would act as further disincentive to employers looking to hire women.  While the Lilly Ledbetter Fair Pay Act of 2009 and the Equal Pay Act of 1963 are well intentioned in their desire to help women, unintended consequences such as more unemployment of women than there otherwise would be can result.  

