Today is the date by which the Equal Employment Opportunity Commission (EEOC) has been court-ordered to finish its collection of pay data based on gender, race, and ethnicity from employers with 100 or more employees. This data collection effort is an Obama-era requirement intended to create pay transparency that will help the EEOC to enforce equal pay laws, and to make pay data by industry public.
The current administration has been very active in opposing the data collection: while it hasn’t succeeded in stopping the process that ends today, it has vowed not to continue the collection in the future. It’s imperative that it does continue, though. As the tradition of calling transparency laws “sunlight” laws illustrates, bringing light to what’s exactly happening is essential to equity, and to a well-functioning democracy to boot.
Trump Administration Attempts to Undermine Pay Transparency
In January 2016, on the anniversary of the signing of the Lilly Ledbetter Fair Pay Act, the Obama administration took administrative action to make pay practices more transparent by creating a central database of private-sector pay information. The goal of the policy was to enable government to shine a light on pay disparities and help the EEOC target its enforcement. The data—reported through the existing EEO-1 form that companies use to report their diversity—would be made publicly available in aggregate form by industry, which would help individuals, researchers, and media make comparisons and thereby promote equal pay within and across industries.
Unfortunately, the Trump administration has been undermining this effort at every turn. President Trump’s Office of Management and Budget (OMB) attempted to block the EEOC pay data collection efforts in August 2017 by calling for a “review and stay,” a process that allows OMB to halt the data collection process and review the collection requirements in order to reassess how “burdensome” the data collection would be. In response, the National Women’s Law Center, the Labor Council for Latin American Advancement, and Democracy Forward successfully challenged the stay in court. Next, the federal district court ruled in March of this year that the Trump administration had violated the law with their stay, since they did not show valid justification for blocking the data collection. The court lifted the stay, ordered the EEOC to collect the data, and gave them a deadline of September 30—today.
The Trump administration hasn’t let the issue go—far from it. It has appealed this ruling, and, furthermore, on September 12, announced that it would not collect this data in the future. The appeal has not been ruled on, and should not affect the process of data collection from 2017 and 2018. But it does seem telling that the administration concluded that the data collection was too burdensome for employers before it was even finished.
New Data Shows that Gender and Racial Pay Inequality Persists
The administration’s weakly reasoned decision to relinquish their responsibility to collect wage data comes at a time of stagnation in progress toward narrowing the gender pay gap. Based on the latest Census data, we know that, for every dollar paid to white, non-Hispanic men, Latinas are paid just 54 cents; Native American women are paid just 58 cents; black women are paid just 62 cents; and white, non-Hispanic women are paid 79 cents. According to the new 2018 data, on average, women who work full-time get paid 82 cents for every dollar a man makes. That average gap in pay, which amounts to over $13,000 per year, was essentially unchanged from 2017.
At the rate that the gender pay gap has been narrowing over the past fifty years, women will not achieve equal pay until 2059. We simply cannot afford to wait.
The Arguments for Pay Transparency
The Obama administration’s move to increase pay transparency was grounded in the fact that it’s difficult for workers to determine if they are being paid unfairly, and even harder to do something about it. After all, when it comes to equity, sunlight is absolutely essential: if you can’t see the problem in all its particulars, you can’t solve it. For example, the U.S. Women’s Soccer Team likely found out about the Men’s Soccer Team’s salaries through their publicly available union contract. Actress Michelle Williams, who gave a powerful speech about equal pay as she accepted her Emmy earlier this month, learned she was being paid less than 1 percent of what actor Mark Wahlberg was paid for a movie role because she read about it in USA Today. In 2012, Aileen Rizzo, a math educator in Fresno County, California, overheard her male colleagues talking about their salaries and learned she was being paid significantly less for the same work, despite having more experience and better credentials. And, perhaps best known, Lilly Ledbetter, a supervisor at Goodyear Tire, was given an anonymous note in 1998 alerting her to the discrepancy in pay between her and her male colleagues. We can be glad that these revelations occurred; but as a modus operandi, relying on individuals to uncover pay discrepancies through organizations’ union contracts, newspaper articles, eavesdropping, and anonymous notes is an utterly inadequate solution to the problem of unequal pay.
As a modus operandi, relying on individuals to uncover pay discrepancies through organizations’ union contracts, newspaper articles, eavesdropping, and anonymous notes is an utterly inadequate solution to the problem of unequal pay.
Even though the National Labor Relations Act (NLRA) provides workers with the right to collectively organize and discuss workplace issues, many companies use various tactics to keep employees from discussing their pay, including non-binding company policies, lay-off threats, or firing workers who discuss their salaries with co-workers. A 2011 survey from the Institute for Women’s Policy Research found that about half of workers “report that the discussion of wage and salary information is either discouraged or prohibited and/or could lead to punishment.” In addition, some workers are excluded from the NLRA, including domestic workers and independent contractors.
When pay data is made available, workers can better advocate for fairer practices and for companies to fix inequities. When firms collect and analyze their own data, they can identify trends and averages over time, and use the information to address any systematic discrepancies. One example of how pay transparency can be used for corporate accountability for equal pay is Salesforce. When they conducted a wage audit, they were surprised to find systemic gender and racial pay gaps. So the company made a plan to ameliorate them, and has spent more than $10 million to address the findings of four annual audits they’ve conducted thus far.
The link between pay transparency and equal pay is clearest in unions and the public sector. The gender pay gap among men and women in unions is narrower than the pay gap among non-union men and women—not because men make less, but because women make more: $200 more per week, on average. This, in part, can be attributed to wage transparency clauses often found in union contracts, and the accountability that transparency helps to drive. Similarly, in the public sector, where wage information is often public in salary grade documents and workers are five times more likely to be in unions than private sector workers, there are smaller gaps in pay.
The Benefits of Transparency Outweigh the Costs
Not everyone sees the benefits of pay transparency. The EEOC designed the data collection to be as simple and straightforward as possible—asking the companies required to report (those with 100 or more employees) to add the information to the EEO-1 forms they already fill out. Despite that, companies must do the work to identify and report the pay data. The Trump administration has said the data collection requirement is “unnecessarily burdensome and lacked practical utility.” According to Representative James Comer (R-KY) in a congressional hearing in September on the subject, “The benefit of reporting does not outweigh [the] costs.”
Simply put, the benefit of using pay transparency to achieve equal pay is worth the expense that a little bit of extra paperwork entails for the sake of the women being paid less.
Considering that the data collection has not been finalized, it seems odd for Comer to have reached this conclusion. If anything, the opposite conclusion is the one we must reach when we examine the facts. Simply put, the benefit of using pay transparency to achieve equal pay is worth the expense that a little bit of extra paperwork entails for the sake of the women being paid less. It’s worth it to help identify and fix disparities that will help them pay down their student loans, save for their children’s college educations, or ensure a secure retirement. For some women, discriminatory pay can lead to a loss of $1 million over a lifetime of work—and even more when you account for the fact that Social Security benefits are determined based on income. Solving equal pay is the right thing to do, and requires transparency to accomplish. As an added benefit, the Institute for Women’s Policy Research estimates that equal pay would add more than $500 billion in income to the economy, the equivalent of 2.8 percent of the 2016 U.S. gross domestic product.
Transparency Is Just the Starting Point on the Path to Equality
Pay disparities are caused by a number of factors, including discrimination, occupational segregation, sexual harassment, and the disproportionate caregiving responsibilities placed on women, including motherhood. The Equal Pay Act prohibits discrimination on the basis of sex by paying wages at a rate less than the rate paid to employees of the opposite sex for equal work on jobs that require equal skill, effort, and responsibility and performed under similar working conditions, with exceptions for seniority, merit, systems measuring the quantity or quality of production, or any factor other than sex. Without transparency, it’s a steep challenge for the EEOC to proactively enforce the law, or for an individual to know whether or not they are being paid unequally. That’s why it is a necessary element in the fight for equal pay. For full equality, however, transparency must be combined with other solutions.
For example, in Iceland, companies with twenty-five or more employees not only have to report their wage data: they also have to confirm they are paying women and men equally for jobs of equal value every three years. If they don’t certify, they’ll be fined—daily. Senator Kamala Harris (D-CA) has proposed something similar for the United States. Currently, the onus is primarily on women to suss out pay discrepancies individually and take action to fix them, either through internal channels, filing a claim with the EEOC, or filing a lawsuit—all of which are nerve-wracking, time-consuming options with no guarantee of success. Shifting the responsibility off of women’s shoulders and onto employers would make companies, not workers, responsible for ensuring, and to some degree enforcing, equal pay for equal work.
Shifting the responsibility off of women’s shoulders and onto employers would make companies, not workers, responsible for ensuring, and to some degree enforcing, equal pay for equal work.
Addressing the many other contributors to pay inequality, and not lack of pay transparency alone, will also help. For example, the Domestic Workers Bill of Rights would address occupational segregation by raising standards in this more-than-90-percent female industry. The Be Heard Act provides a comprehensive approach to stopping sexual harassment. The FAMILY Act would guarantee paid family and medical leave to support caregivers, and the Child Care for Working Families Act would raise wages for child care providers—the majority of whom are female—by making high quality child care affordable for every family. Furthermore, raising the minimum wage disproportionately raises wages for women, since women comprise two-thirds of minimum wage earners. These are just some of the additional solutions that—along with pay transparency—can help address the gender disparities in pay.
The data collected by the EEOC will be extremely meaningful if the EEOC cleans it, analyzes it, and makes public the aggregate data by industry. If instead they ignore it, the millions of women who are being paid less than men for similar work will continue to have zero broad-based resources from which to learn about the discrepancy. Paying people fairly for the work they do shouldn’t depend on their gender, or on any factor whatsoever of identity. We need more pay transparency, not less, so we can finally achieve equal pay.