The fight for economic gender equity, at least at the level of federal policy, seems to have taken a back seat. Congress’s repeal of the Obama administration’s Fair Pay, Safe Workplaces Order, as well as rules for equal pay recently removed by the White House, were significant setbacks. Activity at the state level, however, while mixed, has been more encouraging, and merits a closer look. With new U.S. Census data showing little change in the gender pay gap—despite higher educational attainment, women are still paid twenty cents less to each dollar paid to men—and with federal government unlikely to become a source of change on the issue, it may be time to look at what states are doing to reduce the gap.
Despite the absence of federal support, many states have picked up the baton to help encourage fair pay practices, with ten states having added four or more equal pay laws since earlier this year, and thirty-eight states considering new equal pay bills in 2018 alone. Other states have failed to catch on, and some are going the opposite direction. Alabama and Mississippi, for example, have zero state-based equal pay laws; both Montana and New Hampshire have revoked equal pay laws in the past year; and Michigan and Wisconsin recently enacted laws to block localities from instituting some of these laws. What can we learn from these measures? Which, if any, of the fair pay practices in use can be recommended as models for other states to emulate?
Economic disparity in general, and the gender pay gap in particular, are both multifaceted issues with many influencers: for example, it’s possible for legislation or administrative regulations to exist in a state with less equitable cultural gender norms, and therefore end up having a blunted effect; on the other hand, a state that has more liberal gender norms but few if any gender-based economic or work protections may have a smaller wage gap than other states due to those attitudes. So it can only be said, with the data available, whether or not certain policies correlate with economic gender equity, and not which of them cause such equity. However, in the present case, the correlations are frequently strong.
The analysis presented below of several of fair pay practices and their correlation with actual pay equity can help begin painting a picture of effective policy on the behalf of equal pay between genders. There is, for instance, research that shows pay transparency and banning salary history boosts wages for women. And states with more equal pay laws have, on average, higher female pay relative to men. In the coming years, we may see that the more laws for pay equity there are, the more we will achieve that end, as long as those laws are enforced and that momentum from movements like #MeToo continue to culturally enforce positive business and hiring practices that improve economic outcomes for women.
The number of equal pay laws examined here are broken down into twenty-four policies, as tracked by the American Association of University Women (AAUW), which have then been organized into six larger categories: equal pay policies; wage reporting requirements; salary history bans; minimum wage increases; laws counteracting sexism; and the promotion of collective bargaining. They are presented in order from highest suggested efficacy to lowest.
The data suggests that strong unions contribute to fair pay. Across member countries of the Organisation for Economic Co-operation and Development, research shows that the gender pay gap is smallest (8 percent) in the group of countries where the collective bargaining rate is at least 80 percent, and widest in countries with weak collective bargaining and no or very low minimum wages. Unions have fought for increased minimum wage, fair pay across gender and racial lines, workplace safety, and family and medical leave, all which contribute to improved opportunities for women. For these reasons and others, the gender pay gap among women and men in unions is about half the size of the gap among non-union workers, and women in unions earn on average over $200 more per week than do non-unionized women, according to the National Women’s Law Center. On a state level, women living in states with anti-union “right-to-work” laws have worse pay outcomes, as seen in Figure 1.
Salary History Bans
Another notable trend in gender pay policy is the movement to ban inquiries about salary history during the job interview process. Such a ban is not only easy to administrate—simply disallow hiring managers from asking the question—it also can be a powerful tool for fair pay. Basing a women’s salary on their past salary can keep her on a path of unfair pay; banning the question, therefore, could help her start on a level playing field. It also mitigates employers’ monopsony power to set wages based on salary history information rather than on a candidates’ capabilities or the responsibilities of the job.
Documentation of the pay gap data and law implementation data in the eight states that ban salary history suggest that the measure is an effective one: in those eight states, women make nearly four cents more to the dollar of men when compared with women in the states that don’t have the policy.
Increasing the Minimum Wage
Raising the state minimum wage, a more global measure with intersectional benefits and groups of advocates, also seems to have a salutary relationship to pay equity. The wage gap in twenty-four states that have increased the minimum wage since 2017 is four cents higher, to every dollar men make, than in states that have not. Eight of the ten states with the biggest gender pay gaps are subject to the federal minimum wage of $7.25 per hour ($2.13 for tipped work), which for a full–time worker comes to about $15,000 per year—which is below the poverty line for anyone with children. Given these circumstances, it is not surprising that women are falling behind in states with low wages, because they disproportionately work in low-paid jobs, like home health care, food service, and retail. Increasing the minimum wage, these conditions indicate, would be an enormous help to women.
Equal Pay Policies
Directly legislating equal pay can be approached from a variety of angles, none of them mutually exclusive: not only via protections (for example, those for workers against retaliation, and prohibiting reducing pay to comply with equal pay law), but also through remedies (including employer liability), procedures (such as permitting workers to file class action lawsuits), and preventative measures (for example, creation of a state advisory committee on pay equity). Research suggests that the more measures, and the greater the diversity of measures, of equal pay approaches utilized by a state, the more likely the wage gap is to decrease. The Economic Policy Institute (EPI)’s report on the divergent economic outcomes for neighbor states Wisconsin and Minnesota, for instance, indicates that a broad set of progressive policies may be a key factor given naturally similar economic and cultural conditions. From 2010 to 2017, women’s median wage as a share of men’s median wage rose twice as fast in Minnesota than in Wisconsin, as the EPI report states, and the difference between the two states was minimized by declining male wages in Wisconsin. Minnesota has adopted thirteen pay equity laws, including a healthy mix of all the approaches described above, whereas Wisconsin has adopted only six. Furthermore, Wisconsin has no defense laws and no preventative measures. While the Wisconsin legislature also took steps to dismantle union power in the state, which disproportionately affects women (see Figure 1), having a weak set of equal pay protections was a likely contributor to this divergence.
While additional research into which combinations of equal pay policy types are most effective is still needed, these initial analyses make a strong case that more and more diverse is better when it comes to this legislation type.
Sexism may seem like a difficult thing to measure, given its expression through social and cultural norms. Researchers at the University of Chicago’s Becker Friedman Institute, however, recently published the results of a quantitative inquiry into the effects of sexism on American women, including its effects on women’s wages. They measured sexism via a fielded survey, asking women questions about gender-based roles in society and work. They concluded that sexism has causal effects on the long term earnings of women, which correlates directly with data from the National Partnership on Women and Families, which found that the states in the survey indicated as having lower levels of sexism also had smaller pay gaps—on average, nearly a three cent difference for each dollar.
Research suggests that the more measures, and the greater the diversity of measures, of equal pay approaches utilized by a state, the more likely the wage gap is to decrease.
The Becker Friedman Institute study helps to explain this correlation. Women who grew up in states with higher levels of sexism are less likely to participate in the labor force, regardless of where they end up living, whereas men who grew up in those states have no observable labor market response. The researchers of the survey conclude that there are ways in which women internalize gender-based discrimination in the labor market, and bring it with them throughout life, for instance when they negotiate for their salary, choose one profession over another, or decide whether to participate in the workforce at all. While legislating against sexism on the whole is no cut and dry matter, these cases support the special importance of policy that nudges employers to level the playing field, when individuals have internalized a culture that has told them they should not.
Requiring Companies to Report Wages by Gender
One increasingly popular route toward state-based gender pay policy is improving transparency via required reporting of wages within a firm, by gender, to expose how men and women are paid in similar jobs. The efficacy of this law is proposed to work through a three-pronged effect. First, requiring reporting helps well-meaning companies identify where they are underperforming, so that they can fix it. For example when pay inequities were identified throughout all departments of Salesforce, they committed to fixing it. Second, increased access to information for individuals and enforcement agencies makes it easier to identify violations and uphold equal pay laws. Third, it offers leverage to public pressure that could lead to accountability for fair outcomes.
Related positive effects of pay transparency include diminished pressure on workers to investigate the fairness of their pay with their coworkers, and less chance of retaliation for workers discussing pay. It would also be in the interest of the company to offer fair pay in order to attract talent that would go elsewhere if they knew that the company was paying unfairly. This includes offering a pay range on a job posting rather than deciding the range once the applicant shows up. Overall, transparency shifts the onus of pay fairness onto the company, rather than the individual.
Overall, transparency shifts the onus of pay fairness onto the company, rather than the individual.
Seventeen states have implemented the policy, two of which have been added just this year. The difference, all told, between these states and those that haven’t implemented such a policy is a half-cent in pay for women, on every dollar that men make. While an extremely modest difference, examples such as the experience at Salesforce suggest there will be a continual process of improvement, aided by improved access to information; those developments over time may expand the impact of the law in the states that have it. Ultimately, the policy’s efficacy relies on the strength of well-intentioned employers, proactive enforcement practices, and a fully engaged broader public. Later on we will better be able to discern the strength of each of these factors in the states concerned, and therefore the full efficacy of the policy.
Much More to Learn
Over time we can continue to track progress to see which policies and practices are most effective at narrowing the gender pay gap. In the meanwhile, most states have been willing to try new things that could boost gender equity—and as the correlations discussed suggest, trying doesn’t hurt.