Scholars examine regulatory approaches to achieving pay equity.
At the current rate of progression, it will take women decades—until 2054 or later—to reach pay equity with men. In 2021, the U.S. Department of Labor reported that women in the United States were paid, on average, 82 percent of what men were paid. This represents only a slight improvement from 2020, when women earned 81 percent of earnings made by men.
The current gender wage gap contributes to significant losses in earnings for women. In 2021, the average woman earned approximately $12,000 less than the average man.
Pay disparities are even larger for women of color, with Black women being paid only 64 percent of what men are paid and Hispanic women being paid only 57 percent.
The Women’s Bureau of the Labor Department and the U.S. Census Bureau determined that the wage gap cannot be wholly explained through measurable differences between workers, including education level, age, marital status, or hours of work. They say it is “highly likely” that “at least some of this unmeasured portion is the result of discrimination.”
At the federal level, Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, and national origin. More specifically, the Equal Pay Act of 1963 prevents wage discrimination by requiring that employees receive equal pay for equal work, while the National Labor Relations Act outlaws pay secrecy policies that would prohibit employees from discussing salaries.
With the continued persistence of the wage gap, however, local and state legislatures have begun implementing additional safeguards to reduce pay inequities. Recently, seven states have begun to regulate employer transparency, requiring employers to publish salary ranges on job postings or provide pay scales to candidates and current employees. Salary history bans, which prohibit employers from inquiring into a candidate’s pay history, have also been adopted by 28 states, along with Puerto Rico and the District of Columbia.
In this week’s Saturday Seminar, experts evaluate the efficacy of current pay equity regulations and explore alternative regulatory approaches.
- In a policy brief issued by the Institute for Women’s Policy Research, Shengwei Sun of the Institute for Women’s Policy Research, Jake Rosenfeld of Washington University in St. Louis, and Patrick Denice of the University of Western Ontario find that lack of knowledge about coworkers’ pay contributes to the continuation of the gender pay gap. Research suggests that pay transparency reduces this discrepancy. Although the National Labor Relations Act theoretically protects workers’ right to discuss pay, it has limited efficacy because it fails to protect workers from employer retaliation, contend Sun, Rosenfeld, and Denice. The Paycheck Fairness Act, a bill that passed in the U.S. House of Representatives but failed in the U.S. Senate, would better protect workers, explain Sun, Rosenfeld, and Denice. This leaves state and local legislatures responsible for strengthening such protections through workplace transparency regulations, which are most effective when combined with other policies, including salary history bans and pay reporting requirements, argue Sun, Rosenfeld, and Denice.
- In an article published in the Boston University Law Review, Stephanie Bornstein of the University of Florida Levin College of Law critiques the current enforcement mechanisms of workplace discrimination laws. Bornstein explains how the system not only places the burden on aggrieved employees to file charges with a government agency and pursue independent litigation, but also fails to provide sufficient protection from employer retaliation for filing such claims. Bornstein contends that, because government enforcement agencies play a limited role in litigating discrimination lawsuits, underenforcement of antidiscrimination continues. Information-forcing mechanisms, which would compel employers to disclose to the public the pay and promotion of employees by race and sex, could effectively shift the burden of antidiscrimination enforcement onto employers and government agencies, argues
- In a working paper issued by the National Bureau of Economic Research, Morten Bennedsen of Økonomisk Institut and several coauthors find that pay transparency lessens the gender pay gap. The Bennedsen team focused its research on a law enacted in Denmark requiring firms to publicize salary data broken down by gender and notify their employees of any discrepancies. In their analysis, Bennedsen and his coauthors discovered that this policy resulted in a slower growth rate for male wages, while female wages tended to increase, although only slightly. As a result, the overall wage gap diminished as well. When assessing other employment factors, the Bennedsen team noted that firms hire greater numbers of female employees and are also more likely to promote female employees. Because women are statistically less likely to negotiate their wages, pay transparency regulations could provide greater incentive for women to negotiate for equal pay, according to the Bennedsen team.
- Applying an intersectional approach to the pay equity debate, Abigail Coleman, Robyn Dupont, and Nina Rivera argue in an article published by the S. Equal Employment Opportunity Commission that pay disparities should be assessed across protected classes such as race, sex, and national origin. Coleman, Dupont, and Rivera contend that women of color, particularly Black and Latina women, face vast pay discrepancies across fields and receive lower wages and benefits than white women. They recommend that the federal government, as a significant employer in the United States, set an example by tackling pay equity through an intersectional lens. For example, Coleman, Dupont, and Rivera highlight efforts to limit the use of salary history in employment decisions, as such histories often reflect racial and gender biases and could further perpetuate the cycle of pay discrimination.
- Although the COVID-19 pandemic brought structural inequities to the fore, in particular gender pay inequality, progress in closing the gender wage gap has stalled, argue Ariane Hegewisch and Eve Mefferd of the Institute for Women’s Policy Research in an article published in the CESifo Forum. Hegewisch and Mefferd contend that multiple variables contribute to the wage gap in the United States, including gender differences in hours of work, devaluation of “women’s work,” occupational segregation, discrimination, and more. State and local efforts to pass equal pay legislation have found some success, according to Hegewisch and Mefferd. Such successes include regulations that focus specifically on pay transparency, expand worker characteristics that are explicitly protected from discrimination, implement salary history bans in the recruitment process, and strengthen pay data collection, monitoring, and oversight.
- In an article published in the Brooklyn Law Review, Amy H. Soled of Rutgers Law School examines legislation aimed at closing the pay gap and argues that the U.S. Congress should take action. According to Soled, existing legislation is unable to eliminate wage discrimination because there is no single statute that addresses the systemic sexism in the labor market. Soled argues that Congress should follow the Icelandic model, requiring companies to show that their pay practices are nondiscriminatory or pay a penalty. Shifting the burden of proof to the employer through federal legislation, Soled contends, could create consistency across the states and narrow the pay gap.