Abstract
Sarah David Heydemann and Andrea Johnson on the Paycheck Fairness Act.
In brief:
55 years ago, Congress passed the Equal Pay Act (“EPA”), but women still make just 80 cents for every dollar paid to men. The wage gap varies by race and is larger for women of color.
Loopholes and inadequacies in the EPA, bad court rulings, and continued discrimination against women in the workforce allow wage gaps to persist.
Congress should pass the Paycheck Fairness Act to update and strengthen the EPA and provide robust protection against sex-based pay discrimination in the workplace.
States across the country are introducing and passing similar legislation, and public support for closing the wage gap is high.
Addressing discrimination and ensuring women receive equal pay would have a significant positive effect on our economy.
In the last four decades, women’s educational levels and work experiences have increased dramatically. Women are over half of college graduates and nearly half the workforce, and families rely on women’s earnings. However, women are still paid less than men. More than half a century after the passage of the Equal Pay Act (EPA), a woman working fulltime, year-round in 2017 was typically paid just 80 cents for every dollar paid to a man working full-time, year-round. The gender wage gap varies by race and is larger for most groups of women of color: nationally, Black women, Native women, and Latinas working full-time, year-round were typically paid just 61 cents, 58 cents, and 53 cents, respectively, for every dollar paid to their non-Hispanic White male counterparts, while non-Hispanic White women were paid 77 cents for every dollar paid to non-Hispanic White men. Asian women working full-time, year-round were typically paid 85 cents on White non-Hispanic men’s dollar, but the wage gap is substantially larger for some communities of Asian women. Gender wage gaps persist in all 50 states and in nearly every occupation. Significant wage gaps also exist for mothers compared to fathers, LGBTQ women compared with men, and women with disabilities compared to men with disabilities.
Skeptics of the wage gap contend that it is due to differences in education levels or the kinds of jobs that women choose. But studies show that at the very beginning of a woman’s career, just one year after college graduation, women working full time were paid only 82% of what their male colleagues earned and we know that wage gaps grow over time. For women overall, even when accounting for factors like unionization status, education, occupation, industry, work experience, region, and race, 38% of the wage gap remains unexplained. Data make clear that discrimination— based on conscious and unconscious stereotypes—is a major cause of this unexplained gap. A recent experiment revealed, for example, that when presented with identical resumes, one with the name John and the other with the name Jennifer, science professors offered the male applicant for a lab manager position a salary of nearly $4,000 more, additional career mentoring, and judged him to be significantly more competent and hirable. When women lose out on earnings because of discrimination, families and the economy suffer. Addressing discrimination and closing the gender wage gap would have a significant positive impact on the economy, including helping to tackle the problems of poverty and wealth inequality.
The Paycheck Fairness Act
Although the EPA has helped to narrow the wage gap over the last 55 years, loopholes and inadequacies in the law have allowed pay discrimination to continue. Employees lack the tools they need to effectively fight against pay discrimination, and employers lack incentives to proactively reduce pay disparities. The Paycheck Fairness Act (PFA) would update and strengthen the EPA and is a critical measure to address pay discrimination. It would move us closer toward closing gender and racial wage gaps.
The PFA uses a diverse set of tactics to strengthen protections against pay discrimination. Among other provisions, the bill increases pay transparency, an essential tool in the fight for equal pay. Of all forms of discrimination, pay discrimination is among the most difficult to detect and address. Because of a culture of secrecy around pay, women can be paid less than the men working next to them for years without realizing it. In fact, 60% of private sector employees report that discussing their wages is either prohibited or discouraged by employers. The PFA would, instead, prohibit employers from punishing employees for sharing pay information with their coworkers. It also directs the Equal Employment Opportunity Commission (EEOC) to collect employee compensation data and other employment-related data from employers, broken down by sex, race, and national origin. These data would give the EEOC an invaluable tool for fighting pay discrimination by shining a light on pay patterns that raise red flags, so that the EEOC can more efficiently and effectively use its resources for enforcement, education, and outreach to address pay discrimination. It would also ensure that employers are proactively examining their own pay data and create a powerful incentive for employers to correct unjustified pay gaps.
Further, the PFA would help strip bias out of common employer practices, like pay setting, by preventing employers from relying on a job applicant’s salary history to set pay when hiring new employees. When an employer relies on an applicant’s previous salary to set pay, women and people of color can carry pay discrimination and lower wages from job to job. Preventing reliance on salary history in pay setting is a simple step to help ensure that salary is based on an applicant’s relevant skills, experience, and the responsibilities they will be assuming, rather than what they happened to be paid in their past job, which may be infected by pay discrimination.
Over the years, courts have interpreted the EPA in ways that have created legal loopholes and weakened protections for plaintiffs. For instance, the EPA allows employers to defend against pay discrimination claims by asserting that a pay differential is based on a “factor other than sex.” Some courts have interpreted this defense so broadly that factors such as a male worker’s stronger salary negotiation could qualify as a defense. The PFA would tighten this language to excuse a pay differential only where the employer can prove it is truly caused by something other than sex, is related to job performance and consistent with business necessity, and accounts for the entirety of the pay differential. Courts have defined other EPA measures in an overly narrow manner. Under the EPA, for instance, wage comparisons must be made between employees working at the same “establishment.” Courts have narrowly defined this requirement to mean that wages paid in different facilities or offices of the same employer cannot be compared. The PFA clarifies that comparisons may be made between employees in workplaces in the same county or similar political subdivision.
The PFA would help give people access to justice by ensuring that individuals can come together to challenge discrimination through a class action and improve remedies for those who do come forward. This would put the remedies available for gender-based wage discrimination on equal footing with those already available for discrimination based on race or ethnicity.
When women are paid less than their male counterparts, it has long-lasting repercussions for their housing, education, health, and retirement.
Equal Pay Increases Economic Security
The passage of the PFA would be a critical step toward achieving equal pay and lessening wealth inequality. When women are paid less than their male counterparts, their smaller paychecks have long-lasting repercussions for their housing, education, health, and retirement. They and their families face not only an immediate loss of income but potentially years of decreased earnings, job stability, and economic insecurity. For example, based on today’s wage gap, a Black woman stands to lose an astounding $946,120 over the course of a 40-year career. She would have to work until she was age 84 to catch up to what a White, non-Hispanic man would be paid by age 60. This disparity in earnings over time prevents Black women from building wealth and saving for retirement. Recent data show that single Black women have a median wealth amounting to just $200—a fraction of the $15,640 typically accrued by single White women and the $28,900 typically accrued by single White men.
Closing the wage gap means not just more money in women’s pockets, but a stronger economy overall—to the tune of an additional $512.6 billion. Those added billions would result in a dramatic decrease in poverty rates for working women and for the many families that depend on women’s earnings. A recent study found that if women received the same compensation as their male counterparts, the poverty rate for all working women would be reduced by half, from 8.0% to 3.8%. Moreover, nearly 60% of women would earn more if working women were paid the same as men of the same age with similar education and hours of work. Closing the gender wage gap is especially critical for working mothers. In 2015, 42% of mothers were the sole or primary breadwinners in their families and another 22.4% were co-breadwinners, meaning mothers’ earnings are critical to families’ financial security. Yet in 2016, more than half of all poor children lived in families headed by women and female-headed households with children were much more likely to be poor (35.6%) than male-headed households (17.3%). If we achieve equal pay, the number of children with working mothers living in poverty would fall from 5.6 million to 3.1 million. More equal pay for women means increasing economic security for women, their families, and our communities.
The passage of the Paycheck Fairness Act would be a critical step toward achieving equal pay and lessening wealth inequality.
Moving Forward
Not surprisingly, recent public opinion data show that 79% of women and 70% of men surveyed felt equal pay should be a top priority for lawmakers, and policies to close the wage gap are making headway in states and cities across the country. In the past few years, lawmakers have introduced legislation in over two-thirds of the states to address pay discrimination, and many of these bills have become law. Many of these laws are modeled on the PFA and some even go further in enacting protections, such as requiring employers to provide salary ranges to job applicants in order to level the playing field in salary negotiations, where women often ask for less when they negotiate than men, even when the women applicants are otherwise equally qualified and applying for similar jobs as their male counterparts.
The Paycheck Fairness Act is an essential tool for individuals and advocates to prevent, identify, and fight against pay discrimination. But it is only one piece of the policy agenda necessary for women to truly achieve equality at work and in pay. For example, mothers experience a particularly large wage gap. Policies that help mothers and families will work to lessen the wage gap including by requiring that pregnant workers with a need for an accommodation be provided reasonable accommodations so they can keep working; adopting nationwide paid family and medical leave and paid sick leave; providing access to affordable, high quality childcare; and ensuring fair work scheduling practices— all of which help ensure that caregiving doesn’t push women out of work or into lower paying jobs. Likewise, while no occupation is immune from it, sexual harassment is a barrier to women’s participation in higher wage, traditionally male-dominated occupations, so strengthening protections from harassment and related retaliation will help women to access these higher-paying jobs, and work to close the gender wage gap. Relatedly, women’s overrepresentation in low-wage and tipped jobs is a key driver of the wage gap, so in addition to lowering barriers for women to access higher wage jobs, raising the minimum wage and doing away with the unfair and unjust two-tiered minimum wage system for tipped workers will help to close the gap.
To make real strides in eradicating wealth inequality and realizing an economy in which we can all prosper, we must work to close gender and racial wage gaps and ensure equal pay—and that starts with the Paycheck Fairness Act.