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The PayCheck Fairness Act Does Not Go Far Enough to Eradicate the Gender Wage Gap

Here's why we believe The PayCheck Fairness Act doesn't go far enough in addressing the systemic drivers of pay inequity in our workplaces and our economy at large.

Editor’s note: This article also includes significant contributions from Lydia Frank, VP of Content Strategy at PayScale.

Last week, House Democrats passed the PayCheck Fairness Act (PFA) — their latest in a long series of attempts to ensure women and men are paid equally. This bill was initially introduced by Rep. Rosa Delauro (D-CT) in 1997 based on a very simple concept: men and women in the same job deserve the same pay.

PayScale found that in 2019, when comparing all women to all men, women earn a median wage of $0.79 for every dollar that men earn. And even when we compare similarly qualified women and men in equivalent jobs, a woman still makes $0.02 less than the equivalent male.

Key Provisions of the 2019 PayCheck Fairness Act

The Paycheck Fairness Act is intended to close loopholes in the landmark Equal Pay Act (EPA) of 1963, which requires that men and women receive equal pay for equal work. The EPA states that employers cannot use gender as a legitimate factor for differentiating pay.

At this point, there’s wide consensus in the legal community that the EPA is ineffective in eradicating gender-based wage discrimination, for a variety of reasons.

The most recent PayCheck Fairness Act puts additional protections in place to address the stubborn, lingering wage gaps. These are the key provisions (we’ve taken a summary by the American Bar Association and combed through the full bill ourselves):

1. The PayCheck Fairness Act will update the definition of a work “establishment”. The bill will broaden the law’s definition of “establishment” by stating that wage comparisons may be made between employees who perform substantially equal jobs at any of the employer’s places of business that are located in the same county or political subdivision. This change is needed because many businesses today operate out of multiple offices in the same area.      

2. Lowers the bar on what qualifies as an affirmative defense in a pay discrimination lawsuit. The PFA provides that a factor other than sex” defense must be based on a bona fide, job-related factor such as education, training, or experience that is consistent with business necessity.

3. Stronger remedies for plaintiffs: The PFA will allow prevailing plaintiffs to recover compensatory and punitive damages. These proposed changes would put gender-based wage discrimination on an equal footing with discrimination based on race or ethnicity.

4. Updates to the class action provisions of the EPA. The new bill says that class members will automatically be considered part of the class unless they specifically choose to opt out. This will make it easier for workers to file class action suits.

5. Prohibit retaliation for disclosure of salary information: It would eliminate employer rules that keep workers from disclosing salaries to their co-workers. This makes it safe for employees to gather data on coworkers’ salaries, so they can figure out whether they are underpaid. Without adequate legal protection, fear of being fired will continue to bar workers from inquiring and seeking relief for discriminatory gender-based pay disparities.

6. Increased oversight and enforcement: Employers would have to share compensation data and other employment-related data (including hiring, termination, and promotion data) disaggregated by the sex, race and ethnic identity of employees with the Equal Employment Opportunity Commission (EEOC), so that the EEOC can police potential discriminatory practices.

The EEOC shall annually make publicly available aggregate compensation data collected by employers broken out by categories including gender, race, ethnicity, segmented by industry, occupation, and core based statistical area (as defined by the Office of Management and Budget).

Additionally, the bill will revitalize the role of the Department of Labor (DOL) and the EEOC in combating gender-based discrimination by requiring research, education, outreach and ready public access to compensation discrimination information.  

7. Negotiation skills training: The bill states that the Secretary of Labor, after consultation with the Secretary of Education, is authorized to establish and carry out a grant program to eligible entities to carry out negotiation skills training programs for the purposes of addressing pay disparities, including through outreach to women and girls.

Why the PayCheck Fairness Act Doesn’t Go Far Enough

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Photo by Austris Augusts on Unsplash

Does the PFA go far enough in addressing the systemic drivers of pay inequity in our workplaces and our economy at large?

We don’t think so.

Yes, the PFA certainly puts some additional protections in place. For example, giving workers the legal protection they need to discuss salaries will encourage workers to find out whether they’re underpaid — so they can ask their employers to remedy the pay gaps. It’s also helpful that the PFA would make it easier for workers to file class action suits for pay discrimination. Asking employers to disclose salary data will surely prompt businesses to take a closer look at their pay equity situation.

However, we feel the law hasn’t gone far enough in many respects to approach pay equity in a holistic way.

One of the key reasons that the unadjusted pay gap is 79 cents on the dollar is because women experience discrimination when it comes to access to the best-paying jobs in the labor market.

The jobs with the highest compensation, including STEM jobs and leadership roles, are disproportionately going to white men. The key to closing the large wage gaps is ensuring that executive teams, boardrooms and certain job families are more reflective of the demographics of the overall labor market.

The PFA does not mandate or even nudge employers to put more women into high-paying jobs — which explains the majority of the gender wage gap. We would love to see the law go further on the other areas that are so vital to close the wage gaps. Here are a five specific ways to enhance the effectiveness of the PFA.

5 Ways the Law Can Go Further to Eradicate the Gender Wage Gap

1. Mandate That Employers Share Salary Ranges With Their Employees  

The PFA does protect workers in having salary discussions —– which helps workers discover pay discrimination and make an case for redress. However, the law could go even further: why should workers have to ask their coworkers what they make? It would be easier if organizations simply disclosed to their workers what the salary range is for each role. The law could mandate that employers share salary ranges with their employees.

2. Paid Parental Leave for Both Spouses and Paid Family Leave

Parental leave

The gender wage gap is as large as it is because women are more likely to take breaks from the workforce to take care of family (children and aging parents). Leaving the workforce has a negative impact on people’s wallets. Even when family leave is available for men as well as women, it is typically significantly less than what is provided for women who are having children. That, alone, is signaling that in a household with a mother and a father that the mother’s career is less important and that she should be the one to take more time off.

Additionally, most organizations today still expect that the bulk of their workforce will do their jobs in an office/shared space for at least 40 hours a work. This lack of flexibility tends to hurt women more because women still bear the majority of the burden when it comes to household responsibilities.  

If the law would mandate that employers provide paid parental leave and family leave benefits to all workers, this would send the message that a woman’s career is just as important as her male spouse’s and give women opportunities to fully participate in the workforce. However, there is another bill on the horizon that does address this issue. Recently, Washington State Senator Patty Murray announced her new bill for affordable child care and paid sick leave.

“Because of a lack of child care, working parents are being forced to work fewer hours, turn down high-paying positions, or even quit their jobs because they can’t find child care,” Murray said.

According to her, the bill would guarantee access to high-quality, affordable child care for working-class families living paycheck-to-paycheck. It would also create 770,000 child care-related jobs, and potentially allow 1.6 million parents to return to work.

Murray has also introduced a bill to guarantee workers at least seven days of paid sick leave — to provide flexibility to care for children and loved ones, which can help ease the burden women feel on their paychecks when they have to take days off to care for family.

3. Reporting Requirements Around Promotion Velocity and Retention Rates 

Research shows that organizations do not promote women, people of color and other historically marginalized groups at the same rate as white men. And raises aren’t doled out in an equitable fashion either.  

In our Gender Pay Gap Report, we found that roughly an equal percentage of men and women start their careers as individual contributors. However, by mid-career (age range 30-44), 47 percent of men are managers or higher, while only 40 percent of women reach this level. By late career (age 45+), 57 percent of men are managers or higher, while only 41 percent of women reach this level. By late career (age 45+), eight percent of men have risen to an executive level position, compared to three percent of women.

When we examined how employees are treated when they ask for a raise, we found that women of color are 19 percent less likely to receive a raise than their white male peers, after controlling for job, industry, experience, etc. Men of color are 25 percent less like to receive a raise compared to an equivalent white man. This goes to show that all humans have biases. Organizations can do more to standardize the raise request process to mitigate biases from the pay increase process.

To make meaningful progress on the opportunity gap, mandating reporting and disclosure around promotion velocity and retention rates can go along way. For example, if organizations have to report on the promotion velocity and retention rates by demographic groups and share the data with the EEOC and their own employees, it would prompt major behavioral shifts.

The law could even require organizations meet a certain diversity targets for senior level roles within a timeline, similar to carbon reduction targets which are already available within certain parts of the United States and Europe.

4. STEM Education for Girls and Young Women

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Photo by Juan Ramos on Unsplash

The PFA authorizes the establishment of a new grant for negotiation skills training. This is well-intentioned, but misses the mark. In reality, women aren’t failing at negotiation, but they aren’t being hired as frequently as men in STEM roles and when they are, they are more likely to leave.

To move the dial, the law could directly tackle getting more girls and young women into the high-paying STEM jobs. The law could support the creation of new STEM education programs for girls and young women, or give private businesses incentives so they will support STEM education programs or provide STEM internships for young women.

5. Funding and Programs for Female Entrepreneurs

Small businesses collectively create a large amount of wealth for their owners. Yet, female entrepreneurs in the U.S. receive just 2 percent of venture capital dollars.

This shockingly low statistic is possible because venture capital firms lack diversity. Diversity VC found that in the U.S., just 11 percent of partners at VCs are female. In this environment, it is difficult for women to approach a group of white male VCs, if not impossible, because most VCs ask founders to get a “warm introduction” through someone they mutually know. Many female founders just don’t have these contacts in their work networks. Finally, it’s been proven that there is notable unconscious bias in the decision-making process when deciding whether to make an investment, which disadvantages female founders seeking funding.

To solve the capital access problem, the law can create government-backed programs that give female entrepreneurs capital and help them expand their networks so that they can grow their businesses.

For practical guidance on how to make real, and faster, progress on pay equity, check out the resources on our Pay Equity Hub.   

Tell us what you think

What’s your take on the PayCheck Fairness Act? What does it need so that it can effectively close the gender wage gaps that have persisted for so long?

Editor’s note: This article includes significant contributions from Lydia Frank, VP of Content Strategy at PayScale.

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