For those of us curious about whether the person at the next desk doing the same job is getting a bigger paycheck, as well as for businesses who want to tackle income inequality—there’s good news from the White House.
On Friday, the Obama administration announced executive action that will mandate reporting from companies with 100 employees or more on how employee pay breaks down by race, gender, and ethnicity. Such a regulation is being advocated jointly by the U.S. Equal Employment Opportunity Commission and the Department of Labor. Women’s advocates and workplace equality advocates hope that this increased transparency will help expose discrimination and reduce the gender pay gap. That problem remains persistent, according to the White House, with women in full-time jobs earning 79 cents for every dollar a man earns. Moreover, recent report from the Council of Economic Advisers shows that the gender wage gap in the U.S. is 2.5 percentage points higher than the average among industrialized countries.
These measures coincide with the anniversary of the Lilly Ledbetter Fair Pay Act, which was signed into law by the Obama Administration in 2009, allowing workers to file lawsuits over equal pay for up to 6 months after a discriminatory paycheck. This coming week, Obama will also go before Congress to call for the Paycheck Fairness Act.
Some critics feel it is not the president’s place to deal with this issue via executive action. Republican Senator Deb Fischer of Nebraska stated that the only a law with bipartisan support would truly represent the interests of all Americans. “The way to make meaningful, lasting progress on equal pay for women isn’t unilateral presidential action. I remain fully committed to forging a bipartisan consensus in Congress to update our laws and ensure women and men have the information they need to negotiate the salaries they deserve,” said Fischer in a statement. “I urge the president to step up and work with, not around, Congress to make a difference in the lives of working families.”
In a press release explaining the proposed changes, the EEOC noted that “this new data will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.” According to the EEOC, this data would expose specific industries and occupations with the worst pay disparities. The compensation data would also provide a supplement to employment information companies are already required to submit annually on race and gender—the EEOC says that the collective data would be made public to help employers “facilitate voluntary compliance.” These requirements would go into effect in 2017.
“We expect that reporting this data will help employers to evaluate their own pay practices to prevent pay discrimination in their workplaces,” said Secretary of Labor Thomas E. Perez.
Regardless of growing public awareness and discussion of race and gender discrimination, talking about compensation at work is often discouraged by managers and bosses – despite the fact that it is entirely legal. As concerns grow about stalled wages and pay discrimination, pay transparency has become a hot tactic in recent years, with some companies publishing exactly how they calculate compensation to appease their employees.
And sometimes, just being forced to look at the data actually helps. The New York Times reports that Marc Benioff, the chief executive of Salesforce, was enlisted to support these new rules. Last year, Salesforce reviewed the salaries of all 17,000 employees after two female employees asked Benioff to examine whether the company paid women fairly. Benioff was skeptical of this claim, but commissioned the internal review anyway. The results surprised him, and the company added $3 million to its payroll to address the inequities.