Pay transparency is trending for all the right reasons
Washington State, Colorado, New York City — and now California and possibly New York State have charted a path toward combating gender and racial pay gaps through increased pay transparency.
As New York City employers are starting to comply with a new salary transparency law designed to combat gender and racial pay gaps, and as New York Gov. Kathy Hochul (D) considers signing the bill that would enact a similar law across the state, other cities and states should pass pay transparency laws of their own.
In September, California Gov. Gavin Newsom (D) signed a similar bill into law, capping off a month that encompassed Moms’ Equal Pay Day (Sept. 8), International Equal Pay Day (Sept. 18), and Black Women’s Equal Pay Day (Sept. 21). When enacted next year, the law will require employers with 15 or more employees to include the pay scale for a position in all job postings, require private employers with 100 or more employees to submit an annual pay data report to the state’s Department of Fair Housing and Employment, which would make the reports publicly accessible and, if requested by an employee, require the employer to provide the pay scale for the employee’s current role.
California and New York would join Colorado (in which researchers found a boost in the state’s labor force participation rate during the law's first year) and Washington State (with a law that becomes effective in 2023) in requiring employers to post salary ranges with job descriptions. Other cities and states would benefit from similar pay transparency laws as well.
Take Washington, D.C., where I work, and Maryland, where I live, for example. Washington, D.C. has one of the largest gender pay gaps in the country, following only Wyoming and Utah. According to a U.S. Census Bureau data visualization tool released earlier this year, the difference between median earnings for men and women who worked full-time, year-round for 12 months in the District is $16,032. The Census Bureau points to age, the number of hours worked, the presence of children, and education as potential factors leading to the gender pay gap, but this gap persists even when the profession is held constant.
For example, male lawyers in D.C. make a median of $167,134 per year, while female lawyers make $152,638. Likewise, male management analysts bring home $100,640, compared with $89,830 for female management analysts. The pay gap grows when race is layered with gender in analysis of the pay gap, and again, Washington, D.C. performs poorly in these metrics.
As the Washington Post reported last year, the District has the widest wage gap for Black women in the nation, who make 63 cents for every dollar paid to white, non-Hispanic men. Women of all races, as well as Black men and Latino men, earn less than white men, even when similarly educated. Pay transparency can be an important step in reducing these gaps.
While Maryland updated its Equal Pay for Equal Work law in 2020, it requires employers to disclose the pay range to applicants upon request — but when some experts explicitly advise against asking about salary while interviewing, how many job applicants are actually requesting pay ranges?
According to a Salary.com survey, 87 percent of respondents said they are always or sometimes apprehensive when it comes to salary negotiations. The same survey found that 55 percent of women are always apprehensive regarding salary, compared with 39 percent of men, so a law that requires the extra step of asking about pay in order to close the gender pay gap is likely not as effective in doing what it was designed to do.
Ultimately, as the National Women’s Law Center writes, “The Equal Pay Act has been the law for more than 50 years — but it needs to be updated and strengthened.” Until Congress updates that federal law, Washington State, Colorado, New York City — and now California and possibly New York State — have charted a path toward combating gender and racial pay gaps through increased pay transparency. I hope other cities and states follow suit.
Amy Frieder is a Tom Henderson Civil Rights Fellow at Sanford Heisler Sharp, LLP, a national plaintiff-side employment and civil rights law firm. Views expressed in this piece are her own.