COVID-19 RECOVERY SERIES: Time for Transparency: A Post-COVID America Where Employers Report Wage Data by Gender and Race

April 1, 2021
WageGap

By Evelyn Murphy

In 1963, President John F. Kennedy drew the nation’s attention to the gender wage gap after signing the groundbreaking Equal Pay Act. Women, he said, earned 60 cents for every dollar men earned. Where I worked at that time, people said reassuringly, ‘’You’ll catch up soon. It’s only a matter of time until you girls are as well-educated and have worked as long and hard as men.”

Today, women earn 82 cents for a man’s dollar. That’s an alarmingly slow rate of catch-up. So, almost 60 years later, ‘It’s only a matter of time’ rings more than hollow to me.

What happened? Women are now better educated than men in America. Women work hard, long hours, and are often the sole breadwinner of the family. Women still shoulder the greater share of child care and house work than their male partners, even when working full time. Why are women’s earnings not even close to catching up with men’s?

And, as we now take full measure of the astonishing and incredibly disturbing number of women who have lost their jobs or dropped out of the workforce during the pandemic -- about 2.5 million women and growing -- that persistent wage gap could become even more difficult to bridge unless we take serious and immediate action.

How have we gotten to this point?

It’s certainly not for lack of advocacy. As with all complex economic and social inequality in America, the path to achieve wage equity has engaged thousands of women -- and a considerable number of men -- activists, scholars and public servants. Yet few employers, some only after settling racial and gender discrimination lawsuits, have publicly supported wage equity efforts over these six decades. Only recently, when unemployment hit record lows in the United States and employers needed every able worker, did they begin taking steps -- cautious, not top priority, steps -- toward reckoning with gender and racial wage inequity under their roofs.

My in-depth analysis of this issue over 20 years points to a critical missing ingredient to achieving gender equity: public reporting by each employer of their gender and racial wage gaps along with the race and gender of the highest earners. Such transparency informs everyone about progress -- or lack thereof. In short: Transparency brings accountability.

Wage Gap Statistics 1960-2020

On June 10, 1963, President John F. Kennedy sat in the Oval Office surrounded by the prominent congresswomen and signed the Equal Pay Act of 1963. This gathering paid tribute to 20 years of hard work “by labor, management, and several private organizations” since the first bill aimed at eliminating pay disparity based on sex was introduced in Congress.

In his brief remarks, rich with statistics especially about the number of children in households with working mothers underscoring the necessity for more child care centers, the President provided the nation with the marker of wage inequality that we have been trying to improve on ever since -- “ the average woman worker earns only 60 percent of the average wage for men.”

For the remainder of the 1960s and throughout the 1970s, while millions of American women joined the workforce, working women continued to earn 60 cents for every dollar men earned.

Finally, in the 1980s, the gender wage gap improved markedly. By 1992, women earned almost 72 cents to a man’s dollar. During the 1980s, with cheaper labor markets abroad, thousands of America’s high paying manufacturing jobs moved offshore. Economists attributed the decline in the gender wage gap as much to the decline in men’s earnings as these displaced workers took lower paying jobs as to increased earnings of women.

From 1990 to 2020, women gained another 10 cents in wage gap. So, after 60 years, American women still earn an astonishing 20 cents less than men. Women’s advocacy groups now project that if we continue to proceed at this pace, America’s gender wage gap will not be eliminated until 2070.

The pace for eliminating the racial wage gap is more dire. Today, African American women earn 63 cents and Latinas earn 55 cents for every dollar men earn. The Institute for Women’s Policy Research projects that it will take 110 years for Black women to close the wage gap.

1960s-2000: Decades of “Fixing” Women to Solve the Gap

After enactment of the Equal Pay Act, efforts to eliminate the gender wage gap focused on actions that women needed to take. In the 60s, one common remedy was the assertion that women needed to be as well educated as men. By the 1980s, more women were graduating from college than men, a trend that has continued to this day.

Another widely held prescription involved women’s choice of professions and jobs. Women, it was argued, chose lower-paying professions such as nursing, while men chose to become high paid doctors. This reasoning suggested that the wage gap would diminish if only women would pursue careers in higher-paying professions. Yet today, even women who chose to be doctors or pursued STEM careers find themselves experiencing gender wage gaps within these higher paid professional tracks.

Women activists in the 1970s and 1980s pursued another solution to the wage gap: comparable worth. They acknowledged that the 1963 law President Kennedy signed mandated equal pay for equal work was fundamental. But they interpreted the law to include equal pay for comparable work as well. Their point: women and men should be compensated equally for work requiring comparable skills, responsibilities and effort. Throughout the 1980s, several states instituted job evaluation studies to determine the worth of jobs to ensure that state workers were “paid for the job, not who does the job” as Minnesota comparable worth pioneer Faith Zwemke explained. Private sector employers watched from the sidelines.

These prescriptions had -- and still have -- merit. Many distinguished scholars have contributed valuable insights and analyses to advance our understanding of what needs to be done to eliminate the wage gap.

So why haven’t we made more progress since passage of the Equal Pay Act of 1963? Because activists and academics have been limited by the information available to them.

The Blinders of Census Data

If there is a single new lesson to add in our quest to create wage equity in the American workplace, it is to remove the blinders on the principle source of wage gap data -- the U.S. Census Bureau. Our understanding and actions have relied overwhelmingly on this federal agency.

The U.S. Census Bureau periodically gathers and publishes the data calculating gender and racial wage gaps. Since the 1940s, the Bureau has conducted a monthly Current Population Survey, which includes earnings information from citizens by race and gender.

These surveys are the principle data sources guiding researchers and activists about wage gaps. The Bureau uses well-honed, sophisticated questionnaires conducted by rigorously trained data gatherers. The reports are the largest data source of earnings of American workers. So, since the 1960s, researchers and activists have relied primarily on this data to diagnose impediments to eliminating racial and gender wage gaps and to prescribe actions.

One problem with Census data is that this data is provided by employees. Consider the accuracy of wage data from employees. How accurate is a citizen’s response to the Current Population Survey question: “What is your best estimate of your usual (weekly, bi-weekly, monthly/annual) earnings before taxes or other deductions?” How accurate is a ‘best estimate’? Did that employee remember accurately? Did she or he take time to find a pay stub to verify his/her answer? How likely is it that an employee might mistakenly provide current earnings rather than earnings for the period requested? Or, just provide a number in order to move on to the rest of the 200 questions in the survey?

In contrast, consider how an employer would likely respond to the question, “How much did (that citizen) earn last year?” The employer would use the W-2 filed for that employee or use payroll records.

This distinction between employer- and employee-provided wage data appeared in the first wage gap report of the Boston Women’s Workforce Council in 2015. The Council reported gender wage data from employers which showed that the gender wage gap in metro Boston was 23 cents. Census data reported a 20 cent gap. This discrepancy between employer- and employee-reported wage gap data has shown up in every biannual report of the Council since then. Simply put, employers are likely to report more accurate wage gap data than employees. And, if the Metro Boston data is reflective of the entire country, the racial and gender wage gaps are larger than Census data reports.

Another problem: by relying solely on employee wage data from the Census Bureau, inequitable workplace conditions are not identified at all. The U.S. Equal Employment Opportunity Commission (EEOC) gathers race and gender data from employers not wages. An Executive Order to require employers to report wage data was signed by President Obama late in his tenure. His successor promptly overturned it. Even if the new administration restores this reporting requirement, the EEOC does not provide public information about gender and racial earnings by individual employers.

Cursory Data Publicly Available on Employers’ Wage and Power Gaps

Consulting firms, a few academics with access to EEOC data, and a smattering of surveys done by nonprofits engaged in advancing women opened windows into employers’ activities which might reduce wage gaps.

In recent years, consulting firms such as McKinsey began advising large employers on ways to attract, advance and retain female workers. By 2018, with more women than men employed in American non-farm jobs, employers felt pressed to reassure women of their supportive working conditions, opportunities for advancement, and other job benefits. Consulting firms signed nondisclosure agreements with their clients, which enabled employers to protect wage information from public view.

Scholars such as Harvard sociologist Frank Dobbin, who have been granted access to EEOC data and surveys of a small number of employers, point out that some activities employers use to advance women and people of color can have the opposite effect. For example, Professor Dobbin found that businesses which require employees to take diversity training actually reported a negative impact on the advancement of employees of color, while employers offering voluntary diversity training experienced positive effects.

These windows into employer policies and practices suggest employers, especially large employers, are acting to advance women and people of color through mentorship programs, sponsorship programs, ERGs, special speaker series and paid attendance to conferences. Whether or not -- or to what extent -- these activities positively affect the gender and racial wage gaps under an employer’s roof is not public knowledge.

All that America knows about employers’ racial and gender wage and power gaps are various bits and pieces -- consulting firms’ glossy reports about their clients’ activities; local surveys of small numbers of employers; scholarly analysis of selected activities -- but nothing in the way of comprehensive data and analyses.

Why is little information available?

In Washington, DC, and state capitols throughout the country, employers have successfully blocked proposed legislation requiring them to report wage and power data -- perhaps fearing vulnerability to discrimination lawsuits.

For instance, the Paycheck Fairness Act (PFA) legislation was first filed by Congresswoman Rosa DeLauro and Senator Tom Daschle in 1997. It would require employers to report wages along with the gender and racial data they currently file annually on EEO-1 forms. That bill and subsequent versions were buried in Congressional committees for 22 years by business lobbyists, most notably, the U.S. Chamber of Commerce. In 2019, the PFA finally passed in the House, only to be stalled in the U.S. Senate.

In 2020, California passed legislation requiring employers to report their wages using the EEO-1 format. This was widely regarded as a breakthrough. However, California specifically prohibits public disclosure of any business filing its wage data and further protects a filing employer from disclosure under the California Public Records Act. Wage data is only accessible to the state agency charged with “effective enforcement of equal pay or antidiscrimination laws.” The Paycheck Fairness Act also directs the use of employer’s wage data for “enhancing the enforcement of Federal laws prohibiting pay discrimination.”

It’s time for Employers to Publicly Report Gender and Racial Wage and Power Gaps

An America that is serious about eliminating racial and gender workplace inequity must have a database from and about employers as public as surveys of employees now provided by the U.S. Census Bureau. It is time that accountability for wage and power gaps extends to employers. We must not continue to place the burden on women and people of color at work, on activists and on researchers who see only half the problem. When every employer’s racial and gender wage gaps are reported and made public, we can understand where these gaps exist.

America is behind many other countries in such reporting. The United Kingdom’s 2017 amendment to its Equality Act 2010, requires employers to publish their gender wage gaps annually. Each employer’s gap is posted on its website and on the government website for the public to see. Employers see how equitable their wage practices are compared to their competitors and decide how best to reduce and eliminate their wage gaps. Employees see how fair their employer is compared to other employers in their industry. Employers and employees can see, year after year, whether their employer is making progress toward wage equity.

Bear in mind, such reporting leaves it to the employer to decide what, if any, prescriptive action should be taken to alleviate inequities. It is simply a snapshot in time about the existence -- or not -- of wage inequity under that employer’s roof. There is no evidence that this reporting is intended to trigger legal action. It is strictly to inform employers, employees and the public.

Employers can eliminate their wage gaps in three ways. (1) Create more equitable gender and racial representation at the top. This raises the average earnings of women and employees of color. (2) Reduce the number of low-earning women and employees of color. This raises their average earnings by increasing inequity. (3) A combination of these two.

Raising the earnings of women and people of color is obviously the preferred way to eliminate wage gaps. Yet, to ensure this is the employer’s path of action, reporting on the power gap is essential. That means every employer must also report the race and gender of its top earners. Again, transparency enables all interested parties to mark and measure progress.

In 2018, Andrea Silbert, president of the Boston-based Eos Foundation, introduced a concept called ‘The Women’s Power Gap.’ Assembling data from state governments, IRS 990s filings, proxy statements and institutional websites, she has issued groundbreaking reports documenting the presence of women and people of color at the highest levels under the roofs of colleges and universities, large employers and large business organizations. Eos Foundation reports also include specific actions employers can take to advance women and people of color. These highly publicized reports motivate those in charge to change the faces of leadership. Her model of change is to motivate not litigate.

Solving employers’ power gaps is essential to solving employers’ wage gaps the right way -- by advancing equity not inequity as we saw in 2020. Last year, low-earning women, especially women of color, were disproportionately laid off or dropped out of the workforce to take care of their children during the pandemic. COVID-19 has set back racial and gender earnings equality; and consequently, worsened the wealth gap for women and people of color.

As the United States economy and its employers begin the process of reopening and retooling after this brutal pandemic year, they must recognize that they will never be able to restore their businesses without finally recognizing the full role that women and people of color play at all levels of their workforces and not only bring them back, but also do so with equity.

It is long past time for American employers to be transparent about wage and power inequity under their roofs and hold themselves accountable for progress. If they do not do this, other free world economies will find themselves rebuilding better, more productively and more profitably after the pandemic.

 

About the Author:

 
Evelyn Murphy
Evelyn Murphy, a PhD economist, is Founder and President of The WAGE Project, Inc., a nationwide grassroots nonprofit established in 2003 and dedicated to eliminating the gender wage gap in America. WAGE salary negotiation workshops for women are now being provided to 10 million women by the American Association of University Women, while WAGE focuses on efforts to eliminate racial and gender biases under employers’ roofs.
Dr. Murphy has served at Massachusetts Lieutenant Governor, Secretary of Environmental Affairs and Secretary of Economic Affairs. Prior to election as Lt. Governor in 1986, no woman in Massachusetts’ 200 year history had served in any constitutional office -- Governor, Lt. Governor, Secretary of State, Attorney General, Treasurer, Auditor, or U.S. Senator.
She is a Co-chair of the Boston Women’s Workforce Council, a founding Director of The Commonwealth Institute, on the Advisory Boards of the Center for Women and Work, UMass Lowell, and the Center for Women in Politics and Public Policy, UMass Boston.
She is the recipient of 11 honorary degrees, the Distinguished Alumna of Duke University Graduate School, the Boston Chamber of Commerce Pinnacle Award for Lifetime Achievement and the author of Getting Even: Why Women Don’t Get Paid Like Men and What To Do About It published by Simon & Schuster in 2005.

 

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