States bridging the gender pay gap
A new law that went into effect in Illinois in September amended the Illinois Equal Pay Act of 2003 by prohibiting employers from asking job candidates about their previous compensation history. The hope was that employers in the state would adopt more fair hiring practices by setting a compensation package for whoever takes the job in the future, regardless of gender.
“It is just an adjustment for us in terms of the questions we are able to ask candidates,” says Steve Wolfe, executive vice president of operations and administration for Addison Group, a staffing and consulting firm in Illinois. “It causes us to focus more on the current state and what an opportunity entails and involves and how that is going to be compensated regardless of what a person did or didn’t do in the past.”
By barring an employer from asking about a candidate’s pay history, the law eliminates biases that can be created after obtaining this information, Wolfe says. He notes that many employers will lower the compensation they would otherwise have offered once they learn about past earnings.
Employers can ask candidates about their compensation expectations, Wolfe adds, and if the amount is well under what they expect, then it’s up to the jobseeker to decide if they are willing to accept a lower compensation.
Salary history is only a small contribution to the pay gap between men and women performing the same jobs, according to Ariane Hegewisch, program director at the Institute for Women’s Policy Research.
“There isn’t ever going to be a silver bullet law that can fix all issues around unequal pay,” she says. “But many states are working to update their equal pay acts by adding clear language stating that if an employer gives a reason for paying someone less, that reason must be objective and not tainted by gender. The employer must also explicitly account for the discrepancy.”
Other states have tried to broaden the definition of equal pay by specifying it should apply to employees with equivalent job duties and education. This is meant to prevent companies from assigning different job titles to pay employees less for doing the same type of work as their colleagues. Others are pushing for compensation transparency.
“Pay transparency, which is again another issue, is clearly crucial. If you can’t figure out how you are being underpaid, it is impossible to bring a lawsuit,” Hegewisch says.
Salary differences get exacerbated over time, especially if wage discrimination happens at the beginning of a woman’s career. From then on, the gap gets bigger every time she changes jobs.
Enforcement is another topic of conversation regarding the gender wage gap. In Albuquerque, New Mexico, “they started to integrate it into how they award public contracts. You have to submit data on wage gaps in the company,” Hegewisch says. The company must then decide if the gaps can withstand an audit, which gives a range of issues to address pay inequality.
Enforcement is difficult when it comes to Illinois’ law because unless an employer asks a job candidate directly about their past wages, it is nearly impossible to determine whether their salary is based upon gender bias.
“How far it is going to have an impact on earnings is hard to know. You will not see it overnight. But what it does do is it pushes companies to not be so haphazard about their hiring policies in terms of starting wages,” she says.
Many companies leave the salary decisions to their line managers. The Illinois law forces companies to be more systematic about their pay equality, she adds.
Larger companies are more systematic about salary scales, but small and midsize companies are not, and that’s how discrimination comes in.
Hegewisch says that only 60% of gender pay differences can be explained away. 40% is unexplained and “that’s what people take as discrimination, but it isn’t just people applying for the same or similar jobs but also people not being hired in the first place,” she says.
For instance, a black woman with a hard name to pronounce might not even get an interview. Occupational segregation is another issue that feeds the gender pay gap. If women move into male-dominated fields, they might feel isolated and experience harassment.
“Since the beginning of the 2000s, there has been hardly any progress on this,” she says.
Nationally, the Paycheck Fairness Act made a reappearance in the House earlier this year. The bill, which has been around since the 1990s, was introduced and passed by the U.S. House of Representatives, but stalled out in the Senate. It would have stopped employers from paying people who do the same job different amounts, unless there were “bona fide job-related factors.”
Many states this year have passed laws that address wage discrimination, including Nebraska, Maryland, Maine and New York. California, Connecticut, Hawaii, Washington and Wyoming have all passed similar laws.
Alabama passed its first pay equity law every in 2019. The law requires employers to give equal pay to employees of different races and different sexes who perform equal work. It also prohibits employers from retaliating against job candidates who won’t divulge their wage history.
Colorado was the first state in the country to require employers to include a compensation range in every job posting. The state already has a law that prohibits the use of salary history in hiring, clarifies the reasons employers can use to justify pay differences and making employers keep records of wages and job descriptions to see if there is a pattern of wage discrepancy, according to the American Association of University Women, which advocates for these types of legislation across the country.