The Truth About the Gender Pay Gap: Proposed Changes Stir Controversy Over Equal Pay

Share on LinkedIn Share on Facebook Share on Twitter Share on Google Plus Share this Page

The Truth about the Gender Pay Gap woman make less than men

“Breaking the glass ceiling” “Equal pay for equal work” “Pay discrimination” “Gender pay gap”

An Evolving Issue

Each of the terms above have somewhat different connotations, but at their core is the concept that women in the workforce are making less than men for reasons that hinge solely on their gender. Analyses from all sides of the issue have documented a wide variety of factors that are likely causing the gender pay gap to persist. Interestingly, many of the most recent of these studies are shying away from the finger pointing, gender discrimination angle that often flairs up during heated political battles on the subject.

Instead, these researchers are focusing on larger, more complex societal norms, how they influence often unconscious biases, wax philosophical about what it means to be a woman in the 21st century, and how this evolving identity may be playing a role in how the pay gap will look in the future.

In fact, many of these researchers who have dedicated their life’s work to exploring the gender pay gap, agree that the persistence of the often quoted (and often challenged) “$0.79 on the dollar” gender pay gap probably has very little to do with companies intentionally paying women less than their male counterparts when performing the exact same set of job duties in today’s workplace.

Despite this change in approach and tone among economists, as noted above, this topic is often highly politicized and polarizing between the Republican and Democratic parties, with the 2016 presidential race serving up plenty of a prime examples.

On the legislative front, Congress hasn’t passed, or even taken up for consideration, the Paycheck Fairness Act in several years, although almost half of the state legislatures across the country are currently debating (or will be soon) various laws aimed at addressing the pay gap within their state boundaries.

With little movement towards any type of resolution between the clashing parties on any issues these days, much less something as contentious as the gender pay gap, President Obama recently announced that the Equal Employment Opportunity Commission (EEOC) and Department of Labor (DOL) will be taking on the issue themselves in a very tangible way, i.e. a significant expansion to the existing Employer Information Report (EEO-1) requirements.

Under existing reporting requirements private employers with at least 100 employees, and federal contractors with at least 50 employees, provide an annual EEO-1 report to the federal government that includes the number of individuals employed at their organizations in each of 10 job categories, by race, ethnicity, and gender.

If the proposed rule change to the EEO-1 goes forward as written, all employers with 100 or more employees will be required to report W-2 data and hours worked for all employees within these 10 preset job categories and 12 newly implemented pay bands starting in 2017.

Much like the existing EEO-1 form, the new draft form is also divided up by race, ethnicity, and gender. As is standard practice for new EEOC proposals, the pay data collection proposal language must first seek public comment from employers that will then be evaluated and incorporated, at the EEOC’s discretion, when the final rule is published. Currently, the public comment period is slated to end on April 1, 2016, but this particular proposal has elicited significant reactions from both sides.

Con: The Wrong Approach

Of course asking employers to embark on a new reporting endeavor is always challenging and controversial, but the severity of the reaction elicited by the U.S. Chamber of Commerce and other experts in the field calls into question the very essence the EEOC’s efforts to aggressively address the pay gap.

In addition to publically voicing concerns about the ability of the new data requested to uncover legitimate cases of pay discrimination, the Chamber has also requested an extension on the public comment period.

Their extension request of an additional 90 days argues that they require this additional time in order to conduct their own research and weigh the full impact of the data being requested on employers. The Chamber specifically takes issue with the cost projections offered up by the EEOC in the proposed rule. Thanks in large part to the technologically advanced payroll systems many of these larger employers have in place, the EEOC projects that the expanded EEO-1 reporting should take a company’s HR staff person approximately 8 hours at an average wage of $47.22 per hour for a total of $378—the first time around. After the first year, this cost is projected to drop to approximately $160 annually.

In a scathing critique of these projected dollar figures, the Chamber letter calls into question the EEOC’s methods for determining these costs, saying that these figures, “are not credible and reflect EEOC’s woeful misunderstanding of the speed and ease by which complex and customized data can be compiled from computer information systems.”

In addition to conducting their own analysis of the time and resources necessary to fulfill this type of detailed data request, the Chamber is also asking employers to do their own calculations and submit them during the comment period.

Pro: Illuminating the Inequality

On the opposite end of the spectrum, supporters of the Administration’s actions, are far more optimistic about the ability of this additional data “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”

A direct result of recommendations from the President’s Equal Pay Task Force, supporters argue that the proposed rule “lays important groundwork for progress toward achieving equal pay, as it will encourage and facilitate greater voluntary compliance by employers with existing federal pay laws.”

By continuing to include not only gender, but also race and ethnicity, the EEOC explains that they are aiming to identify and address pay discrimination based on any or all of these factors.

In fact, although gender has been highlighted as the driving force behind this proposed rule, the Administration cites several statistics indicating that when combined with race and ethnicity, much of the progress towards equality that has been seen over the decades is quickly erased and the pay gap widens significantly—up to as much as 55 cents on the dollar between Hispanic women and non-Hispanic white men.

Supporters also note that privacy concerns from the naysayers are likely overblown as the new form will not require employers to report individual compensation data. Instead, employers are being asked to provide a count of the number of employees on staff that fall within each cell on the spreadsheet-like reporting document.

For additional information about the proposed rulemaking changes for the EEO-1 form or to add your thoughts to the mix during the public comment period visit the EEOC’s website.

Get more articles like this one delivered to your inbox.

Join the thousands who receive ERC's weekly newsletter to stay current on topics including HR news, training your employees, building a great workplace, and more.

Subscribe Now