On March 15, 2022 we observed national Equal Pay Day. The event, dating back to 1996, is on a different day every year. That it has been going on for almost three decades speaks to the ongoing unfairness of the American pay system. Equal Pay Day (originally “National Pay Inequity Awareness Day”) tells us how far into the year women must work at their jobs just to earn what men – doing the exact same job – earned in the prior year.
It’s a well-known fact that women earn a lot less than men. For the year 2021 it was about 83% of what their male colleagues made, according to the Bureau of Labor Statistics. As alarming as that sounds, it’s nothing compared to how Black and Latino women have fared. The 2022 Equal Pay Day for Black women just happened – on September 21 – meaning they had to work an extra 263 days to earn what White men earned in 2021!
The causes and reasons for pay disparities have been studied and documented ad nauseum. Women have been undervalued, relegated to subservient roles, denied status in the workplace. Minorities have been labeled lazy, uneducated, untrustworthy. And laws mandating equal pay – on the books in every state, as well as at the national level – will keep failing to close the gap as long as attitudes are unchanged and legal remedies are anemic.
But there is a way to start fixing things. It isn’t rocket science, and it doesn’t require complicated economic calculations. If every company were to simply post the pay range for the jobs they sought to fill, the gap would actually begin to narrow. Laws to this effect have already been implemented, and data shows that the gender gap has moved in the direction of closure as a result.
Colorado adopted a rule in 2021 requiring employers to include pay ranges in job postings. The immediate effect was that many companies stopped hiring workers from Colorado. They didn’t like having to commit to paying everyone equally, which the law would have forced them to do, instead wanting to wait to see the applicant’s gender and skin tone before deciding on pay. Washington state adopted its own wage disclosure law, applicable to companies with 15 or more employees, in May of this year.
Now companies that have skirted pay disclosure laws by skipping those states will have to change their tune. On September 27, California Governor Gavin Newsom signed into law signed Senate Bill (SB) 1162, which will require nearly 200,000 California companies with 15 or more employees to disclose pay ranges starting next year. New York is preparing to enact similar legislation. With these two heavy hitters adopting Colorado’s model, other states are expected to follow suit.
What does it mean for job seekers? Besides providing them with critical information before they pursue an opportunity, it gives them assurance that they will not face pay discrimination because of their age, race, ethnicity, gender or other characteristic. It tells them that they will be paid as much as any other applicant for that same job.
Many states bar companies from asking for an applicant’s pay history. Such information can easily be used to justify lower pay for female workers, without regard to their qualifications for the position. When the actual pay range for a position is made public prior to hiring, pay history becomes irrelevant. All workers could be impacted by these laws, but they are likely to be especially helpful for women and minorities, the applicants most likely to get lowballed in salary negotiations.
For multistate employers, we can expect to see pay ranges posted for all positions, regardless of where the worker resides. This should simplify the hiring process for employers while enabling job seekers to more effectively comparison shop.
Concerns that pay disclosure will reduce companies’ willingness to agree to pay raise requests from existing employees are likely overstated. On the contrary, the starting salary for new hires should be known by current employees and should provide a legitimate basis for new pay negotiations.
Pay disclosure ultimately helps employers think through the value of the jobs they post, while providing realistic expectations to those in the job market. Ultimately, requiring transparency of pay ranges will help achieve equity in the workplace and allow those seeking jobs to better evaluate where they should focus their efforts.