Equal Pay

According to the U.S. Census Bureau, women who work full-time earn 77 cents for every dollar earned by men.1 African American women earn 69 cents and Latinas earn 57 cents for every dollar paid to white male workers. Men of color also experience wage discrimination. African American men earn 73 cents and Latinos earn only 66 cents for every dollar paid to their white male counterparts.2

If married women were paid the same as men who do comparable work, their family incomes would rise and their family poverty rates would fall. If single working mothers earned as much as men who do comparable work, their poverty rates would be cut in half.4 Over her lifetime, each woman loses between $700,000 and $2 million in earnings because of wage discrimination.5

Although the wage gap can be partially explained by differences in education, experience and time in the workforce, a significant portion is the result of discrimination. U.S. employers pay hundreds of millions of dollars annually to settle wage discrimination claims.6 In 2004, for example, Boeing Company agreed to pay between $40 and $72 million, Morgan Stanley agreed to pay $54 million, and Abercrombie & Fitch agreed to pay $50 million to settle lawsuits over gender and racial discrimination.7 Further, more than half of all women workers hold sales, clerical, service or caregiving jobs (child care, elder care, and nursing). These professions pay less than equivalent jobs held by men.

Federal and state equal pay laws have been in effect for decades, yet wage discrimination continues. Not only are these laws poorly enforced, but they do not apply to the problem of unequal pay for equivalent work in different jobs. It is possible to compare different jobs within an organization to determine equivalent work. American employers have used job evaluation studies to set pay and rank for different jobs within a company for several decades. These evaluations take into consideration factors such as skill, effort, responsibility and working conditions. In fact, two out of three workers are employed by businesses that use some form of job evaluation. The federal government’s job evaluation system, which covers nearly two million employees, has been in use for over 70 years.

One survey found that businesses leaders consider the elimination of wage discrimination between different jobs to be “good business,” and say that equal pay is necessary to remain competitive.8 Furthermore, higher wages for women and people of color increase their purchasing power, which strengthens the economy. Equal pay would not bust the budgets of businesses or governments. Pay adjustments tend to be modest and are phased in over a period of years. In Minnesota, where equal pay legislation was implemented for public sector employees over a four-year period, the cost was only 3.7 percent of the state’s payroll budget. In the state of Washington, equal pay for state employees, implemented over an eight-year period, cost only 2.6 percent of overall personnel expenditures.

One option, the Equal Pay Remedies and Enforcement Act, enhances existing laws and establishes a multi-sector Equal Pay Commission to study the extent, causes and consequences of wage disparities. The Commission provides the research needed to craft state-specific policies. Another option, the Fair Pay Act, prohibits pay differentials between women and men and between minority and non-minority workers in jobs that are equal or require equivalent skill, effort, responsibility and working conditions. Exceptions are made for differentials based on bona fide seniority, merit or other legitimate factors.

In 1982, Minnesota first implemented equal pay for all public sector employees. States have continued to be the source of innovative solutions for narrowing the wage gap. In 2005, Hawaii prohibited gender-based wage discrimination and established a pay equity task force to recommend remedies for wage inequities, and Maryland created a commission to study disparities between the pay of men and women and between whites and minorities. In 2003, Illinois enacted a law that prohibits wage discrimination on the basis of gender, New Mexico and Utah passed bills that required pay equity studies, and the West Virginia legislature created an equal pay commission.