March 24th is Equal Pay Day. This date symbolizes the extra three months into the year that women must work to earn the same amount of money their male counterparts took home in the previous year alone. The gap in pay between men and women remains stubbornly wide, and women are taking home a mere 82 cents on average for every dollar earned by men. While there’s much talk about eliminating the gender pay gap, progress has been elusive, and little has changed in the last decade. There’s one simple solution to reducing the pay gap that remains largely untapped—getting coworkers talking about their pay.
Research shows that workplaces that are more transparent about employees’ pay have narrower pay gaps. Yet, Jake Rosenfeld, a sociology professor at Washington University, St Louis and author of You're Paid What You're Worth and Other Myths of the Modern Economy has found that in many workplaces, employees are discouraged from discussing pay. As a result, many employees remain in the dark about pay disparities in their workplace.
Pay Secrecy Enables Pay Gaps
Rosenfeld says there are two reasons that openness about pay can help eliminate pay gaps. “The obvious reason is it’s hard to know you’re being discriminated against if you have no idea what your coworkers make,” he explains. The first step in taking corrective action is knowing that there’s a problem, and having hard evidence of a gap in pay is a great motivator to try to close it.
For example, when confidential information was hacked at Sony Pictures and revealed that Charlize Theron was paid less than her male co-star in a film, Theron took action to correct the $10 million pay discrepancy. If she hadn’t learned her co-star was earning more, she likely would have assumed the pay distribution was fair.
But, increasing awareness of pay disparities is not the only reason pay transparency helps reduce pay gaps. Rosenfeld explains, “The less obvious reason is that in more transparent workplaces, employers have to think quite hard about how to justify their pay determination processes for all workers.” Since employers realize that they’ll likely have to justify their compensation decisions, they’re motivated to make decisions that will hold up to scrutinization. That means fewer pay gaps.
Legislation Alone Is Not Effective To Eliminate Pay Secrecy Rules
So why don’t coworkers compare compensation? In addition to the fact that these conversations can be awkward and uncomfortable, about half of U.S. workers remain subject to a pay secrecy rule of some kind. Some organizations have formal bans on discussing compensation outlined in their company handbooks, while others have informal norms where employees are told that salary discussions with coworkers just shouldn’t happen.
Legislation is a great start in protecting workers’ rights to discuss their pay. Unfortunately, current legislation is limited by loopholes and lack of enforcement. For example, the National Labor Relations Act (NLRA) protects workers’ rights to discuss their pay, but it excludes supervisors and public sector employees. And those organizations found guilty of violating NLRA’s rules typically get off with minor fines and penalties which aren’t severe enough to keep the organization from banning salary discussions.
Many states have also enacted legislation banning pay secrecy rules, but organizations are ignoring these laws and continuing to enforce rules prohibiting conversations about pay. Rosenfeld and his fellow researchers found that “even in states with pay secrecy bans, nearly one in ten workers is formally barred from discussing pay.” In fact, Rosenfeld says that the percentage of people in the U.S. who remain under organization-based secrecy rules hasn’t budged from about a decade ago, despite the fact that a dozen states implemented laws in those intervening years that ban pay secrecy rules in the workplace. One change he notes is in the last ten years, “there has been a shift from the adoption of very formal pay secrecy rules to less formal rules where employees are told, ‘hey at this workplace we don’t really discuss wages and salaries.’”
Given the disregard for pay transparency legislation, getting laws on the books should not be the only objective for those seeking more openness about pay. Rosenfeld recommends that efforts should also be focused on monitoring organizations to ensure compliance with existing rules and educating employees about their rights to discuss pay.
The Paycheck Fairness Act would also make progress in removing obstacles that keep employees from talking about pay. The act was recently reintroduced in Congress, and if it passes, it will help to eliminate pay secrecy by closing the NLRA loopholes and stiffening penalties. The Paycheck Fairness Act has failed to pass for over a decade, but the current administration has pledged to make pay equity a priority.
Women And Millennials More Likely To Disregard Secrecy Bans
The good news is that pay secrecy policies aren’t stopping some employees, particularly younger workers and women, from talking about pay with coworkers. Rosenfeld and his colleagues found that Millennial and Gen Z workers were nearly twice as likely as Baby Boomers to discuss pay with their coworkers. Even when employees were subject to a pay secrecy policy at work, over half of Millennials still discussed pay with coworkers, while only 26% of Baby Boomers talked compensation.
Women are more likely than their male counterparts to discuss pay with coworkers (both in workplaces with pay bans and in workplaces without), likely because they have more to gain from discussing pay. Again, learning about pay discrepancies is the first step to closing them.
It's not easy to have these conversations. In addition to rules preventing pay discussions, there is a societal taboo on talking about the size of our paychecks. But these taboos and rules aren’t in place to help employees. Instead, bans on discussing compensation favor employers by letting them dodge difficult conversations about why one employee earns more than another. We need to break down these taboos and start talking about pay—it’s an easy way to start chipping away at all pay gaps today.
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March 12, 2021 at 02:03AM
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Want Equal Pay? Get Employees Talking About Their Paychecks - Forbes
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