The Gender Pay Gap Isn’t Closing As Fast As You Might Think

April 4, 2017

Despite the more than 50 years that have passed since the enactment of the federal Equal Pay Act, based on the current rate of change it will take until 2152 – an other 135 years – for the pay gap between men and women to be eradicated in the United States. It’s a sobering fact to consider on this Equal Pay Day 2017, especially in light of the new Gender Pay Gap Reporting legislation that takes effect later this week in the United Kingdom.

This revelation, recently made in an American Association of University Women report, will come as a surprise to many who have hailed the progress made in diminishing gender pay disparity – and, indeed, progress has been made. U.S. Census Bureau statistics show that in 1964, shortly after the EPA took effect, women across the country earned 59 cents to every dollar earned by their male counterparts; by 2017, women earned 79 cents to every dollar earned by men. At the state level, New York leads the nation, with women making 89 cents to every dollar earned by men.

By comparison, the gender pay gap for all employees in Britain was 18.1 percent in 2016, according to data compiled by PwC and reported in Financial Times. Under the new U.K. laws, employers in England, Scotland Wales with 250 or more workers will be required to publish their mean and median gender pay gaps for salaries and bonuses in a sweeping initiative to confront and shrink the disparity.

While the U.K. moves forward, President Donald Trump has rolled back protections implemented by former President Barack Obama. Last week, President Trump revoked the Fair Pay & Safe Workplaces executive order, instituted in 2014 to compel businesses with federal contracts to improve compliance workplace fairness and civil rights laws. Two of the more prominent provisions in the Obama executive order – one that required wage transparency and an other that prohibited forced arbitration clauses for sexual-harassment cases – were intended to eliminate cover-ups of illicit pay practices and hostile work environments.

What Happened to the Promising Upward Compensation Trend?

In the U.S., men and women graduate in equal numbers from colleges and universities, they earn the same in entry-level positions when they begin their careers, and women now occupy every echelon of the workforce. However, despite the parity in education and entry-level opportunities, statistics indicate that over the long run, the pay gap is greater for women with a college degree than for those without.

Among the theories offered to explain the continuing disparity are that women are primarily responsibility for child-rearing and homemaking, consequently with fewer working hours than men and reduced opportunities for promotion, and that women are employed in industries that pay them less than other industries dominated by men. Yet, even taking these non-discriminatory factors into account, economists project that the female-to-male earnings ratio is still 92%, demonstrating that women work for less pay than men who perform the same work, simply based upon their gender.

How the Law and the Courts Have Failed to Help

Lawmakers (through regulation) and employers (through voluntary workplace policies) have attempted to narrow the divide by increasing paternity leave opportunities and permitting more flexible work schedules. Though commendable, these efforts still fall short. -Gender-based discrimination, pregnancy discrimination within and outside the FMLA context, failure to promote or retain women to leadership roles, and sexual harassment are prevalent, significantly contributing to the pay gap and further slowing progress.

Regrettably, the law and the courts have not offered the necessary redress and instead impose substantial hurdles. for example, to prevail in an Equal Pay Act claim, the plaintiff is required to demonstrate that she was paid a lesser wage for “equal work” performed within any “establishment” as her male counterparts. As at least one recent case shows, finding a suitable male comparator poses a sizeable obstacle. for one, a high degree of similarity in the work performed, especially among higher level executives and professionals, can be fatal to the plaintiff’s case, as can the existence of an other male comparator whose compensation is proven to be less hers.

At the same time, employers can avoid liability by showing that any disparity was the result of a seniority system, a merit system, a system that determines compensation by the quantity or quality of production, or any factor other than sex.

Similarly, because the Equal Pay Act is effectively an amendment to the Fair Labor Standards Act, a woman seeking its protection is limited to remedies including back pay, pay raises to the level of the opposite-sex counterpart, and, if an intentional violation is proven, full liquidated damages – limited exposure that offers employers little incentive to correct pay inequities.

Recent Statutory and Workplace Developments Offer Hope

Over the past year, state and federal legislators have amended existing equal pay laws to level the litigation playing field in two ways. One set of amendments aims to soften some of the exacting legal requirements plaintiffs face while imposing more rigorous standards for defendants, while the other seeks to increase pay transparency to allow both employees and employers to determine the fair value of the work that women perform.

The states, not Congress, are blazing the trail, with New York, Maryland, Massachusetts, California, and other states enacting more robust equal pay laws and easing the burdens that female employee encounter when trying to establish their prima facie cases.

The path to meaningful change is dependent upon evolution and transformation in company structures and business cultures, which will in turn impact and inform the industries and profession in which they exist. Statutory amendments and new pay equity laws are certainly useful, perhaps following the example set by the U.K. The heavy lifting, however, must be done by employers that offer increased flexibility and transparency, embrace strategic recruitment and retention practices, and institute progressive performance and compensation policies.

(*Prior results do not guarantee a similar outcome.)