To narrow gender pay gap, one state tries something completely new

In 1963, President Kennedy signed the Equal Pay Act, a federal law meant to prohibit employers from paying women less for doing the same jobs as men.

In 2015, Emily Scheurman discovered, by accident, that she was getting paid the same salary as her lower-ranking male assistant.

Ms. Scheurman started out as an administrative assistant in the Manhattan offices of a global clothing retailer. Over 2-1/2 years, she worked her way to a better position but grew frustrated with how slowly her salary was growing.

“I had already been looking for another job, but then right before I left I found out that even though I had been promoted above him, we were at the same pay level,” says Scheurman, who left to work for a higher-end retail fashion label soon after. “It wasn’t super sneaky. We all have to do these performance reviews every six months, and I walked by his [computer] system and his was open with his pay grade on his screen.”

Lawmakers, advocates, and well-intentioned businesses have been working to prevent situations like Scheurman’s for decades, and to give workers more agency to find out about and challenge pay inequities. Still, women earn less in nearly every occupation in which there is enough earnings data to keep track, according to the United States Census Bureau.

Lately, however, those working for equal pay are changing their approach. Rather than relying on broadly declarative laws and company policies saying men and women should get equal pay for equal work, they’re creating more granular rules to address the subtle workplace and societal dynamics that help the gender pay gap persist.

This week, Massachusetts passed a sweeping equal pay law that includes a provision barring employers from asking job candidates about their previous salaries. It is a seemingly small thing, but one meant to level the playing field for groups like minorities and women who are more likely to have started their careers at a pay disadvantage.

Supporters have praised the law, set to go into effect in 2018, as a promising model for other states and at the federal level.

Additionally, in recent years, the conversation around equal pay has shifted in focus from merely a women’s issue to “something that’s really core to economic security and the well-being of the nation,” says Vicki Shabo, vice president of the National Partnership for Women & Families. “I’m optimistic for many reasons about where the conversation and action are.”

Intrinsic value

The Massachusetts salary provision is the first of its kind in the United States, and it gets at one of the more intractable problems when it comes to pay equality: Earnings gaps tend to grow over time, and people who, for whatever reason, start out their career on a weak foot face a cumulative disadvantage.

Women earn $4 an hour less on average than their male peers right out of college. Those who graduate from college during a recession tend to see their careers, and earnings, grow a lot more slowly than those who don’t.

When companies ask for a salary history, “there may not be any discriminatory intent there,” Ms. Shabo says, but it helps widen those gaps. Instead, employers in Massachusetts are required to make a salary offer upfront, based on the value of the job itself. 

“It shifts the conversation from benchmarking a salary based on history to what skills and experience are needed for [the job a worker] is about to go into,” says Victoria Budson, the director of the Women and Public Policy Program at Harvard’s Kennedy School.

Scheurman believes that because she started as a low-paying assistant, her pay increases lagged behind many of her peers. “I was making 25 to 30 percent less than other people in my department,” she says. “They could always find a reason to only give you a small increase.”

She knew she was making less from talking to her colleagues, but says it was “discouraged” within the company – another big obstacle in achieving fair pay practices, according to experts.

Half of employees say talking about salary at their companies "is either discouraged or prohibited and/or could lead to punishment," according to statistics from the Institute for Women’s Policy Research. It’s been illegal under federal law for companies to impose “pay secrecy” on their employees since the 1930s, but the consequences for those who violated the law are minimal.

States allow sharing

Along with 12 other states including California and Maryland, the Bay State now protects workers from retaliation for sharing their salaries with one another.

California, which has one of the nation’s stricter equal pay laws, places the onus on companies to prove that they have equitable pay structures in place. And earlier in 2016, President Obama signed an executive order ratcheting up punishments for federal contractors who violate transparency laws, which could include a loss of federal contracts and funding.

“Anytime workers can discuss their wages freely, gaps shrink,” says Ms. Budson, who also chairs Massachusetts’ Commission on the Status of Women.

Budson is optimistic the Massachusetts law will become a model for other states for another reason: It was drafted with enthusiastic support from the state’s business community. 

Within the past two years, more than 100 Boston-based businesses, including huge corporations like MassMutual and National Grid, have signed the “100% Talent: The Boston Women’s Compact,” agreeing to share their payroll data with the city and share ideas for pay equity solutions with one another.

The equal pay law further encourages such initiatives, giving companies who do voluntary audits some presumption that they are working to solve pay discrimination issues, in the event an employee takes legal action.

“It gives employers the tools and incentives to actually solve the problem,” Budson says.

Few are under the impression that the law will solve everything – gender pay disparities have a wide array of deeply rooted causes, including the higher likelihood of women to lose ground in the workforce due to care giving duties and to be more highly concentrated in low-wage occupations. But eliminating the snowball effect of past pay discrimination is an important, innovative step, Budson argues.

“It helps women. It helps every single person who applies for a job.”