One reason women consistently get paid less for equal work is that they don’t know how much their male counterparts are earning.
President Barack Obama’s Pay Transparency Executive Order promises to help chip away at the wage gap by eliminating barriers to transparency in worker pay.
The Office of Federal Contract Compliance Programs (OFCCP), a division of the U.S. Department of Labor (DOL) that investigates pay discrimination in the federal government, recently released a proposed final rule to implement Obama’s executive order. The Rule was published in the Federal Register on September 11, 2015 and will take effect 120 days from publication – January 11, 2016.
The order, issued on April 8, 2014, prohibits federal contractors and subcontractors from discriminating against employees and job applicants who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants.
The pay transparency rule includes a hammer.
Contractors must submit pay, race and gender data on their employees to the DOL each year. The DOL will use the compensation data to target contractors who appear to be engaging in pay discrimination against women and people of color.
The OFCCP contends the 118-page rule will contribute “to building an economy that works for everyone” and “make the contractor workforce more efficient.”
Employers are required to update their nondiscrimination policies to include language addressing pay transparency. This language must be incorporated into employee manuals or handbooks and disseminated to employees and job applicants.
Employers have two possible defenses to a pay discrimination charge: a general defense, which could be based on the enforcement of a “workplace rule” that does not prohibit the discussion of compensation information, and an “essential job functions” defense.
A third of all American women live in or near poverty – Center for American Progress
The pay gap has ramifications for all women but it is especially critical for low-income and retired women.
A 2014 report by Maria Shriver and the Center for American Progress found that a third of all American women are living at or on ‘‘the brink of poverty.’’ This equals to 42 million women – plus the 28 million children who depend on them.
The gap has devestating consequences for women in later life. The Social Security Administration’s formula for awarding retirement benefits is based upon lifetime earnings so the wage gap contributes to poverty in old age for millions of women who have worked hard all of their lives.
What is the Wage Gap?
Comparing census data on average annual wages in 2013 reveals that women make 78 cents for every dollar that men make.
The DOL states that a typical woman who works every year between ages 25 and 65 loses $420,000 over her working lifetime because of the earnings gap (based on median annual earnings for full-time year-round workers at age 25 and above in 2013).
The gap is wider for some women of color. Census data shows African-American women arre making 64 cents, Latina women making 56 cents, and Asian women making 86 cents per dollar earned by a non-Hispanic white man.
The wage gap is just one of many factors, that contribute to the gender pay disparity, including sex discrimination in hiring, assignments, promotions and terminations.