U.S. Government Moves to Close the Gender Wage Gap

Requiring companies to reveal salaries by sex is one step in the right direction

11 February 2016

A new executive order by U.S. President Obama is an attempt to close the wage gap for female workers, who earn an average of US 78 cents for every dollar made by their male counterparts. The wage gap never seems to fully close no matter how well educated women are or how many hours they work.

On 29 January, Obama announced his executive action, which will require companies with 100 or more employees to report to the federal Equal Employment Opportunity Commission what workers are paid, broken down by gender, race, and ethnicity.

 “Too often, pay discrimination goes undetected because of a lack of accurate information about what people are paid,” Jenny Yang, chair of the commission, said in a New York Times article. The new pay-reporting requirement would expand on another executive order Obama issued nearly two years ago that requires federal contractors to submit the same information for their employees.

WHERE THE GAP WIDENS

Women—even those with high-paying jobs in STEM (science, technology, engineering, and math) fields—have not been able to escape pay inequality. A 2014 study conducted by the American Association of University Women found that women in computer science and math-related fields make 87 percent of what their male counterparts earn, and women in engineering are typically paid 82 percent of what men make.

Women in the United States are, on average, more educated, according to a 2014 study by the White House Council of Economic Advisors: 40 percent of women earn at least a bachelor’s degree, compared with about 32 percent of men.

Claudia Goldin, a professor of economics at Harvard, says her research shows that women and men who are similarly educated start out at about the same pay rate, and the divide happens 10 to 15 years after women enter the workforce. When Goldin was interviewed recently in a podcast by Stephen J. Dubner, co-author of Freakonomics, a book that applies economics to a number of social issues, her argument was that when women—more often than men—work fewer hours to raise children or take care of relatives, they are likely to take lower-paying jobs.

A 2013 survey conducted by Pew Research supports that theory. It found that women are twice as likely as men to work part time: 26 percent of women and 14 percent of men reported they worked fewer than 36 hours per week.

But a higher demand for flexibility doesn’t explain why women’s hourly wages are lower, according to the study. The research firm estimated that women made 85 cents per hour for every dollar men made. So women are making less regardless of the amount of hours they work.

TAKING RESPONSIBILITY

The wage gap is undeniable, and the effort to close it can’t be placed squarely on women’s shoulders. Companies should take responsibility by reviewing the salaries of equally qualified men and women who work the same hours in similar positions.

Some organizations are already doing that. One is Salesforce, a cloud computing company in San Francisco with 16,000 employees. The company increased its payroll by $3 million last year after determining it was underpaying its female employees by that amount.

Companies also can support working mothers by providing paid parental leave—a benefit currently offered by only 12 percent of private-sector businesses in the United States, according to the Department of Labor. Offering 16 weeks (the current average is 12 weeks) of paid leave could save businesses worldwide as much as $19 billion per year—according to a study by KPMG, an international financial consulting firm—because the companies would not have to recruit and train new employees to replace new mothers who quit or ask to go part time.

Some people argue that it’s up to women to ask for a salary they believe they deserve, but we can’t always put the onus on them to negotiate for higher salaries. The wage gap will close only if companies take an objective look at their practices and install policies that treat all their employees equally.

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