The gender pay gap is one of the most crucial and obvious societal faults in today’s world. It shines yet again on the awful wage gap between men and women doing equal work. Despite the advances that have been made, the pay gap still impacts women of all colors and walks of life—no matter your title or trade. The discussion over what approach to take to remedy this inequity is usually contentious, especially when it comes to the appropriate level of government intervention. Many in the business community cautioned that such government intervention could inadvertently do more harm than good to businesses and the jobs they create. I fervently contend that effective legislative action is critically important to maximizing movement toward true pay equity.
As a reporter committed to advancing economic justice, I have witnessed the damage that the gender pay gap inflicts. It leads to crushing financial stress for millions of Americans. It’s more than a theoretical math problem. As a result, real Americans are unable to afford basic necessities, putting their dreams for the future on hold and living with chronic financial instability.
One of the simplest and most effective strategies would be to encourage pay transparency. When employees are aware of the salary ranges for their roles, they’re able to identify pay gaps. This new awareness puts them in a better position to identify and challenge potential discrimination. New York City has been implementing a new law since last fall, requiring employers to disclose salary ranges in job postings. This is a big step forward for transparency in the labor market. These laws give job seekers the information that they need in order to negotiate in good faith and make informed decisions about their careers.
Transparency is not enough by itself. We want legislation that better aligns the legal framework to promote equal pay and strengthen protections against pay discrimination. The California Fair Pay Act, for example, addressed loopholes that employers had used for decades to rationalize pay disparities. Specifically, the Paycheck Fairness Act’s class action provisions would strengthen existing Equal Pay Act provisions related to class actions. While it hasn’t passed at the federal level yet, it would make clear that any permissible “factor other than sex” justifying pay differences has to be job-related and business necessity.
Nevada’s strategy of making state contractors prove they aren’t practicing pay discrimination is another unique fixer-upper. This makes the government’s purchasing power work harder so that more businesses—particularly small and disadvantaged businesses of all types—are effectively compensated.
I have heard the fears that these reforms will lead to questionable unintended consequences. Many opponents of regulation claim that putting in place more strict guardrails would unduly burden businesses, killing jobs or scaring away investment. According to this line of research, minimum wage legislation functions as a price floor, resulting in disequilibrium in labor markets. This can lead to higher joblessness. Still others point to investments such as Australia’s National Broadband Network. They believe it’s government intervention that creates the bad incentives and misallocates resources.
These fears must not immobilize us. The important thing is to think through these interventions carefully, with a priority towards avoiding or at least recognizing and understanding negative impacts while maximizing overall effectiveness. For example, legislation can include a long phase-in period so that businesses have time to prepare and adapt. This includes giving companies access to resources and support that help them meet new compliance requirements.
Additionally, the rewards of narrowing the gender pay gap greatly exceed the dangers. More equal pay for women means more money in their pockets, which translates to increased consumer spending and economic growth. Their kids are more healthy and better able to learn at every age, because those families are in a stronger economic position. And employers are reaping the rewards of a more diverse and engaged talent pool.
In my experience, most employers are genuinely interested in pay equity. Too often, they are left without the right tools or expertise to address the challenge in an impactful way. This is where the federal government—and state and local governments, too—can play a critical role by providing guidance and clear, effective resources. Instead, the government could establish best practices for conducting salary audits. It might further educate managers to identify unconscious bias and operate clear pay structures.
There are things that can increase or minimize companies’ exposure that they can control. One way to limit this discretion in pay decisions is by requiring that compensation departments approve manager recommendations to decrease bias. Getting rid of negotiation from the hiring process altogether or implementing fully lockstep salary bands are other ways to ensure fairness. Conducting consistent salary audits as a practice allows an organization to catch and correct any inequities in the first place.
What can we learn from the experiences of other countries Their experiences provide helpful and sobering lessons. Iceland, for instance, recently passed a law mandating employers to get their pay equality certified to prove they pay all employees equally for all work performed. France will penalize firms that fail to eliminate unexplained pay equity disparities within a three-year timeframe. And Ontario is following up with proposed new pay transparency legislation.
Understanding how these models succeed and fail and applying those lessons to our own context is key.
I think we need public awareness campaigns. By educating people about the gender pay gap and its causes, we can build public support for legislative changes and encourage individuals to take action. In addition to keeping young people safe from harm, raising awareness helps to push back against the societal norms, stereotypes, and prejudices that perpetuate this issue.
The road to pay equity is a challenging one, but it’s a challenge we can’t afford to shy away from. Bold strategic government intervention can spark that flame. Together, when companies and individuals do their part, we can create a more just world where everyone earns an equitable wage for their hard work—regardless of gender. It’s not only the right thing to do, but it’s the economically prosperous and socially equitable thing to do. So, the time for decisive federal action is today.
