California’s gender pay gap: How two proposed laws aim to close it
(Update: Gov. Jerry Brown split on these bills, signing into law AB 168 to prohibit job interview questions about previous salary, but vetoing AB 1209, which would have required companies to submit pay data categorized by gender, race, and ethnicity. The governor said he worried thatt bill would “encourage more litigation than pay equity.”)
California boasts some of the toughest “fair pay” laws in the country—yet the average full-time working woman has been earning only 86 cents for every dollar earned by a man. A recent study concluded that gap won’t close before the year 2043.
Two female lawmakers don’t intend to wait that long.
The Legislature, which in the past two years has approved a series of bills aimed at gender pay equity for substantially similar work, is considering going even further this session. The first proposal would bar a prospective employer from asking a job applicant about prior salary; the second would require large employers to publicly disclose the median earnings of salaried employees and board members, by gender.
“This is an issue I remember writing high school papers about—and it’s still an issue,” said Democratic Assemblywoman Lorena Gonzalez Fletcher of San Diego, who has introduced one of the bills and co-authored the second. She cited the 2043 forecast by the Institute for Women’s Policy Research.
“For my daughter, who is entering the workforce now, that’s her entire life in the workforce without pay equity,” she said. “We have to take really bold steps to make sure we speed up this timeline.”
These may be bold steps—but in the wrong direction, say most of the major business groups in the state. Over the last two years, groups like the California Chamber of Commerce and the National Federation of Independent Business say they have played nice with progressive lawmakers, supporting—or at least not outright opposing—compromise legislation designed to narrow the wage gap without saddling businesses with excessive costs. But they say the initiatives introduced this year are untested, punitive, and being rolled out before recently adopted reforms have had time to make a difference.
Although the most recent U.S. Census data, for 2015, reveals a 14 cent gap between the average wages of full-time male and female employees, California is still ahead of the U.S. as a whole. Nationwide, female employees earn an average 20 cents less than full-time male employees.
But over the last ten years, the disparity across the state has barely budged.
In 2015, Gov. Jerry Brown signed a bill by Democratic Sen. Hannah-Beth Jackson of Santa Barbara that made it more difficult for an employer to justify paying men and women a different wage for “substantially similar work.” Last year, a law authored by former San Jose Democratic Assemblywoman Nora Campos took effect to prohibit employers from using prior pay as the sole justification for a disparity in earnings.
But this year’s bills are different, said Shawn Lewis, California communications director for the National Federation of Independent Businesses, which represents small business interests.
“We acknowledge that gender pay inequality is an issue,” he said. But this year’s initiatives “undo some of the pragmatic, collaborative efforts” of recent years and, more importantly, he said, they won’t solve the problem of pay inequality.
The bill to prohibit job interview questions about prior salary, was introduced by Assemblywoman Susan Eggman, a Democrat from Stockton. Supporters argue that using prior earnings to determine current salary allows historic discrepancies in pay between men and women to persist from one job to the next, regardless of an employer’s intent.
“If you’re historically underpaid, using salary history just bakes in the inequity,” Eggman told a Senate panel at a recent hearing on AB 168.
Whether that’s true or not is subject to debate. Despite a recent wave of similar legislation passed in Massachusetts and in cities like San Francisco, New York, and Philadelphia, none of these new laws have been in place long enough to have a discernible effect. Meanwhile, business groups and organizations that represent state employers argue that past salary can be useful information for an employer, who may not know what the prevailing wage is when hiring an employee. They also contend that the Campos bill, which already puts restrictions on an employer’s use of pay history, only went into effect on January 1st of this year and should be given more time to have an effect.
“If an employer asks an employee about his or her prior salary, yet ultimately pays the applicant a higher salary than any of the applicant’s male colleagues, that employer could still be sued,” Jennifer Barrera, a lobbyist for the California Chamber of Commerce said in a letter submitted to lawmakers earlier this month.
That, she said, is “simply unfair.”
“California’s largest businesses are working overtime to make sure that the slightest wage differentials can be justified on non-gender or non-race or non-ethnicity grounds,” Mike Belote, representing the California Employment Law Council, a business interest group, told the same Senate hearing. While the business community supports “the mission” of equal pay, he said, the bill intrudes too far into negotiations between employers and employees and exposes firms to legal liability simply for asking a question.
But supporters of the bill say the business community is overstating how much the bill would interfere with standard hiring practice. Employers can still make any offer they choose and applicants are still free to haggle accordingly, using salary history as a bargaining chip if need be.
“It doesn’t keep anyone from saying, ‘Gosh, that’s not what I made at my last job; I’d like to make more,” responded Sen. Connie Leyva, a Democrat from Chino.
The second bill, which also passed through the Assembly and is now being considered by the state Senate, aims at reducing the wage gap through mandatory transparency. Assemblywoman Gonzalez-Fletcher’s AB 1209 mimics a 2016 Obama administration executive order that requires large private companies and all federal contractors to submit pay data, broken down by sex, race, and ethnicity. The Republican-controlled Congress is now considering defunding that order.
“Often employers themselves aren’t aware of that there are these disparities,” said Jessica Stender, senior staff attorney at Equal Rights Advocates, a civil rights legal organization that sponsored AB 1209 and supports both bills.
Under California law, a wage gap between men and women can be justified based on seniority, a merit system, or some other “bona fide factor other than sex,” such as past training, education, or productivity. By forcing businesses to analyze the gap, said Stender, companies will be required to self-assess and see if their pay trends are justified under the law.
“If there is no gap, then that’s great—we’ve confirmed that there’s no issue,” she said. “But if there is one, then it gives them a chance to dive a bit deeper.”
Not surprisingly, California business groups are not keen on the invitation. Instead Lewis from the National Federation of Independent Business said the true intent of the bill is “shaming companies based on partial data and opening doors to litigation.”
If women are more likely to request time off or more flexible hours, that would result in average lower pay. That kind of difference, if published, could be misinterpreted or, said Lewis, intentionally misrepresented in anti-discrimination litigation.
That’s in part because there isn’t a single, malevolent cause that explains the wage gap. Instead the reasons are many.
A recent study by economists from Massachusetts and Oslo, Norway, analyzed the pay data of 15 million Americans and found that more than a quarter of the wage gap could be explained by women opting into lower paying professions and industries than men. Most of the gap, instead, was explained by different levels of salary growth at a given job—in other words, when men and women go to work for the same company or organization, men tend to receive larger raises more frequently.
This result was particularly pronounced for those with college educations: The average man with a bachelor’s degree earns 55 percent more than the average college-educated woman, the study found. Why? Certainly overt discrimination plays a role. Likewise, women are often less willing to negotiate higher salaries than men. And then there is the responsibility, often unevenly shared, of childcare.
According to the authors of the study, though jobs that require higher education tend to offer the best opportunities for future salary growth, “among married couples, the household division of labor tend to limit women’s career choices.” In other words, heterosexual married couples—especially those with children—are more likely to prioritize the career of the man at the expense of the woman’s.
None of these factors mean lawmakers should accept the pay gap as either inevitable or justifiable, said Stender. But it does paint a more complicated picture—one in which differences in earnings aren’t solely the fault of bigoted employers, but of broader social inequalities and attitudes. That she said, argues for a whole host of policies aimed not just at pay, but also family leave and access to child and health care services.
But first, she contends, it’s necessary to figure out where the pay gaps exist:
“You can’t fix what you don’t see.”