The gender pay gap is well-known, but limited progress has been made in achieving pay equity between women and men. The gap, approximately 22 cents on the dollar for full-time, year-round work, has remained virtually unchanged for over a decade.
Even when there is a will to address pay inequity, real action must be based on valid information - an accounting for internal pay gaps. Often this accounting alone is sufficient to move management to take significant action. As the saying goes, “you manage what you measure.”
A movement is underway among state and local governments to require entities seeking public contracts to assemble and disclose their pay equity statistics. Beyond fairness, support for such gender pay equity initiatives can be built on public policy benefits broader than ending pay discrimination alone. Fair wages increase tax bases and result in a healthier overall economy. Closing pay gaps can lower the burden on public services such as Medicaid, subsidized child care, and food stamps. Transparency and accountability to taxpayers is increased.
The State of New Mexico began systematically studying gender wage gaps and implementing procedures to combat pay inequity by state contractors in 2010, the first state in the U.S. to do so. The City of Albuquerque has replicated and expanded the initiative at the city level. Potential contractors are required to provide standardized data on gender wage gaps in their companies as a condition of bidding for city contracts. Contractors with small gaps are rewarded with a 5% premium added to the score on bids, and recognition by the city as pay equity compliant.
Albuquerque is New Mexico’s largest city, comparable in size to Atlanta, Boston, and Denver. Contracting requirements and procedures are standardized, so policies and procedures can be exported in varying degrees to national governments, states, cities, and municipalities.
Dr. Martha Burk, who directed both New Mexico initiatives, has consulted with several states and municipalities, including the cities of San Francisco, New York, and Phoenix, and state governments of New York and Missouri. She is available for an initial consultation without charge to entities wishing to pursue implementation of gender pay equity initiatives.
Key Concepts and Rationale
1. The system should be conceptualized as an incentive for contractors -- the opportunity to bid on government contracts, qualify for Industrial Revenue Bonds, avoid sanctions under existing anti-discrimination law, or other locally relevant incentives.
2. So far as possible, the system should overlap with existing reporting requirements, use data already gathered by contractors or readily accessible to them, and be simple enough that even small contractors can participate without undue administrative burdens
3. The system should minimize contractor concerns about release of proprietary information.
4. Reporting should be mandatory and uniform across all departments, and reports should be subject to audit by an entity independent of individuals or departments involving in contracting (i.e. offices of government accountability, offices of human rights, comptrollers, or auditors).
5. Technical assistance should be available without charge to contra.
The gender pay gap is well known, but limited progress has been made in achieving pay equity between women and men. Even though discrimination in pay has been against federal law since 1963, women are still not paid the same as men for the same or comparable work, and the gap has remained virtually unchanged at 22 cents on the dollar for over a decade.
Even when there is a will to address pay inequity, real action must be based on valid information including a formal analysis of internal pay gaps. Often this analysis alone is sufficient to move management to take significant action. As the saying goes, “you manage what you measure.”
Gender pay equity initiatives by employers can have benefits other than basic fairness and ending pay discrimination. Fair wages increase employee satisfaction, resulting in a more cohesive workplace. Closing pay gaps can also help to attract top talent and increase retention, lowering employee replacement costs due to workers leaving for better pay in competing companies.
Discrimination in pay is against federal law, and also against many state and city laws. Insuring fairness through independent analysis of pay scales and remedying any unwarranted discrepancies can head off burdensome litigation and costly settlements, with the attendant negative publicity. In addition, some government entities have instituted gender pay equity reporting requirements as a condition of contracting, and such analysis will be beneficial in compliance with these requirements.
Some pioneering companies like Hill+Knowlton Strategies have taken the lead by working with Dr. Burk to monitor their pay practices on a systematic basis. (Blog by Hill+Knowlton president)Boston area employers are signing the 100% Talent: The Boston Women's Compact, a voluntary pledge that over 50 companies have joined to indicate their commitment to closing the gender wage gap in the workplace. By signing the Compact, employers commit to participating in a biennial review to discuss successes and challenges, as well as contributing data to a report compiled by a third party on the Compact's success to date. Leading companies include Mass Mutual, Putnam Investments, Blue Cross Blue Shield, Sixt Rental Cars, Staples, and John Hancock.
Dr. Martha Burk has conducted gender pay analyses for both private sector companies and government entities to help employers ensure internal fairness and compliance with gender pay equity laws. She is available for an initial consultation without charge for independent, confidential evaluation of pay practices, and for planning and/or implementing internal gender pay equity initiatives.
Many states have equal pay laws on the books that are patterned after the federal Equal Pay Act of 1963 and Title VII of the 1964 Civil Rights Act. Most date to the 1970s - 1990s, and all (like the federal laws) are complaint driven, meaning pay discrimination is prohibited, but no specific action is required of employers to close wage gaps. The burden of proof falls on plaintiffs, who can sue if they experience wage discrimination. An exhaustive list of such laws can be found at http://www.ncsl.org/research/labor-and-employment/equal-pay-laws.aspx
The section below deals with more recent legislation and initiatives that move beyond merely prohibiting discrimination on the part of employers.
The California Equal Pay Act (almost-identical federal Equal Pay Act) was passed in 1949 and amended in 1985, but terminology and loopholes made enforcement difficult. In 2015 the law was amended to require equal pay for "substantially similar" work, prevent use of the ill-defined "factors other than sex" justification for pay differentials, ensure non-sex related factor(s) account for entire pay differentials, and prohibit retaliation or discrimination for discussing pay with coworkers. https://www.cela.org/legislative/SB358FairPayFactSheet.pdf
The Maryland Equal Pay for Equal Work Act (1991) requires employers to pay men and women equally if the employees work in the same establishment and perform work of comparable character or work on the same operation, in the same business, or of the same type. In 2016 the state expanded the law, covering more than pay disparities. It now also prohibits employers from "providing less favorable employment opportunities," which includes placing employees into "less favorable career tracks" or positions, "failing to provide information about promotions or advancement," and "limiting or depriving" employees of employment opportunities because of sex or gender identity. Additionally, employers may not forbid employees from "inquiring about, discussing, or disclosing" their wages or the wages of other employees. http://www.natlawreview.com/article/maryland-expands-state-equal-pay-act-and-broadens-employees-right-to-discuss-wages
In 2016 Massachusetts passed the Bill S2119, which bars employers from asking about applicants' salaries before offering a job, and requires companies to state a salary upfront. The law also bars companies from prohibiting workers to disclose pay to others, and requires equal pay for work of "comparable character" or work in "comparable operations." The law takes effect in 2018. https://malegislature.gov/Bills/189/Senate/S2119/History
In the 1980s, the State of Minnesota passed landmark comparable worth legislation applying to state government workers, as well as county and local government workers. The law requires equal pay for jobs of equal value (measured by skill, effort, responsibility and working conditions) even if the job titles and duties are different. http://www.oesw.leg.mn/PDFdocs/PE_Report_Summary.pdf
In 2014 the state passed the Women's Economic Security Act , which requires businesses with more than 50 employees seeking state contracts worth more than $500,000 to self- certify their compliance with existing equal pay laws. The Act also makes it illegal for employers to prohibit voluntary discussion or disclosure of pay to others. Employers with employee handbooks must include a notice of rights and remedies under the law. http://www.dli.mn.gov/wesa.asp
In 2015 Governor Jay Nixon signed an Executive Order mandating that pay equity guidelines be developed to ensure pay equity by both public and private employers. Issued in 2016, the guidelines call for employers to voluntarily conduct self - audits to identify gender - based pay disparities and remediate them by evaluating compensation systems. The guidelines also call for employers to voluntarily implement policies to prohibit pay secrecy, and make salary ranges by title public to job applicants. https://governor.mo.gov/news/executive-orders/executive-order-15-09
In 2008 Governor Bill Richardson signed an Executive Order creating a Pay Equity Task Force. On recommendation from the Task Force, a second Executive Order was created in 2009, allowing a first-in-the-nation initiative to be implemented, requiring potential contractors to submit pay statistics by job category for women and men. The order is still in effect, though enforcement has been somewhat weakened under the present governor. http://www.generalservices.state.nm.us/statepurchasing/pay_equity.aspx
In 2015 Albuquerque became the first city in the nation to implement a gender equity reporting requirement for potential contractors, and to award a 5% premium to bidders who are pay equity certified. Mandatory reporting of pay statistics by contractors is scored for certification. The initial cutoff point for certification was 10% or lower gender pay gaps company wide, to be gradually tightened after sufficient data is collected. https://www.cabq.gov/womens-pay-equity-task-force/albuquerque-pay-equity-initiative-instructions
On March 28, 2016, Boston Mayor Martin Walsh signed the Boston Women's Workforce Councils 100% Talent Compact. The Compact is an effort to close the gender pay gap by anonymously collecting wage data in real time and by working with employers to implement research-tested interventions. Employers agree to voluntarily contribute data to a biennial self-assessment of progress and to design internal programs to overcome any gender-based wage gaps. https://www.cityofboston.gov/women/workforce/compact.asp
The city's 2014 Equal Pay Ordinance requires certain contractors to file Equal Pay Reports annually with the City's Human Rights Commission. It established an Equal Pay Advisory Board to analyze and recommend how to collect wage gap data in a meaningful way while maintaining a minimal burden on contractors reporting the data. The city Human Rights Commission is authorized to investigate whether discrimination is occurring by contractors and recommend measures for enforcement when necessary. Full recommendations for implementation are due in 2016. http://sf-hrc.org/equal-pay-ordinance-year-one-report-2015
In April 2016, the Tempe City Council voted to create an initiative to ensure pay equity based on gender, including devising a process to designate qualified businesses as partners committed to equal pay. This initiative includes four pillars of pay equity: 1) Policy; 2) Business Designation; 3) Business Education and Outreach; and 4) Negotiation Training. The City is working with a group of businesses to test the self-assessment tool that would lead qualified employers to be showcased as an "Equal Pay Business Partner," developing quarterly workshops for local businesses on equal pay topics, and offering negotiation skills training to women (and men) who are in or entering the workforce. http://www.tempe.gov/city-hall/strategic-management-and-diversity/equal-pay-for-equal-workReturn to top
Erie County New York (includes Buffalo)
In 2015 Erie County Executive Mark C. Poloncarz signed Executive Order #013, which requires county contractors to certify that they are in compliance with federal and New York state equal pay laws, that they have not been the subject of an adverse finding under the Equal Pay Laws within the previous five years, and disclosure of any currently pending claims against them. Filing of a false or misleading information is grounds for immediate termination of contracts and may disqualify companies from future contracts. Reports are subject to audit. http://www2.erie.gov/exec/index.php?q=executive-order-013
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The Initiative is a set of rules for contracting with the City requiring reporting of pay scales by gender and job category for entities seeking city contracts. The Initiative also provides for a 5% preference for those companies with gender pay gaps of 10% or less overall, and further provides for recognition of leadership in pay equity. https://www.cabq.gov/womens-pay-equity-task-force/albuquerque-pay-equity-initiative-instructions
Why Do We Need It?
The pay gap between working women and men in the U.S. continues to be one of the highest ranking concerns for women. It is also a priority for men, because when one earner in a family brings in less than she should, the family suffers overall. Though "equal pay for equal work" has been the law since 1963, disparities in pay between men and women for full time, year round workers are not lessening substantially, and cannot be expected to go away naturally (after all, it's already been 52 years).
Federal law prohibits pay discrimination as do several New Mexico laws, including the New Mexico Equal Rights Amendment, New Mexico Human Rights Act, and the New Mexico Fair Pay for Women Act. This initiative will help employers comply with the law, and help them to close any pay gaps before they become a problem.
What Does a 5% Preference Mean?
When competitive bids are evaluated for awarding a contract, companies meeting the standard for pay equity will be given an additional 5% bonus in their score. (Note: all combined preferences such as small business, veteran's, and pay equity cannot exceed 10% overall.)
If the Goal Is to Eliminate Pay Gaps, Why Allow a 10% Discrepancy? Isn't That Just Saying of 10% Is an Acceptable Level of Discrimination?
No. Other things being equal, such as education, experience, time on the job, etc., there is no "acceptable level of discrimination." The average pay gap between women and men working full time, year round is 21% in New Mexico, and some of the data already submitted by Albuquerque contractors show pay gaps of up to 40%. Given these statistics, allowing a variance of only ten percent is a very high bar for initial implementation.
The goal of the Initiative is to incentivize companies that are lagging to improve. A zero tolerance policy in the early stages would only discourage companies from making any effort at all, since many are far away from that goal. As companies improve and pay gaps narrow, the cutoff for the preference will be revised downward.
Are All Entities Seeking City Contracts Subject to the Requirements of the Initiative?
All potential contractors are required to submit city-provided forms showing gender pay gaps when seeking contracts. The electronic report is generated automatically once basic information is entered, so potential contractors are not burdened with complicated calculations.
Will Potential Contractors with Large Gender Pay Gaps Be Excluded from Consideration?
No, but those with pay equity certification will be rewarded with a 5% preference.
What If Gender Wage Gaps Are Due to Factors Such as Experience, Piece Work, Education, or Other Factors Not Related to Gender?
We realize there are multiple factors that affect wages. The ideal goal is a 0.00% wage deviation if all factors are equal. Because such factors are rarely 100% equal, some deviation can be tolerated and still be considered fair. The current deviation that is eligible for a preference is 10%, but that is a starting point to incentivize contractors to examine pay gaps and adjust them if necessary. The acceptable deviation will be revised downward gradually.
What If Women Are Making More than Men Is That Ok?
Gender pay equity is the policy of the US Government, State of New Mexico and City of Albuquerque. This includes both women and men, so that neither group benefits or is penalized simply because of their gender.
If Contractors Discover a Gender Wage Gap, Is the City Going to Tell Them How to Fix It?
No. There are many ways to remedy gender wage gaps, and they are well documented. There are consultants who specialize in this as well. The City of Albuquerque will not dictate how such gaps should be fixed.
Will the City Be Setting Wage Rates for Private Business?
No. Only pay gaps, not pay amounts, are reported. The city won't even know what the contractors are paying, and will in no way advise them on pay scales.
Does Fixing a Wage Gap Mean Some People's Wages Will Need to Be Lowered?
Methods by which pay gaps are remedied are the decision and responsibility of the contractor, not the city. Lowering anyone's pay to achieve parity is not the policy or recommendation of the City of Albuquerque. Experts in the pay equity field do not recommend cutting anyone's pay to overcome pay gaps.
Isn't this Going to Violate Worker Privacy?
No. Wage or salary data will be part of a contractor's internal calculations, but will not be reported to the city, nor will dollar amounts by group. Only percentage pay gaps between groups will be reported.
Won't this Give Away Valuable Pay Scale Information to the Competitors of Businesses That Report?
No. Actual pay amounts won't be reported. Just the percentage differences between pay for women and men in the same job categories.
Isn't it Going to Cost Contractors a Lot of Money to Report Pay Gaps?
The cost should be minimal. Contractors already know who works for them, what their gender is, and how much they're paid, so no new data will need to be gathered. Many are already producing federal/state reports or reports for other purposes that are in the same format. Contractors will not need to come up with reporting schemes or new forms. Required forms are provided at no charge by the State of New Mexico and the City of Albuquerque, and are downloadable online.
We have consulted with experts on payroll systems large and small, and they assure us that the capability to gather the data that will be needed to produce the report is already a part of most payroll systems. The city is also providing a spreadsheet template to assist employers in producing the reports.
Are the Reports Public Information, and If So How Can I Obtain Them?
The City of Albuquerque maintains public records following federal, state and local laws.