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18 Cents to Equity: A Call to Remove the Invisible Borders of the Gender Pay Gap

ABSTRACT Disparity begins and persists when exceptions exist. The Equal Pay for Equal Work and its connected act, Equal Pay Act (EPA) is enforced by the EEOC (Equal Employment Opportunity Commission) and is part of the Fair Labor Standards Act (FLSA) under the Department of Labor (DOL). This act entails federal law prohibiting pay discrimination on the basis of sex. Overloaded with thirty-four (34) federal regulations; exceptions deter the progressive nature of equity and somewhat tarnish the principal purpose of the EPA. Moreover, the lack thereof of standards or guidelines to adequately regulate the purpose only allow for exceptions to persist even more. Whether it's exclusions or absent guidelines, such acts defeat the purpose of progression and the opportunity to reach that equitable compensation. The root cause of the gender pay gap is the historic exclusion of opportunity in all avenues which translates to an imbalance of potential earnings. Therefore, “pounding the table” and asking the “why” in this will provide a movement of rewriting or completely removing the words that enable exceptions under the EPA. This will diminish the pay gap and allow female employees, or females in general, to catch up to the earnings potential they are equipped with. All should be given an opportunity through the outlook of “potential” rather than through proving their worth through an array of arduous tasks. In the end, the reasons why these agencies might have adopted such rules are simply because of the history of gender roles. I have observed how the wage gap between male and female employees widened solely based on the aspect of potential in my role as a Human Resources Professional. Male employees with similar years of experience and equal educational levels as female employees were offered substantially larger salaries because of their potential to become “something” within the organization. In turn, female employees had to prove their worth through special projects, implementation of systems, or any other concrete good to be within that same salary. Amendments, minimum standards, and regulatory retributions will initiate the breaking down of those invisible borders and drive us closer to closing that gap.


INTRODUCTION


Equity between genders in leadership ascension and equal pay, as well as the obvious gap in such aspects, is a tangible reality in today’s workplaces just as it was in the past. Equal Pay Acts and shifts in opportunities have made their way throughout generations, yet both visibly and direct or blanketed and invisible, females are still being paid less than their male colleagues for the same work and/or positions. This fact is seen in all arenas of work; from professional sports to corporate offices across the United States and beyond, females are undeniably compensated at a much lower rate than their male counterparts. This being said, what is the problem or issue here? Equal Pay for Equal Work and its connected act is enforced by the EEOC and its federal law prohibiting pay discrimination on the basis of sex, yet for every one ($1) dollar a male employee earns, female employees earn eighty-two ($0.82) cents. Are these eighteen ($0.18) cents to equity an unbounding road that we will soon reach?

Equity will only exist if an opportunity is available and it is “reasonably necessary to the normal operation” of a progressive movement towards many more employment equalizers like compensation. Pay gap cycles of progression and regression have been seen since 1963 when the Equal Pay Act was enacted after President John F. Kennedy signed the act into law. Over the span of almost sixty (60) years, female employees have inched closer to some kind of equity mostly through declaratory judgments on wrongful acts. Yet, why do wrongful acts have to occur in order for additional regulations to be in place? Continuous cycles of regression, when supposed equal pay and fair pay acts, are in place only serve as a façade of protection for females around the world. Thus, lobbying for equal pay and fair pay with added minimum standards and legislation can be a solution to this inequitable cycle. At the forefront, internal and external cultural changes need to be uprooted through critical assessment and empirical data. Awareness through these impenetrable data points will allow for the internal voices of corporations to face these issues firsthand. Sustainable change is the gathering of small actions in increments while building trust and respect, therefore corporations need to implement business plans through policies in order to move forward with these cultural changes. Applicability and compliance are key determinants of change.

Invisibility doesn’t mean nonexistence; therefore these roads to change should be objective and overseen by subject-matter experts (SMEs) in each corporation after analyzing the data. Reliance on such guidance will drive this movement to the next phase of potential legislative implementations. Lobbying for legislative implementations through the adoption of policies coupled with guidelines would provide minimum standards set by law. Currently, the absence of regulated standards and laws allows corporations to continue the cycle of inequity in pay. This being said, in combination with standards set already through the EEOC and FLSA, a proposal to mitigate the disproportionate pay gaps through mandatory disclosure of salary information and by formulating a Job Duties Test and Salary Level Test for starting salaries of female and male employees with equivalent job skills and education would bring forth governance to the gender pay gap. Any inaction in such regulations would have financial and reputational repercussions to continuously police equitable compensation on the basis of sex.

ANALYSIS


The Equal Pay Act of 1963 declared a purpose distinctly focused on the effects of wage differentials on the basis of sex through the lens of commerce; the obstruction of commerce stemming from labor disputes, the burdens of commerce, and the continuance of free-flowing enterprises, yet it failed to directly declare the purpose of opportunity and equal advancement of a voice deeming in the background for decades. In part, it emphasized results from wage differentials in standards of living and gave a glimpse of the narrower scope of labor resources directly connected to such differentials. Subsequently, the declared new subsection within the Fair Labor Standards Act of 1938 expanded on the prohibition of discrimination on the basis of sex through unequal compensation for rendered work of equal “skill, effort, and responsibility” performed in similar working conditions “to employees of the opposite sex[.]” Exceptions were stated where equal compensation was not pursuant to the act, which naturally allowed a gap in coverage for this continued inequality. Furthermore, the lack of clarity in these exceptions such as a “seniority system” and a “merit system” presumably allowed bad actors to game the system, per se, and work around the lack of standards within these exceptions to further the gap in equality. All in all, the Equal Pay Act of 1963 was groundbreaking for the mere fact of acknowledging that such compensation discrimination was prevalent in industries and establishments in the United States, yet its administration and enforcement were reactive rather than proactive which transferred the responsibilities from the employers/establishments to employees. Governance under employees translates to no governance at all the majority of the time.


The Lilly Ledbetter Fair Pay Act of 2009, forty-six (46) years after the enactment of the Equal Pay Act of 1963, was the direct result of the Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007) case. Lilly Ledbetter claimed that her direct supervisors throughout her years at Goodyear had intentionally given her inaccurately poor performance evaluations on the basis of sex directly impacting her pay increases (i.e. “merit system”). A differential in pay commenced from these unfair and inaccurate evaluations throughout her employment, leading to inequity in compensation between her male counterparts. The gaming of exceptions from the Equal Pay Act of 1963 was front and center in this case. The jury at hand awarded Ledbetter retro pay and damages, yet this win was shorted lived as Goodyear appealed on the basis of a time technicality or charging period established by the EEOC. The decision was reversed by the Eleventh Circuit stating that a Title VII pay discrimination claim could not be for alleged discriminatory events before Ledbetter’s last pay decision during said charging period. Moreover, the Eleventh Circuit declared that evidence was inconclusive to prove Goodyear had conducted itself in a discriminatory manner towards Ledbetter’s pay decisions during the said period. Roughly two (2) years later, President Obama enacted the Lilly Ledbetter Fair Pay Act of 2009 to overturn the Supreme Court’s decision. Provisions detailing the retroactivity of discriminatory pay claims were declared unlimited allowing employees to challenge discriminatory compensation practices when appropriate. Nevertheless, similar to the enforcement reactions of the Equal Pay Act of 1963, the absence of proactive measures and standards leads to employees taking the responsibility to file claims.


Sixty (60) years after the enactment of the Equal Pay Act of 1963 gender pay gaps still persist regardless of prevalent factors like professional or technical experience held by women and the roles and responsibilities of accompanying positions. In the immediate years following the enactment of the law, surges of enforcement were seen, yet throughout the decades waves of decline and prosperity in the gender pay gap spiral in and out of the spectrum absent of standards. Therefore one must ask if such inequality stems from pure discrimination as well as perceived notions of gender roles. In “The Simple Truth About The Gender Pay Gap” (Fall 2022 Edition), data continues to show that women earn significantly less than men over the span of sixty (60) years with more alarming figures surrounding minority women, including Black and Latina women. In comparison to White, Non-Hispanic men, Black women have an earnings ration of sixty-seven (67%) percent while Latina women fall ten (10%) percent to fifty-seventy (57%) percent. Asian and White, Non-Hispanic women have higher overall earnings among the other women with Asian women accounting for ninety-two (92%) percent of the earnings ration.


The disparity between the earnings of male and female workers on a full-time year-round basis from the years 1967 and 2021, per the AAUW 2022 update, in the year 2021, female workers earned an annual salary of thirty-seven thousand ($37,000 per year) compared to male workers at fifty-nine thousand ($59,000 per year). A twenty-two thousand ($22,000 per year) pay gap.


GENDER ROLES, BATTLES, ACTS & GAPS


Considering parts of the whole, essential properties, and understanding that gender roles persist in the twenty-first (21st) century just as they did in the eighteenth (18th) and nineteenth (19th) centuries connects the elements of women in society and the lack thereof to choose, the absence of the power of opportunity, and the trapped feminine thinking that segregates professional advancement. In desperate times, women consistently question their professional advancement with anecdotes of “Is this all?” as it was so cleverly stated in Betty Friedan’s The Feminine Mystique. Historically, women’s roles were glorified as true ownership of their household and “being their own boss” in their occupation of “housewife,” yet in the early 1960s and on the eve of the Equal Pay Act of 1963, the “trapped American housewife” was yearning for their voice to be heard after years of practicing their prestigious “Ph.T.[‘s]” “(Putting Husband Through)” This trapped voice was not alone in this journey as it was equally accompanied by the avoidance of a woman’s identity. An impostor within an impostor, a woman’s identity was affixed to that of their husband which naturally removed who they were in this lifetime. Hence, growth was stunted along with the progression of fulfillment as a human being leading to the prevention of growth and maturity in the workforce and limiting the capability of women in general. Therefore, the question remains of how this transition from trapped femininity to the discovery of human identity will come to fruition in today’s unstable world.

“To face the problem is not to solve it.” A statement that resonates with truth in both the legislative transfer of responsibility to employees in acts like the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act of 2009 and in the singular and unsupported resolution process that women face in their trapped femininity role. Nonetheless, facing, announcing, and questioning often leads to solutions and “first steps” that recognize “choice” and the autonomy of options.

With choice and opportunity comes responsibility, yet the absence of such reverts women back to gender-structured roles in the workforce. This is prevalent and unfortunate in many corporations in the United States and beyond, including corporations I’ve been privileged to professionally serve. Generally, women have accounted for twenty-three percent (23%) of the human capital while men accounted for seventy-seven percent (77%). The disparity in opportunity only begins here. Director-level and above positions, including the C-Suite positions, are occupied by men. No women serve in upper-management positions. Occupational segregation has been transmitted through the avenues of gender and race in that the small ratio of women who are in managerial-level positions serve roles of service, administration, and sales to internal and external stakeholders with decision-making authority left to their direct supervisors.

Historically, occupational segregation is directly connected to compensation; lower-paying positions are typically assigned to women, and if men hold similar positions they are usually paid a higher wage. Thus, confronting and addressing the opportunity for equal access to higher-paying positions is one part of a two-part invisible border that is vital in closing pay gaps. The second part is the assurance of fair pay for equal work. Nonetheless, out of twenty percent (20%) of the women in managerial-level positions, only a few are Latina and there is no representation from the Black community. Thus, in cyclic motion, the rooted factor of discrimination makes an appearance again as experience and education are present, yet the opportunity is intentionally absent. Moreover, compensation on average seemingly has a lesser gap in pay between women and men in certain positions, yet the underlying discriminatory matter is the time in which these compensation advancements occur. The incremental raises (i.e. merit system) occur in a significantly less amount of time from men than women, thus women are consistently playing the game of “catch-up.” Similar to the Ledbetter case, performance evaluations tied to compensation affect the eventual equitable compensation between genders, more so when experience and performance are visibly disregarded for women. Essentially, the lack of standards to show such criteria of pay serve as a façade to the continuous gap in gender pay.

Organizational design, plans, policies, and standards need to be implemented in order for “first steps” to take effect in pursuit of closing the gender pay gaps, therefore an internal proposal in the creation of a compensation strategy and policy will lead to a universal compliance format to be used among other corporations where absent. Compensation synthesis begins and ends with a “Compensation Philosophy.” Only about sixty-three percent (63%) of corporations have a formal written compensation philosophy according to the renowned global association for human resources management professionals and business leaders, WorldatWork. Notably a fairly decent percentage, yet the lack of understanding and accessibility by employees of said philosophy is the greater problem in corporations. In essence, the philosophy serves as a purposeless explanation of the corporation’s stance on how its employees should be compensated if it’s not easily accessible to its employees and if it’s vague and generalized. Well-communicated details on the correlation between compensation and business strategies as well as how these are embedded in the working culture are essential to equitable compensation strategies as well as an open and transparent communication of opportunities. Designing pay structures, market value compensation grades/bands, and the components of compensation in regard to performance evaluations, promotions, interdepartmental transfers, starting salary, incentives, etc. are all important prongs to a comprehensible compensation philosophy. Moreover, within the compensation philosophy, scheduled periods of conducting benchmarking reports on the market value of all positions are essential steps to identify and prevent gender pay gaps as well as to compare where the corporation stands in relation to the market and where it would want to stand to retain all key talent or high-potential employees.

Separate from the all-encompassing compensation philosophy, two (2) other processes should interact to deliver clarity and transparency with the aim to mitigate discriminatory compensation between genders. First, compensation synthesis should be in place in two (2) parts. Talent management through the drafting and creation of appropriate job descriptions with a range of compensation based on the fair market value of the position at the time coupled with the internal compensation of the same or similar position. The goal is equitable compensation and not driving talent to the corporation with inflated compensation while disregarding current employees. Market synthesis interacts with talent management to appropriately benchmark internal compensation ranges as well as to use external strategic partners as tools to understand if compensation will be fair, equitable, and within the market value, the company has implemented. Secondly, compensation implementation completes the organizational design through the collaboration of upper management and human resources to synthesize the labor cost, operating income, and profitability of the corporation while staying within the schema of the compensation philosophy. The purpose of such elaborate organizational designs is to prevent a reactive and unstandardized process that risks disparities in pay. Communication, accessibility, transparency, understanding, and a pledge to uphold the methodology in place for compensation strategies will lead to the opportunity of closing the gap. With these standards in place, policy and compliance parameters will be implemented and practiced as minimum rule systems within an organization.

To continue on the road to standardization and the complete closure of the gender pay gap, a two (2) part proposal of mandatory minimum standards will be drafted for legislation. The first part will focus on the proactive creation of minimum standards that all corporations will need to abide by when hiring employees to mitigate the disproportionate pay gaps through mandatory disclosure of salary information and by formulating a Job Duties Test and Salary Level Test for starting salaries of female and male employees with equivalent job skills and education bringing forth governance to the gender pay gap. The second part will be the active policing of said minimum standards with a revamping of the EEO-1 Component 2 Pay Data Collection Compliance Report that was removed almost three (3) years ago.

Under the proposed Gender RIGHT (Rightfully Individualized Guaranteed Hired Takings) Pay Act, all employers will be required to disclose salary ranges with narrow endpoints of the interval in a job posting and/or the comparable salary information of a current employee in the same/similar position with the equivalent experience and educational background without the disclosure of individually identifiable data. As a secondary prong in the pre-employment and the offering stages, a (1) Salary Level Test, regardless of an employee’s salary or hourly labor classification, will be required to determine the minimum acceptable salary for the incoming new hire. Using a market synthesis test of both internal and external compensation strategic tools, the salary level test will be a combination of two (2) factors, internally equitable pay of the same/similar position and the external market value of the same/similar position, yet no less than the tenth percentile (10th) in the designated sector/region where the primary position will perform its duties. (2) Job Duties Test, will coincide with the roles & responsibilities detailed in the job posting and the position’s certified Job Description. The Job Duties Test will serve the role of confirmer to the Salary Level Test; affirming that the minimum acceptable salary equates to the actual position and isn’t being manipulated to underpay an incoming new hire. Strategic partnerships with the Fair Labor Standards Act (FLSA), the Department of Labor (DOL), and the Equal Employment Opportunity Commission (EEOC) will drive the administration and enforcement of the Gender RIGHT Pay Act.

Moreover, in order to mitigate risks of noncompliance, policing in the form of the revamping and renewal of the EEO-1 Component 2 Pay Data Collection Compliance Report will be implemented and enforced under the Gender RIGHT Pay Act. Following the annual filing of the EEO-1 demographic data collection report, which reports on an employer’s human capital by race and sex, the EEO-1 Component 2 report will be a mandatory annual filing of the employer’s human capital by race, gender/sex, educational level, years of service/experience, salary, and position/position level. This annual report will serve as a policing tool to flag employers practicing discriminatory compensation strategies on the basis of sex. In 2019, a renewal through the notice-and-comment rulemaking was denied for the EEO-1 Component 2 Pay Data Collection Compliance Report citing administrative burdens on employers with insignificant results to gender pay equity. Employers against the renewal detailed the lack of training and appropriate data that would allow the support of the filing governed by the EEOC. This in turn was another limitation to the pursuit of justice and protection of gender disparities in the workplace. EEOC regulations, under section 709(c) of Title VII, aimed to gather this data to mitigate and remedy compensation discrimination rather than restrict access and continue those “invisible borders” of gender pay gaps. With this in practice, the “Compliance Circle” would encompass more than half of the seven (7) components/elements to drive the remaining three (3) of investigation, enforcement, and assessment towards the total closure of the gender pay gap.

In conjunction with the proactivity of the Gender RIGHT Pay Act and the policing under the renewal of the EEO-1 Component 2 Pay Data Collection Compliance Report, enforcement in the form of regulatory retributions through the FLSA would provide accountability and governance that has been absent for years. Mirroring the FLSA’s penalties enforced for violations in minimum wage, willful violations towards the minimum standards of the Gender RIGHT Pay Act would reach monetary penalties of up to one-thousand ($1,000) dollars per violation. Moreover, failure to comply with the annual filings of the EEO-1 Component 2 Pay Data Collection Compliance Report would add the risk of being in contempt as well as a monetary penalty of up to one-thousand ($1,000) dollars per violation. Undercutting and directly discriminating compensation on the basis of sex has been reactive rather than proactive which has transferred the responsibilities from the employers/establishments to employees. Governance under employees translates to no governance at all the majority of the time. Therefore, the applicability of standards and a multi-layered compliance circle are key determinants of change.

This being said, are these eighteen ($0.18) cents to equity an unbounding road that we will soon reach? On the basis of a reasonable person, the answer is a foreseeable “Yes.”


REFERENCES

Equal Pay Act of 1963 (Pub. L. 88-38) (EPA)

Lilly Ledbetter Fair Pay Act of 2009

Louderback, Charles M. et al (2009). The Impact of the Lilly Ledbetter Fair Pay Act of 2009: An Immediate Look at the Legal, Governmental, and Economic Ramifications of New Legislation Regarding Equal Pay Based on Gender

National Equal Pay Task Force (2013). Fifty Years After The Equal Pay Act

America Association of University Women (2018). The Simple Truth About The Gender Pay Gap

Friedan, Betty (1997, 1991, 1974, 1963). The Feminine Mystique

(2018, October). Compensation Programs & Practices Survey. https://www.worldatwork.org




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