News

White House Announces Steps to Promote Pay Equity

Future actions include barring the use of prior salary when hiring federal employees

March 15, 2022 | Stephen Miller, CEBS

Two business people sitting on a balance scale with laptops.

The Biden administration is taking steps to advance pay equity and promote women's economic security in hiring by the federal government and by federal contractors. The announcement was issued on March 15, which marked Equal Pay Day, the date that represents how far into 2022 women have to work to earn what men earned by the end of 2021.

"For over 25 years, Equal Pay Day has helped draw attention to gender-based pay disparities," President Joe Biden said in a proclamation.

"Closing gender and racial wage gaps is essential to building an equitable economy and addressing the barriers that have long hampered women from fully participating in the labor force," according to a White House fact sheet on the administration's pay equity initiative. "But we still have work to do. In 2020, the average woman working full-time, year-round earned 83 cents for every dollar paid to their average male counterpart," the White House noted. "Compared with the average man working full-time, year-round, disparities are even greater for Black women, Native American women, and Latinas, as well as certain subpopulations of Asian women."

When comparing the earnings of women and men with the same or similar job level and title, education, years of experience, industry, and hours worked, the disparity narrows, with women earning 99 cents for every dollar a man in a similar situation earns, compensation data and software firm Payscale reported on March 15.

Many Black and Hispanic women and other women of color, however, earned less than white men and women, a situation that worsened during the COVID-19 pandemic. According to Department of Labor (DOL) estimates released on March 15, Black women lost $39.3 billion and Hispanic women lost $46.7 billion in wages in 2019 compared with their white male counterparts due to their participation in low-wage sectors of the economy, such as caregiving and hospitality.

"Occupational segregation is a long-standing driver of gender and racial inequality in the workplace, but the COVID-19 pandemic exploded many of its outcomes, causing real economic harm to working women and their families, especially women of color," said Wendy Chun-Hoon, director of the DOL's Women's Bureau. "We encourage our partners and coalitions working throughout the country to use the occupation segregation data contained in the department's report to accelerate and strengthen their work."

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Pay Equity

Federal Action

The administration said it will take steps to:

Advance pay equity for the federal workforce.

The Office of Personnel Management anticipates issuing a proposed regulation that will bar the use of prior salary history in the hiring and pay-setting processes for federal employees, consistent with actions taken by many U.S. states and localities. "Banning the use of prior salary history can help break the cycle of past arbitrary and potentially discriminatory pay that can follow women and workers of color from job to job, entrenching gender and racial pay gaps over time," the White House said.

Promote efforts to achieve pay equity for job applicants and employees of federal contractors.

The White House said President Joe Biden will sign an executive order directing the Federal Acquisition Regulatory (FAR) Council to limit or prohibit federal contractors from seeking and considering information about job applicants' and employees' existing or past compensation when making employment decisions. The DOL will consult with the FAR Council on potential regulatory changes to promote pay equity in federal contracting.

Strengthen pay equity audits by federal contractors.

The DOL's Office of Federal Contract Compliance Programs issued a new directive clarifying federal contractors' annual obligation to analyze their compensation practices. "Conducting these pay equity audits helps address and prevent pay disparities based on gender, race, or ethnicity," the White House said.

Ensure equitable access to well-paying jobs.

The DOL's March 15 report, Bearing the Cost: How Overrepresentation in Undervalued Jobs Disadvantaged Women During the Pandemic, analyzed the impact that women's concentration in low-wage sectors—and their relative underrepresentation in many good-paying occupations—has on their overall economic security and gender and racial wage gaps. The DOL urged actions to support workers' ability to more freely enter an occupation that best fits their interests and skills.

Address discrimination against caregivers.

On March 14, the Equal Employment Opportunity Commission published technical assistance on caregiver discrimination, warning that discrimination against applicants and employees based on pandemic-related caregiving responsibilities may violate federal employment discrimination laws.

Other actions the administration said it has taken to advance pay equity include, as part of pandemic relief, providing paid-leave tax credits for small and midsize employers, helping keep child care providers open, providing tax relief to help families with child care costs, expanding the Child Tax Credit, and distributing the majority of emergency rental assistance funding to female-headed households.

Minimum Wage Hike

The administration noted it increased the minimum wage to $15 per hour for federal workers and contractors, "benefiting many women and people of color"; issued executive orders directing the administration to work to ensure that federal contractors pay a $15 per hour minimum wage; and called on Congress to raise the federal minimum wage to $15 an hour for private-sector workers.

"Organizations that don't proactively address pay inequities risk employees surfacing the inequities themselves, and this can create a culture of distrust and may lead employees to search for a better environment," the Society for Human Resource Management reported last year. "Organizations that proactively engage in pay equity best practices have a competitive advantage and stand to gain several benefits that are good for both employees and the bottom line."

Salary History Affects Pay Expectations

"Asking candidates for their pay history can be problematic because it's possible that pay history could reflect an inequity they experienced earlier in their career," the Society for Human Resource Management (SHRM) reported in November. "In response, some states and localities have enacted different forms of prohibitions against pay history inquiries, which has created a patchwork of different policies across the United States."

But simply pivoting from pay history to pay expectations isn't a cure-all for achieving pay equity. 2021 SHRM survey data shows that more men than women say that during their last job interview they asked for 11 percent to 20 percent more than their current pay, and more men than women asked for 20 percent more than their current pay.

Significantly, "1 in 3 HR professionals said their organization has offered a candidate a lower pay rate than was originally budgeted for because the candidate's pay expectations were lower than expected," SHRM noted, while "nearly 4 in 5 HR professionals reported that their organization has offered a higher pay rate than was originally budgeted for because the candidate's pay expectations were higher than expected."

When asking about pay expectations, "organizations must be aware that men and women tend to approach these discussions in different ways," SHRM advised.

Related SHRM Articles:

Gender Pay Gap Improvement Slowed During the Pandemic, SHRM Online, March 2022

The Fight for Equal Pay: From Women's Soccer to Corporate America, SHRM Online, March 2022

Gender Pay Gap for Executives Grew During Pandemic, SHRM Online, February 2022

Related SHRM Report:

Bridging the Pay Gap: Why Pay Equity Pays Off, SHRM Research, November 2021