Fifty years ago this month, President John F. Kennedy signed the Equal Pay Act. At that time, female workers made up one-third of the workforce and earned an average of 59 cents for every dollar earned by male workers. The world has changed dramatically since then.
Today, women make up almost half of the workforce in the United States and they are the primary earners in millions of households. On average women earn 77 percent of men’s wages; however, there are many areas of the country where the gap is smaller. In Washington D.C., women earn slightly more than 90 cents for every dollar earned by men. States with the narrowest wage gaps include Vermont, Maryland, California, and Nevada.
The wage gap is exacerbated by the fact that women often work in lower-paying professions than men. A report released by the American Association of University Women (AAUW) found that slightly more than “40 percent of working women were employed in traditionally female occupations such as social work, nursing, and teaching.” While the report showed that female workers earned less in most professions, the AAUW found at least one example of pay equity: there is no gender wage gap for pharmacists.
Of concern is the fact that the wage gap starts almost immediately after women enter the workforce. One study of 2,500 college graduates found that one year after graduation, women make just 82 percent of their male counterparts’ salaries. It appears one of the main reasons for the discrepancy may be that female workers are reluctant to negotiate salary.
While the number of claims filed under the Equal Pay Act is relatively low compared to other categories, the EEOC collected $9.9 million in monetary benefits for such claims in 2012. Fortunately, there are many ways employers can minimize their exposure to EPA claims. Employers should structure their compensation in a legally defensible manner by adopting the following practices:
- Review compensation practices and policies, including how salaries are established at the time of hire.
- Analyze compensation decisions, including pay increases, bonuses, and stock allocations.
- Periodically review employee compensation to ensure not only those performing the same or similar work are compensated within a given range, but also that disparities are explained or eliminated.
If you have questions or concerns about your organization’s pay practices, contact an MSEC attorney or compensation specialist.