tag:theconversation.com,2011:/es/topics/wage-gap-20543/articlesWage gap – The Conversation2023-05-16T16:36:28Ztag:theconversation.com,2011:article/2032572023-05-16T16:36:28Z2023-05-16T16:36:28ZGender pay gap: how new EU pay transparency laws will make men and women’s wages more equal<figure><img src="https://images.theconversation.com/files/525706/original/file-20230511-36633-n0e6sy.jpg?ixlib=rb-1.1.0&rect=35%2C29%2C934%2C705&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pay transparency.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/transparent-see-through-piggy-bank-filled-623871074">stockphoto-graf/Shutterstock</a></span></figcaption></figure><p>Even though <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_17_4711">90% of Europeans</a> think it’s unacceptable for women to be paid less than men, the average EU gender pay gap remained <a href="https://ec.europa.eu/eurostat/databrowser/view/SDG_05_20/default/line?lang=en">close to 13%</a> in 2021. And there has been only a 4 percentage point decrease over the previous decade. This is despite the EU encouraging member states to implement <a href="https://commission.europa.eu/strategy-and-policy/policies/justice-and-fundamental-rights/gender-equality/equal-pay/eu-action-equal-pay_en">legislation and policies</a> to improve gender pay equality for decades. </p>
<p>Fortunately, a new <a href="https://www.consilium.europa.eu/en/press/press-releases/2023/04/24/gender-pay-gap-council-adopts-new-rules-on-pay-transparency/?utm_source=dsms-auto&utm_medium=email&utm_campaign=Gender+pay+gap%3a+Council+adopts+new+rules+on+pay+transparency">EU pay transparency directive</a>, adopted in April, will help to close this gap further. But even with this new law, this will not be an easy task. It will mean overcoming some significant drivers of wage inequality between men and women, including unconscious bias and stereotyping, differences in negotiation tactics and even new technology such as artificial intelligence.</p>
<p>The gender pay gap is the difference between the average gross hourly earnings of the total number of female and male workers. It covers all workers employed within a country, sector or organisation. So, it differs from the right to equal pay, the right of an individual female worker to be paid the same as a male worker doing equal work or work of the same value.</p>
<p>The causes of the gap are complex and interrelated. The <a href="https://www.aeaweb.org/articles?id=10.1257%2Fjel.20160995&source=post_page">unequal division between genders</a> of paid and unpaid work (impacting career choices and working patterns) has been blamed. <a href="https://www.oecd-ilibrary.org/economics/sticky-floors-or-glass-ceilings-the-role-of-human-capital-working-time-flexibility-and-discrimination-in-the-gender-wage-gap_02ef3235-en">And so have</a> conscious and unconscious biases, gender stereotypes that influence educational and occupational choices, and the <a href="https://ec.europa.eu/eurostat/documents/3888793/14368632/KS-TC-22-002-EN-N.pdf/4951104b-f01d-0964-717a-be0ea3dfd9e4?t=1662728236409">concentration of women</a> in low-paid jobs. </p>
<p>There is also evidence that the pay gap has been partly driven by <a href="https://academic.oup.com/qje/article-abstract/137/1/215/6352976">gender differences in pay negotiation styles</a>, as well as so-called “<a href="https://www.cesifo.org/DocDL/CESifo-Forum-2022-2-boeheim-gust-gender-employment-and-pay-gap-march.pdf">information asymmetries</a>” – when employers have more information about salaries than job applicants and workers. </p>
<p>Fears are also growing that the use of AI technologies to shortlist job applicants will only deepen the gap since they may be <a href="https://www.igi-global.com/gateway/chapter/291431">biased towards male applicants</a>.</p>
<h2>What is the pay transparency directive?</h2>
<p>The right to equal pay has been recognised by EU law since 1957. And although eliminating the gender pay gap is not formally required by EU law, reducing it is part of the “<a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017C1213(01)&rid=2#:%7E:text=3.-,Equal%20opportunities,services%20available%20to%20the%20public.">European pillar of social rights</a>” (pillar 2), a priority in the EU 2020-2025 gender equality strategy, and part of <a href="https://sdgs.un.org/goals/goal8">the United Nations’ sustainable development goals</a> to be achieved by 2030.</p>
<p>The EU’s new directive includes <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4323032">individual and collective measures</a> to improve accessibility to pay information, as well as to support enforcement of these rights. It will help workers or jobseekers better understand their position in the wider pay structure of a company or industry. It also includes collective measures to ensure employers share aggregated pay data broken down by gender, both internally and publicly.</p>
<p>The EU has designed its directive to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4111185">avoid disclosing sensitive personal data, as well as ensuring costs</a> for employers are not excessive.</p>
<p>Among the directive’s individual measures is the right for workers to obtain pay information about other workers doing equal work from an employer. This helps people take action if their right to equal pay is not respected by their company. </p>
<p>During recruitment, job candidates also have a right to be informed about pay levels they can expect at the position they are applying for. The directive also ensures their right not to be asked about their pay history. This aims to help overcome gender biases and ensure <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4323032">more equitable pay negotiations</a>.</p>
<p>The directive’s collective measures will require organisations with more than 100 employees to publish their gender gaps regarding total pay and variable pay (such as bonuses). Employers will also have to publicly disclose the proportion of workers receiving bonuses by gender and the proportion of women among the highest, upper-middle, lower-middle and lowest earners. </p>
<p>Employers will also have to disclose their internal gender pay gap by job category. This will facilitate comparisons between companies for current and prospective workers, consumers and shareholders. Disclosing this information internally can help employers and worker representatives uncover gender biases in pay structures. It can also give unions more leverage during collective pay negotiations.</p>
<figure class="align-center ">
<img alt="Woman holding larger stack of coins in right hand than in left hand." src="https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/525708/original/file-20230511-36798-t7u1uh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The wage gap.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/compare-wage-gap-tax-differences-equal-1997565632">Andrey_Popov/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Will the directive reduce the gender pay gap?</h2>
<p>Pay transparency alone cannot address all the causes of the gender pay gap. But it can help reduce information asymmetries by decreasing an <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4323032">employer’s power to set wages</a> and making it easier for workers to identify and act against pay discrimination. </p>
<p>Evidence is mounting that pay transparency measures similar to those in this directive can help reduce the gender pay gap. For instance, <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.13136?casa_token=i12xgfa1lB">a study on Danish legislation</a> requiring internal pay reporting showed that the increased transparency reduced the gender pay gap by 13%.</p>
<p>There were <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3584259">even better results in a UK study</a>: an 18% reduction in the pay gap in hourly pay following the adoption of <a href="https://www.legislation.gov.uk/uksi/2017/172/contents/made">pay transparency legislation</a> in 2017. Another study focusing on <a href="https://www.nber.org/papers/w25834">public salary disclosure in Canadian universities</a> estimated a gender pay gap reduction of approximately 20%-40% after legislation was introduced. </p>
<p>Recent research also shows what’s likely to make pay transparency measures more effective. This includes <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3584259">publicly disclosing pay information</a>, <a href="https://www.cesifo.org/en/publications/2022/journal-complete-issue/cesifo-forum-022022-mind-gender-gaps-how-men-and-women-get">strong enforcement systems</a> (for example, with proportionate sanctions) and a high degree of <a href="https://www.nber.org/papers/w25834">union scrutiny</a>. Most of these factors can be found in the new EU directive. </p>
<p>These new rules won’t tackle the complex drivers of the gender pay gap alone. But by focusing on both pay transparency, as well as <a href="https://www.diva-portal.org/smash/record.jsf?pid=diva2%3A1745371&dswid=5422">enforcement mechanisms</a>, the EU’s new directive is a powerful step forward to combat pay inequality between men and women.</p><img src="https://counter.theconversation.com/content/203257/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Research shows strong evidence that pay transparency laws can reduce the gender pay gap.Sara Benedi Lahuerta, Assistant Professor in Law, University College DublinKatharina Miller, Adjunct professor, IE UniversityLaura Carlson, Professor in Law, Stockholm UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1713442022-08-30T12:17:29Z2022-08-30T12:17:29ZHow Mary Kay contributed to feminism – even though she loathed feminists<figure><img src="https://images.theconversation.com/files/480473/original/file-20220822-54947-jktayt.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C2789%2C1996&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Mary Kay Ash's legendary love for the color pink symbolized her determination to be a business success by "thinking like a woman."</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/beautys-big-business-mary-kay-ash-the-originator-and-news-photo/502259765?adppopup=true">Colin McConnell /Toronto Star via Getty Images</a></span></figcaption></figure><p>In 1963, the same year American businesswoman Mary Kay Ash started her cosmetics company, publisher W.W. Norton <a href="https://www.smithsonianmag.com/smithsonian-institution/powerful-complicated-legacy-betty-friedans-feminine-mystique-180976931/">released “The Feminine Mystique</a> – the book that has since been widely credited with launching the contemporary women’s liberation movement.</p>
<p>Ash loathed the term "feminist” and disliked the movement. In a 1983 Dallas Morning News interview, she dismissed “that foolishness feminists started in the ‘60s” of “trying to act just like a man” by cutting their hair short or lowering their voices.</p>
<p>Yet Ash, <a href="https://www.nytimes.com/2001/11/23/business/mary-kay-ash-who-built-a-cosmetics-empire-and-adored-pink-is-dead-at-83.html">who died in 2001</a>, successfully defied her era’s female gender norms. She turned a few thousand dollars into a multibillion-dollar cosmetics empire and led it for decades. Her sales force grew from fewer than 10 women to tens of thousands.</p>
<p>While researching a book on Ash’s life and work, I’ve learned that many of the Mary Kay saleswomen were comfortable with their era’s vision of femininity and motherhood. Ash’s <a href="https://www.texasmonthly.com/news-politics/the-hot-pink-empire-of-mary-kay-ash/">company motto of “God First, Family Second, Career Third”</a> put them at ease. </p>
<p>American women today owe gratitude to the women’s movement of the 1960s for making issues like equal pay for equal work and sharing household responsibilities part of the national conversation – but also to a Dallas entrepreneur who reveled in the feminine mystique.</p>
<h2>From underpaid saleswoman to CEO</h2>
<p>In 1963, the year Ash founded “Beauty by Mary Kay” in a small Dallas storefront, barely <a href="https://fred.stlouisfed.org/series/LNS11300002">a third of American women were in the workforce</a>. Ash was one of them. She had peddled children’s encyclopedias door to door, and conducted “house parties” - home demonstrations of products that catered to housewives – <a href="https://www.nytimes.com/2001/11/23/business/mary-kay-ash-who-built-a-cosmetics-empire-and-adored-pink-is-dead-at-83.html">with Stanley Home Goods</a> and other companies. </p>
<p>Ash consistently earned lower wages than her male counterparts, who also passed her by for promotions. When she protested, one common response was to deride her for “thinking like a woman.” Another was that men needed more money because they had families to support. </p>
<p>“I had a family to support too!” <a href="https://www.amazon.com/Mary-Kay-Ash-1981-10-01/dp/B01K175DX0">recalled Ash, a single mother, in</a> her 1981 memoir. So she quit to build a company where there would be no wage gap or male bosses, and women would be rewarded for thinking like women – all while embracing the vision of traditional gender roles that the feminist movement was trying to overturn. </p>
<p>By 1969, the company was earning US$6.3 million in net sales, according to The New York Times. And an article in the Irving Daily News, a Texas newspaper, put the sales force at around 4,000 women from 15 different states.</p>
<p>In 1976, Mary Kay Inc. became the <a href="https://npg.si.edu/exh/journal/ash.htm">first woman-founded and -led company listed</a> on the New York Stock Exchange. </p>
<p>In 1979, glowing coverage on “<a href="https://youtu.be/nrWz_MzKAMk">60 Minutes</a>” prompted nearly 100,000 more women to sign up. The company was grossing over <a href="https://youtu.be/nrWz_MzKAMk">$100 million annually</a> and had a <a href="http://www.marykaymuseum.com/highlight_1970.aspx">global reach</a>, and Ash was named one of the year’s top corporate women in America by <a href="http://3vcm07307bnr2jg8679q77x8-wpengine.netdna-ssl.com/wp-content/uploads/2012/01/Mary_KayCosmeticsInc_Corp_PlanningInAnEraofUncertainty.pdf">Business Week</a> magazine.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/nrWz_MzKAMk?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The CBS news show “60 Minutes” aired a glowing profile of Mary Kay Ash’s cosmetic company in 1979.</span></figcaption>
</figure>
<p>In 1985 Ash and her son <a href="https://www.nytimes.com/2001/11/23/business/mary-kay-ash-who-built-a-cosmetics-empire-and-adored-pink-is-dead-at-83.html">led a $450 millon deal</a> to buy the company back into private family hands. As of 2021, the company <a href="https://nypost.com/2021/10/02/how-mary-kays-founder-went-from-single-mom-to-billion-dollar-beauty-queen/">reportedly has $3.5 billion in annual revenues</a>. </p>
<h2>The Mary Kay mystique</h2>
<p>Ash rejected feminism but sought to build women’s confidence – something absent in the average housewife’s life, according to “The Feminine Mystique” – as well as their income.</p>
<p>“Here’s a woman who’s never had any praise at all for anything she’s ever done,” Ash <a href="https://www.amazon.com/Mary-Kay-Ash-1981-10-01/dp/B01K175DX0">said in her best-selling memoir</a>. “Maybe the only applause she’s ever had was when she graduated from high school. So we praise her for everything good that she does.”</p>
<p>Based on the interviews I’m doing for my research, this approach worked. </p>
<p>Esther Andrews, a housewife, told me that before she became a Mary Kay saleswoman in 1967, “nobody had ever said that I could be great at anything.” Andrews, who raised three children with her Mary Kay earnings after her husband died, was among the first winners of a pink Cadillac – a company prize for top sellers. The car was both a symbol of her success and a means of mobility few housewives enjoyed at the time. </p>
<p>Andrews’ story reflects that of many I’ve uncovered. From a former waitress and single mom in New Jersey who was able to raise her daughter and purchase her own home to a former housewife in Ohio who has more diamond rings than fingers and funds her family’s European vacations, Mary Kay has changed women’s lives. </p>
<p>Both of these women fought back tears as they shared their career accomplishments with me. Both have been in the company for more than 30 years. </p>
<figure class="align-center ">
<img alt="Salespersons from Anhui Province, China, pose for pictures in front of a pink sedan, an award for the best sales team, during the Mary Kay China Leadership Conference on February 20, 2011, in Xiamen, Fujian Province, China." src="https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/481609/original/file-20220829-27-801kvu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Mary Kay company continues to award top saleswomen with new cars in its founder’s favorite color.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/salespersons-from-anhui-province-of-china-pose-for-pictures-news-photo/109325814?adppopup=true">China Photos/GettyImages AsiaPac via Getty Images</a></span>
</figcaption>
</figure>
<p>In her book “In Pink: The Personal Story of a Mary Kay Pioneer Who Made History Shaping a New Path to Success for Women,” homemaker and early Mary Kay recruit <a href="https://www.amazon.com/Pink-Personal-Pioneer-History-Shaping/dp/0985372516">Doretha Dingler remarked that</a> “much more than raising our family income, that kind of earning raised my consciousness” – language echoing that of the era’s feminists.</p>
<h2>Opportunities for women of color</h2>
<p>It wasn’t just middle-class white women who found success in Mary Kay. </p>
<p>In 1975, <a href="https://books.google.com/books?id=9lwEAAAAMBAJ&lpg=PA183&dq=ruell%20cone%20mary%20kay&pg=PA183#v=onepage&q=ruell%20cone%20mary%20kay&f=false">Ruell Cone</a>, a Black woman from Atlanta, was the company’s highest-earning saleswoman. She was honored in person by Ash herself before tens of thousands of saleswomen at the company’s annual seminar. </p>
<p>In 1979, Gerri Nicholson told The Record newspaper of Hackensack, N.J., that while she had “a lot of hang-ups” from growing up as an African American in the South, working for Mary Kay “substantially increased my family income” and gave her “a feeling of self-worth.” At that point Nicholson had worked her way up from saleswoman to sales manager, and would go on to become Mary Kay’s <a href="https://www.warrenrecord.com/article_a63211f2-30fa-11ec-9c07-cb0095c02517.html">first Black national sales director</a>.</p>
<p>By 1985, Savvy magazine reported that Mary Kay Inc. could claim more Latina and Black women earning annual commissions of over $50,000 – the equivalent of $137,000 in 2022 – than any other corporation worldwide. </p>
<p>Ash’s elevation of “thinking like a woman” and the company’s acceptance of Black and Latina saleswomen are also forerunners of feminism’s “third wave” in the 1990s. In this era, younger feminists shifted the movement’s focus from equal rights to diversity, embracing gender differences and celebrating femininity in its various forms.</p>
<h2>A ‘pink pyramid scheme’?</h2>
<p>Along with these success stories, the company has faced accusations of exploiting more women than it enriches. A 2012 article in Harper’s Magazine, “The Pink Pyramid Scheme,” <a href="https://harpers.org/archive/2012/08/the-pink-pyramid-scheme/">pointed at unrealized promises of success</a>, saleswomen going into debt to purchase product inventory, and high turnover rates.</p>
<p>I believe these stories are a part of any accurate telling of Mary Kay history. </p>
<p>However, based on my research, a substantial number of the company’s “beauty consultants” say they found camaraderie, <a href="https://hbr.org/2018/08/why-women-stay-out-of-the-spotlight-at-work">recognition</a> and <a href="https://www.smithsonianmag.com/smart-news/after-two-years-job-womens-confidence-plummets-180955373/">confidence</a> working for Mary Kay, and a female role model in Mary Kay Ash.</p>
<p>These are things working women today <a href="https://doi.org/10.5465/ambpp.2006.22898277">still find elusive</a>.</p><img src="https://counter.theconversation.com/content/171344/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cassandra L. Yacovazzi does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ash derided women’s liberation as “that foolishness” – but her success story is very feminist.Cassandra L. Yacovazzi, Assistant Professor of History, University of South FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1893602022-08-26T12:47:34Z2022-08-26T12:47:34ZA £15 national minimum wage won’t tackle the cost of living crisis — an economist explains why<figure><img src="https://images.theconversation.com/files/481302/original/file-20220826-2795-nguhqg.jpg?ixlib=rb-1.1.0&rect=93%2C26%2C8827%2C5912&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Would a hike in the national minimum wage help tackle the cost of living crisis?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/human-hand-placing-small-figure-on-1588829407">Andrey_Popov / Shutterstock</a></span></figcaption></figure><p>Since it was introduced <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/790910/20_years_of_the_National_Minimum_Wage_-_a_history_of_the_UK_minimum_wage_and_its_effects.pdf">23 years ago</a>, the national minimum wage has raised the incomes of millions of Britons and reduced inequality. </p>
<p>Everyone loves it. For Labour politicians it’s a tool to reduce inequality, while for Conservatives it’s a way to force businesses to take on some of the burden of the welfare system. Technocrats get a sound policy based on impartial evidence, some of it provided by labour economists like me. </p>
<p>But, like that third ice cream, it is possible to have too much of a good thing. We can only push the minimum wage so far to tackle rising living costs such as <a href="https://www.bbc.co.uk/news/live/uk-62633742">spiralling energy bills</a> before we need to use other labour market policies to address issues such as <a href="https://www.ft.com/content/3c482227-8c5a-4ccc-9cf4-e7af09d60640">productivity</a>.</p>
<p>With the UK facing a major <a href="https://www.bbc.co.uk/news/uk-62128069">cost of living crisis</a>, the Trades Union Congress (TUC), which represents most unions in England and Wales, has called for a <a href="https://www.tuc.org.uk/news/tuc-sets-out-roadmap-minimum-wage-and-high-wage-economy">£15 an hour national minimum wage</a>. </p>
<p>Economists gauge the level of the minimum wage by comparing it to the median wage, that is, the hourly wage of the person in the middle of a line-up of the best to least well paid people in the country. At present, British workers aged 23 years or more must earn a minimum of £9.50 each hour, which is equal to just over two-thirds of the median wage. In contrast, a £15 minimum wage would be equal to more than 100% of the UK median wage. In other words, more than half of British workers would be paid it. </p>
<p><strong>Hourly pay of UK workers</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=441&fit=crop&dpr=1 600w, https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=441&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=441&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=554&fit=crop&dpr=1 754w, https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=554&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/481162/original/file-20220825-26-b3311.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=554&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Each minimum wage amount would cover workers earning wages to the left of the relevant dotted line.</span>
<span class="attribution"><span class="source">Labour Force Survey, March-May 2022</span></span>
</figcaption>
</figure>
<p>Researchers <a href="https://www.journals.uchicago.edu/doi/epdf/10.1086/711355">have found</a> that the minimum wage also affects the earnings of workers who earn slightly more than the minimum wage. This is because managers try to preserve wage gaps between pay grades, for example, by raising what supervisors earn when the minimum wage lifts the pay of check-out operators. That means the minimum wage indirectly affects even more workers.</p>
<p>A common concern about a minimum wage is that, if pushed high enough, it will eventually lead to unemployment. This is because firms are forced to pay their workers more than they would otherwise and may find no alternative but to lay them off to remain in business. There is no consensus around what this tipping point is, but the UK already exceeds 60% of the median and <a href="https://motu-www.motu.org.nz/wpapers/21_03.pdf">New Zealand’s minimum wage</a> is at almost 80%, with no evidence of job loss as a result. </p>
<p>This means the TUC’s proposal could potentially be adopted without causing serious job loss. There are two major caveats to this, however, which illustrate the shortcomings of using the minimum wage as a tool to combat the rising cost of living.</p>
<p>First, a big part of the success of the national minimum wage in the UK has been the cautious and predictable way it has been rolled out over the past two decades. The government’s <a href="https://www.gov.uk/government/organisations/low-pay-commission">Low Pay Commission</a>, which sets the amount, takes into account the economic conditions facing firms each year. This is why the minimum wage went up by just 1% in 2009, during the Great Recession, but by 7% in 2016, when the economy was more buoyant. </p>
<p>The TUC’s £15 proposal would represent a 58% increase. To avoid any risk of job loss, this would need to be phased in over several years, providing certainty for firms and a manageable increase in costs each year. But such a softly-softly approach would blunt the effectiveness of the minimum wage as a way to address the <a href="https://www.bankofengland.co.uk/knowledgebank/will-inflation-in-the-uk-keep-rising">rampant inflation</a> we are seeing right now. And unlike direct payments to households, it would do nothing to help those who don’t work or are self-employed.</p>
<p>Second, there’s no such thing as a free lunch: if unemployment doesn’t change in response to the minimum wage, something else will. Companies can accommodate the minimum wage by adjusting what I call the four “P"s: prices, profits, productivity or perks. Firms might cut back on perks such as overtime pay, bonuses or indeed free lunches to offset higher hourly wage costs, for example. But in my work I have found <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/289426/GreggPappsBATH_Beyond_the_wage_FINAL.pdf">little evidence</a> that this happens. </p>
<p>Firms do appear to eke out productivity gains from their workers by increasing the number of tasks they must do or reducing breaks, however. Most worryingly, managers seem to cut back on the amount of training workers receive in favour of squeezing more productive time from them. This may lead to lower wages later in those workers’ careers. In a study of British apprentices, I found <a href="https://www.iza.org/publications/dp/13499/how-the-minimum-wage-affects-training-among-apprentices">evidence</a> that, when employers were forced to pay a higher minimum wage after one year of employment, they responded by cutting the hours devoted to training. </p>
<figure class="align-center ">
<img alt="Man shopping, milk, trolley" src="https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=433&fit=crop&dpr=1 600w, https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=433&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=433&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=544&fit=crop&dpr=1 754w, https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=544&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/481311/original/file-20220826-12-tf6ra3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=544&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Businesses can pass costs like higher wages through to customers via price increases.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/moscow-russia-0515-retired-man-shopping-2156680385">Oxana A / Shutterstock</a></span>
</figcaption>
</figure>
<p>One of the main ways many companies appear to accommodate the minimum wage is by passing on the costs to customers in the form of higher prices. Studies have found that some restaurants can <a href="https://irle.berkeley.edu/files/2018/01/are-local-minimum-wages-absorbed.pdf">recoup 100%</a> of the costs of the minimum wage in this way. Of course this will contribute to the very problem for which the TUC wants to deploy the minimum wage, namely inflation. </p>
<p>On the other hand, the costs of the minimum wage often translate into lower profits. One study found that the unexpected announcement of a big increase in the minimum wage in 2015 led to a fall in the <a href="http://eprints.lse.ac.uk/88286/1/Machin_Minimum%20Wages_Accepted.pdf">market value</a> of the types of firms likely to be most affected, such as pub chains. However, there is probably a limit to how long company owners will accept lower profits before they adopt labour saving technologies or shut down business completely.</p>
<h2>Addressing UK productivity</h2>
<p>Beyond these considerations, a world in which more than half of the workforce has its wages set directly or indirectly by government would lack the wage "signals” that channel school leavers into booming occupations and provide employers with a rough guide of how productive a group of workers is. </p>
<p>The uncomfortable fact is that wages have not been growing in the UK because <a href="https://www.niesr.ac.uk/wp-content/uploads/2022/06/Productivity-in-the-UK-Evidence-Review.pdf">British workers</a> have not been getting any more productive. That’s not because they lack “graft”, as <a href="https://www.theguardian.com/politics/2022/aug/21/jacob-rees-mogg-backs-liz-truss-claim-uk-workers-need-more-graft">some politicians</a> seem to think, but due to a complicated mess of <a href="https://www.niesr.ac.uk/wp-content/uploads/2022/06/Productivity-in-the-UK-Evidence-Review.pdf">past policy failures</a> affecting vocational training and third level education, and a lack of investment by firms.</p>
<p>A £15 minimum wage would mask, but not solve, these issues. Rather than using it as a panacea for all the ills facing British workers, we must tackle the trickier task of developing other effective labour market policies.</p><img src="https://counter.theconversation.com/content/189360/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kerry L. Papps has received funding from the Low Pay Commission.</span></em></p>A national minimum wage increase won’t be enough to address rising living costs.Kerry L. Papps, Senior Lecturer in Economics, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1737242022-01-24T13:26:05Z2022-01-24T13:26:05ZMore women in a STEM field leads people to label it as a ‘soft science,’ according to new research<figure><img src="https://images.theconversation.com/files/441846/original/file-20220120-9679-19vyjxq.jpg?ixlib=rb-1.1.0&rect=533%2C301%2C5844%2C4164&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How seriously people take particular scientific disciplines partly depends on how many women enter them.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/large-group-of-happy-college-students-celebrating-royalty-free-image/1175414396">skynesher/E+ via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em> </p>
<h2>The big idea</h2>
<p>One factor that influences the use of the labels “soft science” or “hard science” is gender bias, according to <a href="https://doi.org/10.1016/j.jesp.2021.104234">recent research</a> <a href="https://scholar.google.com/citations?user=Qw6dPwUAAAAJ&hl=en&oi=ao">my</a> <a href="https://scholar.google.com/citations?user=_SS0alEAAAAJ&hl=en&oi=ao">colleagues</a> <a href="https://scholar.google.com/citations?hl=en&user=SK2z4YsAAAAJ">and I</a> conducted. </p>
<p>Women’s participation varies across STEM disciplines. While women have nearly reached gender parity in biomedical sciences, they still make up <a href="https://www.computerscience.org/resources/women-in-computer-science">only about 18% of students</a> receiving undergraduate degrees in computer science, for instance.</p>
<p>In a series of experiments, we varied the information study participants read about women’s representation in fields like chemistry, sociology and biomedical sciences. We then asked them to categorize these fields as either a “soft science” or a “hard science.”</p>
<p>Across studies, participants were consistently more likely to describe a discipline as a “soft science” when they’d been led to believe that proportionally more women worked in the field. Moreover, the “soft science” label led people to <a href="https://doi.org/10.1016/j.jesp.2021.104234">devalue these fields</a> – describing them as less rigorous, less trustworthy and less deserving of federal research funding.</p>
<h2>Why it matters</h2>
<p>Over the past decade, a growing movement has <a href="https://www.aauw.org/resources/research/the-stem-gap/">encouraged girls and women to pursue education and careers</a> in science, technology, engineering and math, or STEM. This effort is sometimes described as a way to reduce the wage gap. </p>
<p>By encouraging women to enter high-paying fields like science, technology and engineering, advocates hope that women on average will <a href="https://www.urban.org/2016-analysis/promote-stem-grade-school-fight-wage-gap-and-grow-economy">increase their earning power relative to men</a>. Others have hoped that, as women demonstrate they can be successful in STEM, <a href="https://sciencepolicyreview.org/2020/08/reducing-gender-bias-in-stem/">sexist stereotypes about women’s ability and interest in STEM</a> will erode.</p>
<p>Our research suggests this may not be the case. Stereotypes about women and STEM persist, even in the face of evidence that women can and do productively participate in STEM fields. These stereotypes can lead people to simply devalue the fields in which women participate. In this way, even science and math can end up in the “<a href="https://internationalwim.org/how-pink-collar-jobs-have-changed-since-1940/">pink collar</a>” category of heavily female fields that are <a href="https://www.businessinsider.com/low-pay-caring-industry-2014-2">often devalued and underpaid</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="man at white board, two women facing him with microscopes in foreground" src="https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/441848/original/file-20220120-9047-15poc0z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">What does a ‘scientist’ look like in your mind’s eye?</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/teacher-talking-to-students-in-lab-royalty-free-image/500046159">ER Productions Limited/DigitalVision via Getty Images</a></span>
</figcaption>
</figure>
<h2>What other research is being done</h2>
<p>Other research has found that explicit <a href="https://doi.org/10.3389/fpsyg.2015.00415">“science equals men” stereotypes were weaker</a> among people who majored in science disciplines with high participation by women, like biological sciences, compared to those who majored in fields with few women, like engineering. This finding suggests that exposure to women in your own field can shift the gender stereotypes you hold. </p>
<p>But our studies more closely align with other research suggesting that, rather than reducing gender stereotyping, women’s increased participation results in the devaluation of more heavily female fields. </p>
<p>When women make up more than 25% of graduate students in a discipline, men – and to a lesser extent women – <a href="https://doi.org/10.1177/003804070708000102">become less interested in pursuing that discipline</a>, and <a href="https://www.nytimes.com/2016/03/20/upshot/as-women-take-over-a-male-dominated-field-the-pay-drops.html">salaries tend to go down</a>. Other studies have found that the <a href="https://doi.org/10.1111/j.1559-1816.2008.00354.x">same job is seen as deserving a lower salary</a> when positioned in a “female field” than when it is listed in a “male field.” Together, this suggests that the presence of women, and not characteristics of the job or field, is what leads to devaluation and lower pay.</p>
<h2>What still isn’t known</h2>
<p>Participants who worked or planned to work in science were just as likely as the rest of the population to use gender as a cue to categorize soft vs. hard sciences. But in scientists, we found no connection between that tendency and their beliefs about women’s ability in science and math. That is, scientists’ levels of sexism, as measured by self-report, were unrelated to their inclination to call fields with many women “soft sciences.”</p>
<p>We don’t know how scientists and non-scientists ended up making the same connection between gender and soft science labels. It’s possible that people who work in science are just more aware of norms against expressing such gender stereotypes – meaning their self-reports are less likely to reflect their true beliefs and actually more closely match those of non-scientists. </p>
<p>But it’s also possible that something else is driving their use of the “soft science” label. For example, to our surprise, women who worked in science were more likely compared to men in science to label fields with many women as “soft sciences.” This could reflect the tendency for some women who experience sexism in their fields to <a href="https://doi.org/10.1016/j.leaqua.2015.12.007">distance themselves from other women</a> as a way to protect themselves from being targets of sexism.</p>
<h2>What’s next</h2>
<p>Science advocates must grapple with the fact that women’s work in scientific fields can result in fields being devalued. For society to benefit fully from the broad spectrum of scientific disciplines, advocates may need to address gender stereotypes more directly.</p>
<p>Gender stereotypes about STEM could also affect which fields talented students choose to pursue. The label of “soft science” might be a turnoff for high-achieving students who want to prove their strengths – or, conversely, students who are insecure about their abilities might avoid a major described as a “hard science.”</p>
<p>[<em>The Conversation’s science, health and technology editors pick their favorite stories.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=science&source=inline-science-favorite">Weekly on Wednesdays</a>.]</p><img src="https://counter.theconversation.com/content/173724/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alysson Light does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The proportion of women in a discipline influences how rigorous and trustworthy people rate the field overall, as well as whether they categorize a STEM field as a ‘hard’ or ‘soft’ science.Alysson Light, Assistant Professor of Psychology, University of the SciencesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1706222021-11-02T17:39:00Z2021-11-02T17:39:00ZWomen are more competitive when they’re given an option to share winnings – a research finding that may help close the gender pay gap<figure><img src="https://images.theconversation.com/files/429737/original/file-20211102-52445-1388arg.jpg?ixlib=rb-1.1.0&rect=48%2C156%2C6266%2C4724&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Women may be more team-oriented than men.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/we-should-lift-each-other-up-as-women-royalty-free-image/1094871524">Delmaine Donson/E+ via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em></p>
<h2>The big idea</h2>
<p>Women are more likely to take risks and engage in competitive activities if they’re allowed to share their potential winnings with peers, according to <a href="https://doi.org/10.1073/pnas.2111943118">new research</a> I co-authored. Since one explanation of the gender pay gap is that women <a href="http://www.doi.org/10.1146/annurev-economics-111809-125122">tend to be less competitive than men</a> in workplace settings, this finding could lead to ways to narrow it. </p>
<p>In a study published on Nov. 1, 2021, in the Proceedings of the National Academy of Sciences, <a href="https://scholar.google.com/citations?hl=en&user=PtbQ4SQAAAAJ">Alessandra Cassar</a> and <a href="https://scholar.google.com/citations?user=75hF-BUAAAAJ&hl=en&oi=ao">I</a> report an experiment in which we invited 238 undergraduate students – split almost evenly between men and women – into our labs to solve a simple numbers puzzle. We wanted to see how different types of financial incentives prompt men and women to compete differently. We randomly assigned them to groups of four and had them do versions of the puzzle over three rounds. </p>
<p>Researchers <a href="http://www.doi.org/10.1146/annurev-economics-111809-125122">have conducted</a> <a href="https://www.jstor.org/stable/25098868">this experiment</a> <a href="http://dx.doi.org/10.1287/mnsc.2014.1981">many times</a>, with the result that women show less interest in competing than men. But we added a twist. </p>
<p>Half the students followed the usual methodology. They were first told they’d receive US$2 for every numbers problem solved. In the second round, we offered $4 per solution to the top two performers in each foursome, leaving the others with nothing. In the final round, participants were able to choose whether to receive $2 for every problem solved or engage in the more competitive game and potentially earn more money.</p>
<p><a href="http://dx.doi.org/10.1287/mnsc.2014.1981">Mirroring the results of past studies</a>, our research found that while 52% of the men chose the competitive option in the third round, only 34% of women did.</p>
<p>Our twist on this experiment, which we conducted with the other half, was very similar to how the standard version was conducted except in one way. In the second round, students who won were told they could choose to share some portion of their winnings with one of the two low performers in their group. We then looked at how this option to share affected their choices in round three. </p>
<p>We found that this eliminated the male-female competitiveness gap. Men chose to compete at about the same rate as before, but 60% of women opted for the riskier option when offered a chance to share their winnings. </p>
<h2>Why it matters</h2>
<p>The latest wage data <a href="https://www.census.gov/content/dam/Census/library/publications/2021/demo/p60-273.pdf">shows women earn 83 cents of every dollar</a> a man is paid, a stat that has barely budged in <a href="https://scholar.harvard.edu/goldin/career-family">decades</a>. And while controlling for job type and individual characteristics <a href="https://www.globenewswire.com/fr/news-release/2020/03/24/2005213/0/en/PayScale-2020-Gender-Pay-Gap-Report-Findings-Show-Most-Companies-Neglect-to-Address-Gender-Pay-Equity.html">closes much of the gap</a>, we think this adjustment misses the point. </p>
<p>The persistent gap in average earnings suggests women consistently go into careers that pay lower salaries than those that men go into or are systemically <a href="https://www.businessinsider.com/why-women-almost-never-become-ceo-2016-9">underpromoted</a>. The COVID-19 pandemic has <a href="https://www.cnbc.com/2020/10/13/pandemic-fallout-men-got-3-times-more-promotions-than-women.html">exacerbated this imbalance</a>.</p>
<p>To more meaningfully close or at least narrow the gap between how much men and women earn, it’s important to understand its causes. <a href="http://www.doi.org/10.1146/annurev-economics-111809-125122">Some economists</a> have suggested it’s at least partly due to different levels of competitiveness among men and women.</p>
<p>After all, high-risk competitive roles like managers and lawyers tend to come with <a href="https://www.cnbc.com/2018/04/09/what-men-and-women-earn-in-the-highest-paying-jobs-in-america.html">lofty salaries</a>. Since many of the studies cited above show women seem to be less competitive than men, this could help explain why women are underrepresented in those careers and on average earn less. </p>
<p>Our research suggests the explanation may be more nuanced. It’s not that women don’t like competition, but that they are sensitive to social aspects of it that men aren’t. When incentives reflect those social aspects, women are just as competitive as men. </p>
<h2>What’s next</h2>
<p>We’re not sure how our findings translate into the workplace or how companies can adjust the way they pay workers to encourage women to be more competitive. We are uncovering more of the what, and need to better understand the why. </p>
<p>[<em>Over 110,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p><img src="https://counter.theconversation.com/content/170622/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mary L. Rigdon receives funding from the National Science Foundation. </span></em></p>Some suggest women’s lack of competitiveness relative to men is one reason for the persistent gap between how much men and women earn.Mary L. Rigdon, Professor and Associate Director, Center for the Philosophy of Freedom, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1674542021-10-05T15:21:56Z2021-10-05T15:21:56ZSouth Africa is tightening its rules around executive pay, but gaps remain<figure><img src="https://images.theconversation.com/files/421820/original/file-20210917-48423-mwgya4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>South Africa <a href="https://doi.org/10.4102/sajems.v22i1.3251">has a large, and growing, wage gap</a>. The pay gap between executives and employees at the lowest end of the pay scale is increasing. This has seen <a href="https://doi.org/10.1080/10291954.2018.1465149">an increase in shareholder interest in director pay</a>. </p>
<p>South Africa has the highest wage inequality in the world, with a <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_650553.pdf">Gini coefficient of 0.639</a>. It is, therefore, not surprising that there has been a concerted effort to put more focus on director remuneration guidelines in the country’s latest set of published corporate governance rules.</p>
<p>Governance guidelines for companies are set out in a series of reports, known as the <a href="https://www.iodsa.co.za/page/kingIII?gclid=CjwKCAjwndCKBhAkEiwAgSDKQfivoGmXPv7elv983HAMSJFjyaC8zSph-R2Dh3LgO6jGJZPogag98hoCCQAQAvD_BwE">King Reports</a>. The <a href="https://www.iodsa.co.za/page/why-join?gclid=CjwKCAjw49qKBhAoEiwAHQVTo6vc5DN3jt-JNF1hKgni993pMRXZ8AcHnRyiFjl0NQRJbBblRxw2NRoCK08QAvD_BwE">Institute of Directors in South Africa</a> has published four. The first was published in 1994 and subsequently revised in 2002 (King II), 2009 (King III) and 2016 (King IV). The reports map out a set of voluntary principles and recommendations that apply to a wide range of organisations in the country, including listed and unlisted entities.</p>
<p>The latest – the <a href="https://cdn.ymaws.com/www.iodsa.co.za/resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf">King IV Report</a> – is more explicit on executive remuneration. </p>
<p><a href="https://doi.org/10.1080/10291954.2021.1938882">We interviewed</a> South African institutional investors, remuneration committee members, CEOs and chief financial officers (CFOs)of financial services companies listed on the Johannesburg Stock Exchange. Our aim was to establish their views on remuneration governance. We selected this sector because pay policies and practices of several <a href="https://www.fin24.com/Companies/Financial-Services/big-funds-fight-fat-cats-20180715-2">financial services</a> companies recently received considerable shareholder scrutiny.</p>
<p>Our findings showed that most participants welcomed the three part-remuneration report and single figure pay disclosure proposed by King IV. They indicated that these recommendations noticeably standardised pay reporting by South African companies. </p>
<p>But there were also criticisms – and notes of caution – issued from many of those we interviewed. </p>
<h2>Insider views on King IV director pay suggestions</h2>
<p>The guidelines deal with remuneration for executives and non-executives.</p>
<p>They say that executive pay should be performance-based. Non-executives should receive a base fee and fees for meeting attendance. </p>
<p>The guidelines also recommend that companies listed on the Johannesburg Stock Exchange should publish a background statement, remuneration policy and implementation report. Details should be provided on the pay components allocated to individual directors. Additionally, listed companies should indicate how they intend to respond if a substantial number (defined as 25% or more) of shareholders cast their vote against the implementation reports or pay policies.</p>
<p>Remuneration committees should also ensure that director pay is transparently disclosed. This will enable investors to make informed voting and investment decisions. Institutional investors can have considerable influence over corporate policies. Their investment in local companies gives them substantial negotiation and voting power. High ranking executives, such as CEOs and CFOs, as well as remuneration committee members, often discuss remuneration concerns with these powerful investors during private meetings.</p>
<h2>The gaps</h2>
<p>Some interviewees cautioned that local remuneration committees should ensure that remuneration reports don’t become too technical. </p>
<p>Some also requested more guidance from the King Committee to make quantum pay disclosures more comparable across sectors. </p>
<p>They also emphasised that remuneration decision-makers should caution against over-reliance on consultants when compiling pay packages. Research shows that this can result in pay benchmarking. This is when remuneration is set at a higher or comparable level of a comparable organisation. Pay benchmarking can potentially lead to above-average emolument levels.</p>
<p>For their part, institutional investor interviewees indicated that they often meet South African companies they’ve invested in to discuss pay matters before casting their votes at annual general meetings. Most of them suggested that shareholder votes cast on director pay should be binding. </p>
<p>In contrast, the remuneration committee members and leading executives preferred the advisory vote suggested by King IV. </p>
<p>Everyone we interviewed agreed that there should be clearer consequences for companies if more than a quarter of their shareholders voted against their pay policies and implementation reports.</p>
<p>They also emphasised the importance of fair pay practices given the country’s large wage gap. Two of them referred to ‘equal pay for work of equal value’. Directors should accordingly be compensated based on their individual efforts and contributions to their companies. </p>
<p>In addition, the interviewees proposed extended vesting periods for share options to ensure that executives have a long-term focus.</p>
<p>They also agreed that executive pay should be linked to financial performance metrics as well sustainability-related performance outcomes. This led them to suggest that in future director pay should be more clearly linked to:</p>
<ul>
<li><p>the <a href="https://cdn.ymaws.com/www.iodsa.co.za/resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf">triple bottom line context</a>. This refers to the economy, society and operating environment, and </p></li>
<li><p>the <a href="https://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf">six capitals</a>. This refers to financial, manufactured, intellectual, human, social and relationship and natural capital. </p></li>
</ul>
<p>Social and ethics committees should help remuneration committees determine how they can link sustainability aspects to executive pay.</p>
<p>Some also issued a note of caution about amending pay regulations in light of the considerable regulatory burden that JSE-listed companies experience. Enhanced remuneration guidance might, therefore, rather be offered in a guidance note and in the future King V Report.</p>
<h2>What next</h2>
<p>In the context of the current pandemic, director remuneration practices and policies are likely to receive even more attention. It is likely that companies will receive more opposition in future if their leaders’ pay is not clearly linked to financial and non-financial performance metrics over the long run.</p>
<p>JSE-listed companies are encouraged to implement fair, responsible director pay policies and better align their pay practices with the King IV guidelines.</p>
<p>*Marilee van Zyl contributed to this article. She completed her MCom degree at Stellenbosch University and is an assistant governance consultant at FluidRock Governance Group._</p><img src="https://counter.theconversation.com/content/167454/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nadia Mans-Kemp received funding from the National Research Foundation but it was not connected to this research. </span></em></p>Director remuneration practices and policies are coming in for much greater scrutiny.Nadia Mans-Kemp, Academic in the Department of Business Management, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1599562021-04-29T13:30:25Z2021-04-29T13:30:25ZThere’s a gay wage gap – and it’s linked to discrimination<figure><img src="https://images.theconversation.com/files/398122/original/file-20210430-17-r62aqn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pride and prejudice. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/xaNN3j_MO8Q">Carlos de Toro</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The wage gaps that exist between men and women and between white and black people have received a lot of attention in recent years. But there’s another wage gap that tends to be overlooked – between heterosexuals and LGBT+ people.</p>
<p>Interestingly, it works in two different directions: most studies show a wage penalty for gay men but a wage premium for lesbian women compared with their heterosexual counterparts. <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/irel.12075">One analysis</a> of 32 studies from several countries found that on average, gay men earned 11% less than heterosexual men, while lesbian women earned 9% more than heterosexual women. Studies and surveys have also shown a negative wage gap for <a href="https://journals.sagepub.com/doi/10.1177/0003122416674025">bisexual</a> and also for <a href="https://www.standard.co.uk/news/uk/lgbt-workers-paid-ps7-000-less-than-straight-counterparts-a4179996.html">transgender people</a>, though the evidence is much more limited, particularly for transgender people. </p>
<p>Within the data on gay people, there are also variations between countries and depending on how exactly sexual orientation is classified, for example whether it’s based on survey evidence or cohabitation – and there are studies <a href="https://onlinelibrary.wiley.com/doi/full/10.1002/soe">such as this one</a> from the US that found gay men actually earning more. But if the numbers above reflect a broad average, why do such differences arise? </p>
<p>One possible explanation is the work choices that gay people make. Research suggests gay men <a href="https://journals.sagepub.com/doi/full/10.1177/2378023120954795">are more likely</a> to avoid occupations that are more male-dominated than other men (which <a href="https://www.thetimes.co.uk/article/men-dominate-jobs-offering-highest-pay-3jx2zmp00">includes the best paid jobs</a>), while lesbian women are more likely to avoid female-dominated occupations than other women (which are typically <a href="https://journals.sagepub.com/doi/10.1177/0950017015624402">worse paid</a>). Lesbians <a href="https://wol.iza.org/uploads/articles/111/pdfs/sexual-orientation-and-labor-market-outcomes.pdf">may also</a> earn more because they tend to work longer hours.</p>
<p>But why do gay people enter different professions? It may be because they make different educational choices. For instance, LGBT+ students in the US are <a href="https://www.sciencedirect.com/science/article/pii/S0272775719302791">less likely</a> to finish school and attend university than other students. American men in same-sex couples are more likely to obtain a bachelor’s degree than men in different-sex couples, but they are <a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0241596">12 percentage points</a> less likely to complete their degree in a <a href="https://www.topuniversities.com/courses/engineering/what-stem">STEM subject</a>. </p>
<h2>The role of discrimination</h2>
<p>A key question is whether <a href="https://theconversation.com/how-being-a-gay-man-or-lesbian-impacts-on-your-earning-power-39523">these differences</a> in wages and choice of employment are driven by prejudice, or whether they are the result of some innate, work-relevant traits of gay people related to their preferences or skills. If gay men are paid less because of prejudice, then society is not making the best use of their skills and productivity. This would be economically inefficient and would hold back output, because it would suggest that gay men are not making the contribution that they could. </p>
<p>It’s not easy to get to the bottom of why these differences in wages and employment exist. But recent research using various methods has certainly found that discrimination is a key driver.</p>
<p>I will highlight three examples. First, <a href="https://www.journals.uchicago.edu/doi/10.1086/673315">research from Australia</a> has shown that gay and lesbian workers choose to enter occupations with fewer prejudiced workers, with male-dominated occupations more likely to feature discrimination. </p>
<p>Second, <a href="https://journals.sagepub.com/doi/full/10.1177/0019793919832273">in a research experiment</a> in the US, participants were asked to evaluate CVs. Some of the CVs made references to LGBT+ activities while others did not. Male participants penalised CVs that included an LGBT+ activity.</p>
<p>Third, discrimination of LGBT+ people emerges in workplace surveys. For instance, <a href="https://www.stonewall.org.uk/system/files/lgbt_in_britain_work_report.pdf">Stonewall and YouGov found</a> in 2017 that 18% of LGBT staff in the UK had been a target of negative comments or conduct from work colleagues in the previous 12 months because of their sexual orientation. </p>
<h2>Inclusion and economic benefits</h2>
<p>Discrimination against gay people is a global issue. The <a href="https://www.fandmglobalbarometers.org/results/">Franklin & Marshall Global Barometer of Gay Rights</a> gave 62% of countries a failing grade on legal and social protections afforded to LGBT+ people in 2018. Contrasts among countries are wide. For example, Finland scored 96% in the barometer, while Russia scored just 19%.</p>
<p>This raises the question of whether it is possible to quantify the potential economic consequences of this discrimination, particularly in countries that lag the world’s leaders in both economic output and LGBT+ rights. </p>
<p>One approach is to estimate the lost productivity due to discrimination among gay people, based on research from countries where such data are available. These estimates can then be applied to the GDP of other countries. <a href="https://open-for-business.org/reports">Open For Business</a>, a global coalition of companies, on whose research advisory board I sit, has just done exactly that for Hungary, Poland, Romania and Ukraine – four countries with <a href="https://www.imf.org/external/datamapper/PPPPC@WEO/THA">GDP per capita</a> and <a href="https://rainbow-europe.org/country-ranking">LGBT+ inclusion ratings</a> well below the European average. </p>
<p>At the low end, the report <a href="https://open-for-business.org/s/The-Economic-Case-for-LGBT-Inclusion-in-CEE-ENGLISH.pdf">estimates that</a> LGBT+ discrimination costs the Hungarian economy between 0.1% and 0.2% of GDP each year, or around £200 million. At the high end, the estimated cost to the Romanian economy is between 0.6% and 1.7% of GDP, or up to £3 billion.</p>
<p>While these figures are unlikely to make or break a country’s economy, they are substantial in context. For instance, the Romanian government’s spending on education was 3.1% of GDP in 2017. Lost GDP from limited LGBT+ inclusion could fund half of that spending every year.</p>
<p>Moreover, these estimates only represent direct costs of exclusion. There could be additional, indirect economic costs related to <a href="https://blogs.lse.ac.uk/brexit/2019/10/24/queer-and-over-here-polish-migrants-stay-on-despite-brexit/">brain drain</a>, adverse effects of discrimination on well-being, or even foreign investors going elsewhere because they worry that the prejudice in a country’s workforce could harm their reputations. </p>
<p>One thing that this report does not consider is the potential negative effects of inclusion. For instance, could higher participation of gay people in the workforce actually deter prejudiced heterosexual people from, say, working as productively, or even working at all?</p>
<p>There are two reasons why this is unlikely. First, <a href="https://www.sciencedirect.com/science/article/pii/S0047272719301471">several studies</a> on the legalisation of same-sex marriage in the US have found no effect on different-sex couples, including no impact on the probability of whether they are employed. </p>
<p>Second, even though prejudice does exist, attitudes do shift as LGBT+ rights evolve. Recent research has <a href="https://www.sciencedirect.com/science/article/abs/pii/S0014292120300313">shown that</a> attitudes towards LGBT+ people turned more positive after laws recognising same-sex relationships were enacted across Europe. More inclusive laws led to more tolerant views – not the opposite. </p>
<p>One explanation is that equality laws confer legitimacy toward sexual minorities – and attitudes adjust in response. This suggests that such laws could eventually be accepted, even in countries where acceptance of LGBT+ people is low. </p>
<p>If so, and given the potential economic benefits, it is another reason why greater inclusion is worth pursuing. Beyond the level of individual countries, this <a href="https://www.umass.edu/economics/news/mv-lee-badgett-makes-%E2%80%9C-economic-case-lgbt-equality%E2%80%9D-new-book">could also</a> bring benefits for the global economy.</p><img src="https://counter.theconversation.com/content/159956/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pawel Adrjan is a member of the Research Advisory Board at Open For Business, an organisation whose report is mentioned in the article. He is also employed as Head of EMEA Research at Indeed where he carries out research on labour market topics.</span></em></p>Gay men earn 11% less while lesbian women earn 9% more than their heterosexual counterparts.Pawel Adrjan, Research Fellow in Economics, Regent's Park College, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1455022020-10-06T12:17:06Z2020-10-06T12:17:06ZPaid internships elusive for women and Asian college students<figure><img src="https://images.theconversation.com/files/357325/original/file-20200909-18-pw2zpt.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C387%2C258&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Researchers examined the quality of students' internship experience.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/asian-young-college-student-looking-at-her-computer-royalty-free-image/1205174505?adppopup=true">Juanmonino/iStock via Getty Images Plus</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em></p>
<h2>The big idea</h2>
<p>Women and Asian students are significantly less likely than their counterparts who identify as men or white to receive payment during internships. <a href="http://dx.doi.org/10.1353/csd.2020.0042">This finding</a> is based on an analysis of 2,410 responses to the <a href="https://nsse.indiana.edu/">National Survey of Student Engagement</a>. The trend held up even when student background, academic major and the type of college attended were taken into account. </p>
<p>These data were part of a set of survey questions that measure the quality of students’ internship experiences. Our study was published in the July/August issue of the <a href="https://muse.jhu.edu/journal/238">Journal of College Student Development</a>. Using statistical analysis, we found that the calculated odds of women getting paid during their internships were 34% lower than for the men in the sample. For Asian, Native Hawaiian and other Pacific Islander students, their odds were 50% lower than for white students.</p>
<h2>Why it matters</h2>
<p>Our finding that women were less likely than men to land a paid internship adds to <a href="http://htv-prod-media.s3.amazonaws.com/files/women-searningsdeptoflabor-1519686344.pdf">concerns about the gender wage gap</a>. Data show a <a href="http://htv-prod-media.s3.amazonaws.com/files/women-searningsdeptoflabor-1519686344.pdf">wage gap of 27%</a> between women and men.</p>
<h2>What still isn’t known</h2>
<p>Since the sample size was small, it remains to be seen if the results would be the same using a larger sample reflective of the nation. This sample included only 12 four-year institutions. Data from additional colleges and universities and two-year community colleges would enhance the research on this topic. Black and Latino students were included in our analysis, and their likelihood of receiving an internship was not statistically different compared with white students.</p>
<p>Furthermore, it also remains to be seen how interventions such as bias training for career counselors, transparent data on internship pay and <a href="https://www.wayup.com/guide/community/negotiate-salary/">salary negotiation training</a> might come into play.</p>
<p>Bias training could help counselors understand the role that their identity – as well as the identity of the students they advise – may play in how they support students. Transparent data could help students make more informed decisions on which internships to take and which ones pay. Salary negotiation training may also prepare students to advocate for themselves when seeking compensation for internships.</p>
<h2>What other research is being done</h2>
<p>Our research on the roles that gender and ethnicity can play with paid internships aligns with research the <a href="https://www.naceweb.org/diversity-equity-and-inclusion/trends-and-predictions/women-are-underrepresented-among-paid-interns/">National Association of Colleges and Employers</a> is doing. Results from their Student Survey Report, which includes more students and more institutions, include similar disproportions of interns receiving pay based on gender and race.</p><img src="https://counter.theconversation.com/content/145502/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Findings add to growing concerns about the wage gap between men and women – as well as a gap between Asians and whites.John Zilvinskis, Assistant Professor , Binghamton University, State University of New YorkJennifer Gillis, Professor of Psychology, Binghamton University, State University of New YorkKelli K. Smith, Assistant Vice President for Student Success, Binghamton University, State University of New YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1139752019-03-28T20:12:28Z2019-03-28T20:12:28ZWhy pay transparency alone won’t eliminate the persistent wage gap between men and women<figure><img src="https://images.theconversation.com/files/265887/original/file-20190326-36248-mf03wx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The gender pay gap has proved difficult to close. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/gender-pay-gap-488107402">Ian johnston/shutterstock.com</a></span></figcaption></figure><p>No matter how you slice the data, women in the U.S. earn a lot less than men. </p>
<p><a href="https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-pinc/pinc-05.2017.html">A typical woman working full-time makes 81 cents</a> for every dollar a man earns, little more than the 77 cents she got a decade ago. Within careers, it can vary widely, with female physicians and marketing managers earning 71 cents, while female registered nurses are at 92 cents. A university degree doesn’t help, as women with a bachelor’s earn just 74 cents of every college-educated man’s dollar.</p>
<p>One of the <a href="http://www.pbs.org/wgbh/point-taken/should-salaries-be-transparent/#poll">popular solutions</a> proposed for <a href="https://pay-equity.org/day.html">narrowing this persistent gap</a> is <a href="http://www.law.uci.edu/lawreview/vol4/no2/Estlund.pdf">pay transparency</a>. There are two rationales for this. First, employers will be less likely to pay women less than men for the same job if salaries are known. Second, if a woman knows how much her male colleagues are earning for doing the same work, she’ll be in a better position to negotiate a higher salary. </p>
<p>The House <a href="https://www.congress.gov/bill/116th-congress/house-bill/7/text">passed a bill on March 27</a> <a href="https://thehill.com/homenews/house/436121-house-passes-paycheck-fairness-act">designed to promote equal pay and transparency</a> by, among other things, banning employers from asking applicants about their salary history and preventing them from retaliating against employees who compare wages. </p>
<p>Many states <a href="https://www.salary.com/blog/pay-transparency-laws-mean/">have already passed similar laws</a>, while the federal government has <a href="https://www.law.com/nationallawjournal/2019/03/04/federal-judge-hits-trump-agency-for-illegal-move-to-stop-new-pay-data-rule/?slreturn=20190228082114">issued</a> <a href="http://www.dol.gov/ofccp/regs/statutes/eo11246.htm">a few regulations</a> along these lines. </p>
<p>The question is, are they working? As an <a href="http://law.ubalt.edu/faculty/profiles/modesitt.cfm">expert in employment discrimination law</a>, including equal pay, I have my doubts about many of these laws. </p>
<p><iframe id="suLUh" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/suLUh/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>No salary disclosure required</h2>
<p>Part of the problem is that with one exception – government employees – the laws currently in place to promote pay transparency do not actually require disclosure of individual salary information. </p>
<p>For example, the <a href="http://www.dol.gov/ofccp/regs/statutes/eo11246.htm">government regulation</a> that has been touted as a pay transparency law prohibits federal contractors only from retaliating against employees who disclose their own salary. And states with the <a href="https://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm%20https://labor.ny.gov/formsdocs/factsheets/pdfs/p828.pdf">toughest laws</a>, such as California and New York, use similar language.</p>
<p>The idea behind these anti-retaliation laws is to allow employees to disclose their pay without repercussion, eliminating pay secrecy policies and customs.</p>
<p>For these laws to create actual pay transparency, however, employees must be willing to share salary information. And while there <a href="http://www.hreonline.com/HRE/view/story.jhtml?id=534359883">appears to be a trend</a> toward employee willingness to do so, it is at odds with the <a href="http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1345&context=bjell">longstanding social norm</a> against discussing pay.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=414&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=414&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=414&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=521&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=521&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265889/original/file-20190326-36260-hdcomb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=521&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Whole Foods is one company that allows employees to know other employees’ salaries.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Future-of-Work-Entry-Points/98b921ce6cf9454da667dada856a84be/30/0">AP Photo/Steven Senne</a></span>
</figcaption>
</figure>
<h2>Finding a link to pay equity</h2>
<p>In the absence of a legal requirement to disclose actual wages, an increasing number of companies are making salary information transparent on their own. </p>
<p>Different companies have taken varying approaches to this. For example, Whole Foods <a href="http://www.cbsnews.com/news/at-whole-foods-paychecks-are-public/">allows workers to check</a> their colleagues’ salaries, while social media scheduler Buffer <a href="https://open.buffer.com/transparent-salaries/">publicly discloses the formula</a> it uses to determine employees’ salaries. At the extreme end of transparency, <a href="http://www.fedsdatacenter.com/federal-pay-rates/">many governmental employees’ salaries</a> are publicly available, depending on the state. </p>
<p><a href="http://www.law.uci.edu/lawreview/vol4/no2/Estlund.pdf">Proponents argue</a> that transparency decreases the gender pay gap because if employers disclose salaries, they will also be disclosing any gap that exists, which will lead to efforts to eliminate it. This is precisely what happened at Buffer, which, after disclosing employee salaries, found a wage gap and <a href="http://www.theatlantic.com/business/archive/2016/03/pay-transparency-gender-gap/475683/">changed its compensation system</a> and hiring priorities to eliminate it. </p>
<p>The federal workforce, where <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">the pay gap is significantly lower</a> than in the private sector, can also be seen as support for the argument that pay transparency <a href="https://www.dol.gov/wb/resources/womens_earnings_and_the_wage_gap_17.pdf">helps reduce it</a>. The <a href="https://thehill.com/policy/finance/391965-equal-pay-for-women-elusive-55-years-after-landmark-law">federal wage gap ranges</a> from about 4 percent to 9 percent, when controlling for relevant factors that affect pay, <a href="https://www.nber.org/papers/w21913.pdf">compared with 8 percent to 18 percent</a> among all employers.</p>
<h2>Limited research</h2>
<p>But there is little actual research that supports these arguments.</p>
<p>I don’t know of any empirical study of how pay transparency affects the gender wage gap, such as what happens to the gap when companies shift from withholding to disclosing employee pay. While <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">research does exist</a> comparing the federal workforce’s wage gap with the private sector’s, it does not show whether pay transparency is a factor. </p>
<p>It is quite probable that the most important reason for the smaller federal wage gap is the government’s highly structured pay and promotion system. Because pay is based on a job’s classification, with step raises that are identical, there is less chance for men and women to be paid different amounts for doing the same job.</p>
<p>When one looks more closely at the anecdotal evidence, pay transparency appears more likely to be simply one part of narrowing the pay gap. For example, while <a href="http://fortune.com/2015/08/18/tech-transparency-wage-gaps">Buffer eliminated its pay gap</a> after disclosing employee salaries, Salesforce <a href="https://www.salesforce.com/blog/2016/03/equality-at-salesforce-equal-pay.html">did so after merely conducting an internal review</a>. </p>
<p>The common link in these approaches is not pay transparency but recognition of a gap and a commitment to closing it. Thus, transparency can assist in pushing companies toward recognition of a problem but isn’t an essential component to eliminating it.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265888/original/file-20190326-36248-3c1e9y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In 2016, the World Economic Forum found that the global gender pay gap will not close for another 170 years if current trends continue.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Gender-Pay-Gap/9a24d93c03e3434a9890915aa632745b/20/0">AP Photo/Jessica Hill</a></span>
</figcaption>
</figure>
<h2>Pitfalls of transparency</h2>
<p>One downside to pay transparency is the effect on employee morale.</p>
<p>A <a href="https://www.princeton.edu/%7Eamas/papers/card-mas-moretti-saezAER11ucpay">fascinating study</a> on the effect of revealing salaries of University of California employees showed that employees below the median salary for their position had decreased job satisfaction and an increase in desire to change jobs. </p>
<p>This was not offset by improvements in employee morale among those who were paid higher than the median salary. Thus, there was a net overall decrease in employee morale. </p>
<p>On the other hand, a 2015 <a href="http://fortune.com/2015/10/15/pay-transparency/">PayScale survey suggests</a> that transparency has the opposite effect, encouraging retention, because employees tend to think they’re more underpaid than they actually are.</p>
<p>To avoid negative consequences, the <a href="https://www.shrm.org/publications/hrmagazine/editorialcontent/2014/0914/pages/0914-salary-transparency.aspx">Society for Human Resource Management recommends</a> that employers be prepared to explain any reasons for pay disparities that are revealed. This also suggests that how an employer handles a pay gap matters more than the disclosure of it. </p>
<h2>Other factors influencing the gap</h2>
<p>Another factor affecting the pay gap is simply an <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">employee’s initial salary</a>, which is usually higher for men than women for the same job.</p>
<p>California <a href="https://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm">recently passed a law</a> to combat this by prohibiting employers from asking applicants for salary history, and the <a href="https://www.congress.gov/bill/116th-congress/house-bill/7/text?r=2">bill the House just passed</a> would do the same thing. If employers don’t know the prior salaries of applicants, presumably they will offer the same pay to everyone. </p>
<p>This is a good start, but it may not be enough to completely close the wage gap. Even if offered the same salary, men are usually rewarded for negotiating a better salary – while <a href="http://thinkprogress.org/economy/2014/03/19/3416122/texas-republican-pay-gap-negotiate/">women are penalized</a> for doing the same. </p>
<p>Other factors blamed for why women earn less than men include seniority and time off to care for a baby or sick family member, and companies need to take these components into account as well if they wish to eliminate gender disparities in pay. </p>
<p>Putting this all together, pay transparency in and of itself doesn’t necessarily help close the gender pay gap. It creates opportunities for employers to reconsider their current compensation systems but doesn’t mean they’ll necessarily do anything about it. </p>
<p>So while pay transparency is a good idea, on its own it probably won’t be able to eliminate the persistent pay disparities between men and women. More aggressive legislation, such as the recent California prohibition on asking for prior salary or the pending House bill that makes it far more difficult for employers to pay women less than men, is likely needed to combat the persistent gender pay gap. </p>
<p><em>This is an updated version of an <a href="https://theconversation.com/could-knowing-how-much-your-coworker-earns-help-close-the-gender-pay-gap-58570">article</a> originally published on May 1, 2016.</em></p><img src="https://counter.theconversation.com/content/113975/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nancy Modesitt does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Women make about 81 cents for every dollar a man earns, little changed in recent years. Could more pay transparency change that?Nancy Modesitt, Associate Professor of Law, University of BaltimoreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1093572019-02-08T11:32:05Z2019-02-08T11:32:05ZLópez Obrador clashes with courts after vowing ‘poverty’ for Mexican government<figure><img src="https://images.theconversation.com/files/257819/original/file-20190207-174880-ydnlpm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">López Obrader wants to cut salaries for all government workers in Mexico, including himself.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Mexico-Fuel-Theft/af44b632456944778936c2f4902a0db6/60/0">AP Photo/Rebecca Blackwell</a></span></figcaption></figure><p>It’s rare for presidents to advocate for poverty, but that’s just what <a href="https://theconversation.com/andres-manuel-lopez-obrador-was-elected-to-transform-mexico-can-he-do-it-99176">Mexican President Andrés Manuel López Obrador</a> is doing.</p>
<p>At a press conference on Feb. 1, López Obrador said his government would embrace what he called “<a href="https://lopezobrador.org.mx/2019/02/01/version-estenografica-de-la-conferencia-de-prensa-matutina-del-presidente-andres-manuel-lopez-obrador-36/">Franciscan poverty</a>” if it would “transfer funds to the people” and achieve “development, jobs and welfare.” </p>
<p>Francis of Assisi was a Catholic saint who <a href="https://www.friarsofstfrancis.org/the-spirit-of-poverty-of-st-francis-of-assisi/">disdained material wealth</a> to follow Christ as a poor man.</p>
<p>López Obrador’s poverty vow is more bureaucratic than religious. As part of an ambitious effort to fight poverty and reduce government corruption, the president proposed to cut the salaries of public officials, including his own, <a href="https://www.animalpolitico.com/2018/07/amlo-austeridad-corrupcion-puntos/">slash federal budgets</a> and <a href="https://expansion.mx/finanzas-personales/2018/08/01/eres-empleado-de-confianza-asi-te-afectaran-las-decisiones-de-amlo">lay off 70 percent of non-unionized federal workers</a>. An estimated <a href="https://twitter.com/Viri_Rios/status/1018880589850701824">276,290</a> public employees will lose their jobs.</p>
<p>After lawsuits were filed by <a href="https://www.excelsior.com.mx/nacional/la-corte-congela-el-tope-a-salarios-pese-a-resistencia-habra-austeridad-delgado/1283451">opposition political parties</a> and Mexico’s <a href="http://www.cndh.org.mx/sites/all/doc/Acciones/Acc_Inc_2018_105.pdf">National Human Rights Commission</a>, the Supreme Court in December <a href="https://www.scjn.gob.mx/sites/default/files/acuerdos_controversias_constit/documento/2018-12-07/ACU%207-12-18%20ISDAI%20105-18.pdf">granted a temporary suspension</a> of López Obrador’s new <a href="http://www.diputados.gob.mx/LeyesBiblio/pdf/LFRemSP_051118.pdf">Federal Law of Public Servant Salaries</a>. </p>
<p>Saying that even austerity budgets must guarantee the basic functioning of the government, Justice Alberto Pérez Dayán said López Obrador’s plan cannot go into effect until the Supreme Court rules on its constitutionality. </p>
<p>The decision has set up a standoff between the president and the courts, with Mexico’s federal budget and <a href="https://www.proceso.com.mx/570407/el-pueblo-se-cansa-de-tanta-pinche-transa-dice-amlo-confirma-intervencion-ante-scjn-video">judicial independence</a> hanging in the balance.</p>
<h2>Reducing inequality, one tree at a time</h2>
<p>López Obrador and his leftist Morena Party won a <a href="https://centralelectoral.ine.mx/2018/07/08/confirma-ine-resultados-de-eleccion-presidencial-2018/">landslide victory</a> in Mexico’s 2018 general election on promises that they would transform Mexico, empowering the underprivileged in a country with gaping inequality.</p>
<p>Since taking office on Dec. 1, López Obrador has suggested creating some 20,000 jobs in fruit production and wood harvesting by <a href="https://www.excelsior.com.mx/nacional/lopez-obrador-vuelve-a-sus-origenes-presenta-en-tabasco-sembrando-vida/1293984">planting trees</a> on a million acres of land in rural southern Mexico. He has also proposed paying <a href="https://www.excelsior.com.mx/nacional/busca-lopez-obrador-llegar-a-85-millones-de-apoyos-a-adultos-mayores/1289997">small monthly pensions of up to 2,550 pesos</a> – around US$134 – to Mexicans above the age of 68 and to people with <a href="https://lopezobrador.org.mx/2018/12/20/destinara-gobierno-presupuesto-historico-para-personas-con-discapacidad-en-2019-presidente-de-mexico/">disabilities</a> who lack social security benefits.</p>
<p>Leftist governments usually fund social programs like this by raising taxes on the wealthy. López Obrador says he <a href="https://expansion.mx/economia/2018/11/26/estas-son-las-12-promesas-economicas-de-amlo">won’t do that</a>. Instead, his administration hopes to recover public funds by cracking down on <a href="https://books.google.com.mx/books?redir_esc=y&id=0-zmDQAAQBAJ&q=corrupcion#v=onepage&q=corrupci%C3%B3n&f=false">rampant corruption</a> and saving money with <a href="https://elpais.com/internacional/2018/07/16/actualidad/1531708329_222187.html">fiscal austerity</a>. That’s where the salary cuts and mass layoffs come into play.</p>
<p>López Obrador is an <a href="https://lopezobrador.org.mx/2017/11/04/asamblea-informativa-en-susticacan-zacatecas/">admirer of Benito Juárez</a>, the indigenous president who ruled Mexico from 1858 to 1872. Juárez extolled the virtues of selfless public service, <a href="http://www.biblioteca.tv/artman2/publish/1852_153/Discurso_pronunciado_por_Benito_Ju_rez_gobernador_del_estado_de_Oaxaca_ante_la_X_Legislatura_al_abrir_el_primer_periodo_de_sus_sesiones_ordinarias.shtml">saying</a> public servants should “devote themselves to work assiduously while resigning to live in … honorable modesty.”</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/257823/original/file-20190207-174851-1bz67cx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Los Pinos presidential palace in Mexico City is now open to the public.</span>
<span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/e/ea/Los_Pinos%2C_Mexico_2018.jpg">Drkgk/Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>López Obrador flies commercial and has refused to take up residence in the Los Pinos presidential palace, turning it into a cultural center. </p>
<p>He also set his salary at a “<a href="https://www.bloomberg.com/news/articles/2018-12-11/amlo-eyes-salary-of-mexico-supreme-court-head-in-austerity-push">moderate</a>” 108,000 pesos, about <a href="http://www.eluniversal.com.mx/english/amlo-slash-60-his-salary">$5,700 a month</a> – roughly $68,400 a year. That’s 60 percent less than his predecessor, Enrique Peña Nieto, who earned <a href="https://adnpolitico.com/presidencia/2018/07/15/lopez-obrador-fija-en-108-000-el-tope-de-sueldos-para-funcionarios-en-mexico">the equivalent of $14,200 a month</a> in 2018.</p>
<p>The wage gap between average workers and the Mexican head of state was the highest in the world last year, according to a <a href="https://www.ig.com/uk/forex/research/pay-check#/salary">report by the IG Group</a>, a British financial services company. On average, Mexican workers earn around $15,311 a year. </p>
<p>López Obrador’s voluntary pay cut has drastically reduced the difference between his income and <a href="https://www.efe.com/efe/english/life/mexican-households-have-an-average-of-3-8-members-843-in-monthly-income/50000263-2666718">everyone else’s</a>.</p>
<h2>Attacks on the judiciary</h2>
<p>Since <a href="http://www.diputados.gob.mx/LeyesBiblio/pdf/1_270818.pdf">the Mexican Constitution</a> mandates that no public official should make more than the president, however, López Obrador has also effectively capped wages for all government employees. </p>
<p>To his mind, that’s a good thing.</p>
<p>The days of having “a rich government with a poor population” are over, the president <a href="https://aristeguinoticias.com/0812/mexico/quienes-deberian-impartir-justicia-estan-dando-un-mal-ejemplo-amlo/">told a crowd</a> in December. He was speaking in the western state of Nayarit, pledging aid for victims of a recent hurricane. </p>
<p>In the same speech, López Obrador attacked the Supreme Court’s decision to suspend his pay cut plan, accusing Mexican judges – not just Justice Pérez Dayán – of selfishly wanting to keep their salaries and benefits intact. </p>
<p>In fact, <a href="http://www.diputados.gob.mx/LeyesBiblio/pdf/1_270818.pdf">Article 94 of the Mexican Constitution</a> explicitly prohibits reducing the salary of judges at any time during their appointment, a guarantee of judicial independence that <a href="http://www.ordenjuridico.gob.mx/Constitucion/1857.pdf">dates back to 1857</a>.</p>
<p>In 2018, Supreme Court justices earned <a href="https://www.eluniversal.com.mx/nacion/ministros-aceptan-reducir-25-sus-salarios">269,215 pesos</a> – around $14,000 a month. </p>
<p>The Supreme Court has since <a href="https://www.eluniversal.com.mx/nacion/ministros-aceptan-reducir-25-sus-salarios">agreed</a> to take a 25 percent pay cut “in accordance with the new policy of austerity that the presidency has demanded of the Supreme Court of Justice.” That puts their 2019 salaries at about $10,500 a month, not including benefits. </p>
<p>In adopting this measure, the Supreme Court also clarified that, as an independent branch of government directly protected by the Constitution, the judiciary is not bound by the salary standards established by López Obrador. The justices will decide how to implement austerity within the court system. </p>
<h2>Judicial battles ahead</h2>
<p>The Supreme Court is expected to make a definitive ruling on the <a href="https://eljuegodelacorte.nexos.com.mx/?p=9321">two lawsuits challenging the constitutionality</a> of the Federal Law of Public Servant Salaries some time this year. </p>
<p>Over <a href="https://www.eluniversal.com.mx/nacion/mas-de-20-mil-piden-amparo-contra-la-ley-de-salarios">20,000 public servants have also filed individual complaints</a> in federal courts, saying salary cuts violate their labor rights. Under Mexican law, <a href="http://sjf.scjn.gob.mx/sjfsist/Documentos/Tesis/257/257483.pdf">legislation is deemed retrospective</a> – and thus unconstitutional – if it affects the vested rights of individuals. Employers, including the federal government, cannot unilaterally reduce their employees’ wages.</p>
<p>At least <a href="https://elfinanciero.com.mx/nacional/en-38-dias-12-mil-817-trabajadores-despedidos-o-en-vias-de-serlo">12,817 Mexican public servants</a> have already been laid off under López Obrador’s austerity plan. Many of those who have kept their jobs have seen their <a href="https://www.eluniversal.com.mx/cartera/cero-prestaciones-burocratas-eventuales-y-por-honorarios">social security benefits and vacation time</a> eliminated under the new law.</p>
<p>Beyond its questionable constitutionality, López Obrador’s de facto salary cap on public servants does not take into account the expertise, seniority or skills required of high-level positions. Less than $5,700 a month is simply insufficient payment for the most highly skilled workers, Mexican constitutional <a href="http://www.enciclopediagro.org/index.php/indices/indice-de-biografias/102-arteaga-nava-elisur">expert</a> Elisur Arteaga told the newspaper <a href="https://www.razon.com.mx/mexico/juristas-ley-de-salarios-al-vapor-habra-amparos/">La Razon</a> last year. He expects talent will flee the government for the private sector.</p>
<p>Nobody in Mexico thought that transforming the country would be easy when they voted López Obrador into office. To <a href="https://elpais.com/elpais/2018/11/28/opinion/1543428474_358305.html">paraphrase Mexican pundit Jesús Silva-Herzog</a>, fixing Mexico’s bloated and corrupt government was work for a surgeon with a scalpel. </p>
<p>López Obrador, it’s becoming clear, prefers a machete.</p><img src="https://counter.theconversation.com/content/109357/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In 2002, Luis Gómez Romero contributed to a constitutional amendment aimed at establishing that no public servant can receive remuneration higher than that established of the President of Mexico, which later became law.</span></em></p>Mexico’s new president has reduced his own salary and demanded that all federal workers
– including lawmakers and judges – take a massive pay cut, too. That may be illegal.Luis Gómez Romero, Senior Lecturer in Human Rights, Constitutional Law and Legal Theory, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1091282019-01-29T11:46:01Z2019-01-29T11:46:01ZWhy women still earn a lot less than men<figure><img src="https://images.theconversation.com/files/255915/original/file-20190128-42594-1fww6zi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Women earn less than men in most occupations, including soccer. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Gender-Pay-Gap/9a24d93c03e3434a9890915aa632745b/27/0">AP Photo/Jessica Hill</a></span></figcaption></figure><p>A decade ago, on Jan. 29, 2009, newly inaugurated President Barack Obama signed his first bill into law: the <a href="https://www.eeoc.gov/eeoc/publications/brochure-equal_pay_and_ledbetter_act.cfm">Lilly Ledbetter Fair Pay Act of 2009</a>. </p>
<p>It was the latest legislative effort to close the persistently stubborn gap between how much women and men earn. At the time, <a href="https://www.pay-equity.org/info-time.html">women made just 77 cents</a> of every dollar men earned – a level that hadn’t improved all that much since the 1990s, according to Census data. </p>
<p>While existing laws already prohibited gender-based wage discrimination, the Ledbetter Act gave workers more time to sue employers over the issue. And the hope was that it would make a big difference. </p>
<p>So did it? </p>
<p><a href="https://cjgl.cdrs.columbia.edu/article/en-gendering-economic-inequality/">My research</a> explores the legal hurdles that have prevented women from achieving pay equity with men. Now, 10 years after the act was passed, more work still needs to be done. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=442&fit=crop&dpr=1 600w, https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=442&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=442&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=555&fit=crop&dpr=1 754w, https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=555&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/255917/original/file-20190128-108348-1vhrix7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=555&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Obama hands out pens after signing the Lilly Ledbetter Fair Pay Act.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Obama-Equal-Pay/72e5bc86c220491b8120e49e51e34a6c/44/0">AP Photo/Ron Edmonds</a></span>
</figcaption>
</figure>
<h2>Ledbetter’s complaint</h2>
<p>The Ledbetter Act overturned a <a href="https://www.oyez.org/cases/2006/05-1074">Supreme Court case</a> that ruled against Lilly Ledbetter, who worked as an area manager at Goodyear Tire and Rubber for more than 19 years. Over time, her pay slipped until she was earning 15 percent to 40 percent less than her male counterparts.</p>
<p>When an <a href="https://www.self.com/story/lilly-ledbetter-equal-pay-interview">anonymous note tipped her</a> off about the extent of the disparity, Ledbetter filed a pay discrimination complaint under <a href="https://www.eeoc.gov/laws/statutes/titlevii.cfm">Title VII of the Civil Rights Act of 1964</a>, a statute prohibiting employment discrimination on the basis of sex, race, color, national origin and religion. A jury found in her favor and awarded more than US$3.5 million in damages.</p>
<p>The case was appealed all the way to the Supreme Court, which in 2007 <a href="https://www.nytimes.com/2007/05/29/washington/30scotuscnd.html">ruled 5-4</a> that employees must file a complaint within 180 days after their employer makes a pay decision. The fact that the discrimination was embedded in each paycheck and that Ledbetter didn’t know of the disparity for many years did not matter. Time had run out on her claim. </p>
<p>In a <a href="https://supreme.justia.com/cases/federal/us/550/618/#tab-opinion-1962369">vehement dissent</a> read from the bench, Justice Ruth Bader Ginsburg noted that the ruling denied workplace realities. She pointed out that since employees often lack information about pay disparities, which can accumulate slowly over time, they shouldn’t be given such a narrow window in which to file a complaint. </p>
<p>Ultimately, the 111th Congress and President Obama agreed with Justice Ginsburg and nullified the decision. The <a href="https://www.eeoc.gov/eeoc/publications/brochure-equal_pay_and_ledbetter_act.cfm">Ledbetter Act</a> makes clear that the statute of limitations for filing a wage discrimination claim resets with each discriminatory paycheck.</p>
<h2>A disappointing impact</h2>
<p>The law’s impact, however, has been disappointing. </p>
<p>The rate of new wage discrimination cases <a href="https://awl-ojs-tamu.tdl.org/awl/index.php/awl/article/view/11">hasn’t budged</a>, primarily because employees still <a href="http://jlsp.law.columbia.edu/wp-content/uploads/sites/8/2017/03/46-Lyons.pdf">lack information</a> about their co-workers’ pay. Salary discussions <a href="https://www.washingtonpost.com/news/on-leadership/wp/2015/05/05/why-is-it-still-so-taboo-to-talk-about-what-we-make/?utm_term=.56906df6b12d">are taboo</a> in most workplaces, and some employers, like Ledbetter’s, <a href="https://supreme.justia.com/cases/federal/us/550/618/#tab-opinion-1962369">forbid it</a>. </p>
<p>Put simply, a woman can’t file a complaint if she doesn’t know she’s being shortchanged. </p>
<p>Title VII wage claims are hard to prove for other reasons too. Title VII generally requires proof that employers acted with discriminatory intent. However, much discrimination in today’s workplace is not intentional but fueled by <a href="http://theconversation.com/to-achieve-gender-equality-we-must-first-tackle-our-unconscious-biases-92848">unconscious gender stereotypes</a>. </p>
<p>For instance, studies show that <a href="https://georgetownlawjournal.org/articles/220/shifting-sands-of-employment">workers receive better performance evaluations</a> when they conform to gender stereotypes, such as dominance for men and passivity for women. In <a href="http://dx.doi.org/doi:10.2189/asqu.2010.55.4.543">one study</a>, participants were asked to award merit-based bonuses to fictional employees with identical personnel files. Men got higher bonuses than women.</p>
<p>The bottom line: Women today <a href="https://www.census.gov/library/publications/2017/demo/p60-259.html">earn about 80 cents</a> for every dollar men make earn, up just a few cents since 2009. </p>
<p>And for women of color, the <a href="https://www.aauw.org/research/the-simple-truth-about-the-gender-pay-gap/">gap is even starker</a>. Latinas earn 52 cents to the dollar of white men, while African American women earn just 61 cents. Within racial groups, a <a href="https://www.aauw.org/app/uploads/2020/12/SimpleTruth_2.1.pdf">pay gap between men and women persists</a>, although it is narrower. </p>
<p><iframe id="h4yVt" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/h4yVt/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Narrow interpretations</h2>
<p>Of course, employees who believe they are being discriminated against based on gender can also turn to the <a href="https://www.eeoc.gov/laws/statutes/epa.cfm">Equal Pay Act</a>. This act, signed into law in 1963 when women earned only 60 cents for every dollar men earned, does not require a showing of employer intent to discriminate. </p>
<p>The act was the first to <a href="https://www.eeoc.gov/laws/statutes/epa.cfm">prohibit employers</a> from paying men more than women who perform equal work. </p>
<p>The pay gap has since narrowed by about 20 cents, but not because of anti-discrimination laws. The <a href="http://www.pewresearch.org/fact-tank/2018/04/09/gender-pay-gap-facts/">main drivers</a> have been women’s increased educational attainment and entry into the workforce. </p>
<p>The Equal Pay Act hasn’t been effective because <a href="https://digitalcommons.law.umaryland.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=3789&context=mlr">courts read the law narrowly</a>. They generally require that women plaintiffs identify a man with an identical job and resume for comparison. Given that men and women are tracked into different occupations, this can often be impossible.</p>
<p>Moreover, both Title VII and the Equal Pay Act allow employers to defend pay differentials on the basis of “any factor other than sex.” For example, <a href="https://www.nwlc.org/sites/default/files/pdfs/FactorOtherThanSex.pdf">courts have permitted</a> a limitless array of employer excuses for paying women less that are themselves rooted in gender bias, such as women’s weaker salary bargaining skill, lesser management potential or lower prior salary history.</p>
<p>These statutory interpretations may sound technical, but they matter. <a href="https://www.aauw.org/resource/the-simple-truth-about-the-gender-pay-gap/">They help explain why</a> the gap appears stuck at 80 cents and why <a href="https://www.weforum.org/agenda/2019/01/fairer-tech-industry-for-women-gillian-tans/">some estimate</a> it’ll be <a href="https://iwpr.org/new-census-data-shows-that-the-gender-wage-gap-is-not-closing/">at least until 2059</a> until pay equity in the United States is reached. </p>
<h2>Why it persists</h2>
<p>Another reason the gap is so stubborn is that men and women are steered into <a href="https://digitalcommons.ilr.cornell.edu/key_workplace/1587/">different occupations</a>, and <a href="https://www.washingtonpost.com/graphics/2017/business/women-pay-gap/?utm_term=.39c84976f2ff">male-dominated occupations pay more</a> for comparable work.</p>
<p>Even within a traditionally male field such as computer programming, women are paid less. And, as women move into a field, the <a href="https://www.nytimes.com/2016/03/20/upshot/as-women-take-over-a-male-dominated-field-the-pay-drops.html">entire occupation’s wages sink</a>. </p>
<p>Importantly, economists have found that <a href="https://www.nber.org/papers/w21913">discrimination feeds</a> as much as 38 percent of the gender gap. </p>
<p>Skeptics of the gender gap argue that it results from <a href="https://www.forbes.com/sites/karinagness/2016/04/12/dont-buy-into-the-gender-pay-gap-myth/#646a68e62596">women’s choices to work fewer hours</a> and stay home to raise children. </p>
<p>It’s true, women bear a <a href="https://www.nytimes.com/2017/05/13/upshot/the-gender-pay-gap-is-largely-because-of-motherhood.html">larger responsibility for child rearing</a> and thus may cut back their hours or take time off from the workplace – especially because the United States is the <a href="https://www.washingtonpost.com/news/wonk/wp/2018/02/05/the-worlds-richest-countries-guarantee-mothers-more-than-a-year-of-paid-maternity-leave-the-u-s-guarantees-them-nothing/?utm_term=.a869fcb0e722">only developed country without paid maternity leave</a> and child care is <a href="https://cdn.americanprogress.org/wp-content/uploads/2016/06/17091517/ChildCareCalculator-methodology.pdf">expensive</a>. </p>
<p>But while mothers face a “<a href="http://gap.hks.harvard.edu/getting-job-there-motherhood-penalty">motherhood penalty</a>” in opportunities and pay, fathers reap a “<a href="https://www.nytimes.com/2014/09/07/upshot/a-child-helps-your-career-if-youre-a-man.html">fatherhood bonus</a>.” </p>
<p>And so-called “choices” cannot explain why female <a href="https://www.aauw.org/research/graduating-to-a-pay-gap/">recent college graduates</a> are paid 82 percent of their male counterparts or why the gap widens at the top. Professional women with advanced degrees who work full-time face a <a href="https://www.aauw.org/aauw_check/pdf_download/show_pdf.php?file=The_Simple_Truth">gender gap of 74 percent</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=320&fit=crop&dpr=1 600w, https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=320&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=320&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=402&fit=crop&dpr=1 754w, https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=402&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/255920/original/file-20190128-39344-sc7l4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=402&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The American Association of University Women meets with John F. Kennedy as he signs the Equal Pay Act into law.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Equal_Pay_Act_of_1963#/media/File:American_Association_of_University_Women_members_with_President_John_F._Kennedy_as_he_signs_the_Equal_Pay_Act_into_law.jpg">Abbie Rowe/JFK Presidential Library and Museum</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Closing the gender gap</h2>
<p>Closing the gender pay gap is not rocket science – even though recently graduated female rocket scientists <a href="https://www.nsf.gov/statistics/2018/nsf18304/data/tab48.pdf">earn 89 cents on the dollar</a> to their male peers. </p>
<p>Steps that would help include prohibiting employers from using salary history in setting wages, banning employer retaliation against employees who share wage information, providing greater transparency in pay, and revising Title VII and the Equal Pay Act to better address workplace realities.</p>
<p>The proposed <a href="https://www.refinery29.com/en-us/2017/05/153829/what-is-the-paycheck-fairness-act-gender-wage-gap">Paycheck Fairness Act</a> – introduced repeatedly in Congress since 1997 but never passed – would codify many of these remedies at the federal level. And the <a href="https://www.nbcnews.com/politics/white-house/trump-killed-obama-s-equal-pay-rule-what-it-means-n797941">Trump administration suspended</a> an Obama-era requirement that employers report extensive pay data. </p>
<p>While federal efforts stall, several states, including California, Oregon, Massachusetts, Maryland and New Jersey, <a href="http://www.ncsl.org/research/labor-and-employment/equal-pay-laws.aspx">have passed their own laws</a> to close the gap. </p>
<p>The economic gains from closing the gender pay gap are huge. Doing so <a href="https://iwpr.org/publications/impact-equal-pay-poverty-economy/">would add about $513 billion</a> to the economy because of the extra income generated, <a href="https://iwpr.org/wp-content/uploads/2017/04/C455.pdf">reduce poverty</a> and do a lot to support American families since mothers are the <a href="https://iwpr.org/wp-content/uploads/wpallimport/files/iwpr-export/publications/Q054.pdf">sole or primary breadwinners</a> in about half of them.</p>
<p>Passing the Lilly Ledbetter Act was a start, and now we owe it to American workers to enact laws that close the gap once and for all.</p><img src="https://counter.theconversation.com/content/109128/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michele Gilman is affiliated with the ACLU of Maryland and the Women's Law Center of Maryland.</span></em></p>A decade ago, President Obama signed the Lilly Ledbetter Fair Pay Act, the latest legislative effort to close the persistent gap between how much women and men earn. Here’s why it hasn’t made much of a difference.Michele Gilman, Venable Professor of Law, University of BaltimoreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1026822018-09-05T10:32:18Z2018-09-05T10:32:18ZWage Councils could address endemic pay inequality in the UK economy<p>The UK has an endemic <a href="https://www.gov.uk/government/news/low-pay-and-progression-in-the-labour-market">low-pay</a> culture. A new report backed by business leaders and the Archbishop of Canterbury says Britain’s <a href="https://www.theguardian.com/business/2017/sep/05/uk-economic-model-archbishop-of-canterbury">economic model is “broken”</a> and produces widespread inequality. Around <a href="https://www.jrf.org.uk/blog/tuesday%E2%80%99s-spring-statement-opportunity-right-wrong-work-poverty">8m people</a> in poverty now live in working households. Many workers are trapped in low-skilled, precarious jobs, with poor wages and working conditions. </p>
<p><a href="http://www.research.mbs.ac.uk/ewerc/Portals/0/Documents/Comparative-Report-Reducing-Precarious-Work-v2.pdf">“Precarious work”</a> has expanded to include <a href="https://theconversation.com/uk/topics/zero-hour-contracts-13632">zero-hour</a> contract staff, agency and gig economy workers with uncertain hours, volatile earnings and job insecurity. But workers with permanent jobs also struggle to make ends meet as living costs bite. </p>
<p>The UK desperately needs a more robust system to lift standards and protect low earners and those who may feel marginalised and whose rights are virtually non-existent. This is where Wage Councils could come in.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1037251046723256320"}"></div></p>
<p>Despite the national minimum wage (for 16- to 24-year-olds) and national living wage (for over-25s) rates, many people in low paid sectors struggle with rising living costs. It has been <a href="https://www.livingwage.org.uk/news/news-living-wage-foundation-welcomes-pay-rise-uk%E2%80%99s-poorest-workers-urges-employers-go-further">estimated</a> that those earning the national living wage still need to work an additional six weeks a year to cover basic expenses. The government recently identified <a href="https://www.independent.co.uk/news/uk/home-news/minimum-wage-companies-pay-least-list-uk-government-a8433936.html">240 organisations</a> violating these rates including hairdressers, pubs, care homes and sports clubs. </p>
<p><a href="https://www.livingwage.org.uk/living-wage-foundation">The Living Wage Foundation </a> now encourages employers to pay workers a higher living wage of £8.75 an hour (or £10.20 in London). This living wage aims to give workers basic, but acceptable, living standards. Over 4,400 UK organisations pay it, but on a voluntary basis. <a href="https://www.emeraldinsight.com/doi/full/10.1108/ER-04-2017-0083">Research shows living wage</a> regulation can uplift earnings, improve community mobilisation and support better corporate responsibility. </p>
<h2>What are Wage Councils?</h2>
<p>There is a case for Wage Councils to help address in-work poverty in low paid sectors (such as retail, hospitality, hairdressing, social and health care, childcare and cleaning). A Wage Council would be made up of industry (employer and union) and independent members. They would have statutory powers to monitor minimum/living wage rates, health and safety and other working conditions.</p>
<p>Wage Councils are not new. <a href="http://researchbriefings.files.parliament.uk/documents/SN06897/SN06897.pdf">Trade Boards</a> were established under the Trade Boards Act 1909, to set minimum wages for sweated trades like tailoring, where workers worked long hours for little pay. Trade Boards became known as Wage Councils under the <a href="http://shura.shu.ac.uk/18742/1/RHargreaves_2017_LLMR_DevelopmentsofMinimum.pdf">Wages Councils Act 1945</a> and their powers expanded to regulate pay, hours and holidays for various sectors. </p>
<p>The act was repealed by Margaret Thatcher’s <a href="http://www.legislation.gov.uk/ukpga/1986/48/pdfs/ukpga_19860048_en.pdf">Wages Act 1986</a>, which decreased Wage Council power and scope. Thatcher promoted pay flexibility, profit-related pay and decentralised pay bargaining. John Major’s <a href="https://www.legislation.gov.uk/ukpga/1993/19/contents">Trade Union Reform and Employment Rights Act 1993</a> then abolished most of the surviving Wage Councils. </p>
<p>Labour recently pledged to reinstate the <a href="https://www.theguardian.com/environment/2018/jul/22/labour-promises-reinstate-agricultural-wages-board">Agricultural Wages Board</a> in England to set minimum pay levels and other working conditions for farmers – as <a href="https://beta.gov.wales/sites/default/files/publications/2018-06/agricultural-wages-guidance.pdf">still exist</a> in Wales, Scotland and <a href="https://www.daera-ni.gov.uk/articles/awb-agricultural-rates-pay-orders-and-reports">Northern Ireland</a>. These boards comprise independent members, and employee (union) and employer (farmer) representatives. They set minimum wages and sick pay/holiday entitlements and offer a template for Wage Councils for other lower paid sectors. </p>
<h2>A voice for the disenfranchised</h2>
<p>Wage Councils are democratic and efficient bodies. They could yield societal benefits by reducing in-work poverty and providing a voice for disenfranchised groups. They can expose the widening worker-executive pay discrepancies more efficiently than <a href="https://www.gov.uk/government/news/uks-biggest-firms-will-have-to-justify-pay-gap-between-bosses-and-their-workers">recent legislation</a> by forcing CEOs in large companies to justify their salaries. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/234994/original/file-20180905-45158-32nofs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Workers in the gig economy would benefit from having representatives on a Wage Council.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bristol-uk-march-6-2015-deliveroo-790184341?src=eW5EJ1TndXFfWskSj9Jdhg-1-3">Shutterstock/1000words</a></span>
</figcaption>
</figure>
<p>If they were introduced, it is likely that worker productivity would increase in line with the <a href="http://blog.press.princeton.edu/wp-content/uploads/2013/10/camerer-chapter-16.pdf">“fair wage effort hypothesis”</a> which explains that if a pay discrepancy exists which workers perceive as unfair, then workers may simply withdraw their effort. Research by the employers’ body, the CIPD, found that <a href="https://www.cipd.co.uk/about/media/press/110117financialwellbeing">one-in-four</a> employees perform poorly at work because of financial concerns. This can lead to less cooperation among workers, low productivity, and bad employee behaviour in response to a lack of empowerment and resources to contest inequality. </p>
<p>Wage Councils could support the goals of broader <a href="http://www.research.mbs.ac.uk/ewerc/Portals/0/Documents/human-development-report.pdf">socioeconomic</a> human development in line with the <a href="http://www.ilo.org/global/topics/sdg-2030/lang--ja/index.htm">International Labour Organisation’s objective</a> to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. </p>
<p>Income inequality can hamper durable economic growth and may fuel a financial crisis as <a href="https://blogs.imf.org/2017/02/22/the-imfs-work-on-inequality-bridging-research-and-reality/">low-medium</a> income households engage in excessive borrowing. <a href="https://www.imf.org/en/News/Articles/2015/09/28/04/53/soint061412a">Economists</a> have argued that income inequality was a fundamental driver of the financial crash. </p>
<p>These councils may even help address the UK’s <a href="https://www.theguardian.com/commentisfree/2017/oct/29/the-guardian-view-on-the-productivity-puzzle-blame-low-pay">dilemma</a> over how to raise productivity. They would support workforce engagement by providing a voice to marginalised workers on the fringe of the labour market in lower paid sectors.</p>
<p>They may also reduce tax subsidies for in-work benefits like tax credits. Citizens UK research estimated that taxpayers are subsidising the low-pay culture in big businesses to the tune of <a href="http://www.citizensuk.org/taxpayer">£11 billion</a> a year. </p>
<p>Wage Councils could help deliver a fairer deal for the low paid but they need a proper system of enforcement which would enable them to take meaningful action against employers who violate the conditions they set down. They must also be combined with other sustainable economy initiatives, such as creating more <a href="https://www.theguardian.com/society/2018/may/07/why-a-jobs-guarantee-would-benefit-us-all">good quality</a> and secure jobs. </p>
<p>It is now time government and policy makers began looking at how to use the Agricultural Wages Board as a template for a national Wage Councils policy. These councils would benefit workers, employers and society and help repair the UK’s “<a href="https://www.theguardian.com/business/2017/sep/05/uk-economic-model-archbishop-of-canterbury">broken</a>” economic model.</p><img src="https://counter.theconversation.com/content/102682/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The UK desperately needs a more robust system to lift standards in low paid sectors and protect workers.Emma Sara Hughes, Lecturer in HRM, University of LiverpoolTony Dundon, Professor of HRM & Employment Relations, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/848912017-10-25T22:48:14Z2017-10-25T22:48:14ZClosing the immigrant wage gap: Is speaking English important?<figure><img src="https://images.theconversation.com/files/191700/original/file-20171024-30556-yo1lpq.jpg?ixlib=rb-1.1.0&rect=425%2C112%2C3985%2C3081&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New census data gives insight into Canada's immigrant population, including how English language proficiency can impact wages. Here, a group of new Canadians take part in a citizenship ceremony in Ottawa in September.</span> <span class="attribution"><span class="source">(THE CANADIAN PRESS/Sean Kilpatrick)</span></span></figcaption></figure><p>Statistics Canada has released <a href="http://www12.statcan.gc.ca/census-recensement/2016/as-sa/98-200-x/2016017/98-200-x2016017-eng.cfm">new data</a> from the 2016 census that shows more than any other G8 country, Canada is a nation of immigrants. One in five Canadians (21.9 per cent to be exact) were born in another country.</p>
<p>Immigration is a significant component of Canada’s population growth and evolving demographic composition. The census data shows more than 1.2 million new immigrants came to Canada between 2011-16. Immigrants are also typically younger and more educated than the average Canadian.</p>
<p>Not surprisingly then, immigration is often touted as a necessary condition for <a href="https://www.thestar.com/news/immigration/2016/10/06/increased-immigration-urged-to-support-economic-growth-amid-aging-population.html">sustained economic prosperity</a>. And yet in spite of their ostensible importance to the Canadian economy, immigrants themselves have yet to catch up to other Canadians in terms of economic outcomes.</p>
<p>Economists refer to this catching up as “economic assimilation” and often measure it using the “native-immigrant wage gap” — the difference between the average wages of immigrants and those whose families have been here at least three generations. The persistence of this wage gap is a feature common to economies in the Western world that rely heavily on immigration.</p>
<p>As an economist and a child of immigrants myself, I was curious to delve into the census data to understand how this gap has evolved over time and across major cities in Canada — and to get a hint of what may be at the root of it. </p>
<p>The first thing that surprised me is the gap has not changed much over the past 10 years. Census data from 2006 showed, at a national level, first-generation immigrants earned wages 12.6 per cent less than the average wage of native Canadians. In 2011, the gap dropped slightly to 10 per cent, but the new census data shows it’s climbed significantly to 16 per cent.</p>
<p><iframe id="Q4H3x" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Q4H3x/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Importantly, the gap is a countrywide phenomenon. Looking at the three of the most popular destinations for immigrants in the past decade — Toronto, Vancouver and Calgary — the gap in 2016 sits at 25, 17 and 23 per cent respectively.</p>
<p>Interestingly, the gap doesn’t only exist for first-generation immigrants, but also for the children of immigrants (second generation, i.e. Canadians born to immigrant parents). The new data shows at the national level, second-generation immigrants earn 5.4 per cent less than natives. </p>
<h2>Understanding the wage gap</h2>
<p>The obvious question that follows then is: What is the source of these gaps? </p>
<p>Canada is an especially interesting case given the <a href="http://www.cic.gc.ca/english/express-entry/grid-crs.asp">“points” system</a> used to screen potential immigrants, where language, education and job skills are key determinants. And for the first time, the census has reported that about six out 10 new immigrants came here under the so-called economic admission category, meaning they have the skills “to enhance and promote economic development.”</p>
<p>Given the way immigrants are screened before entry, one would expect relatively quick integration into the Canadian economy and a convergence in wages. But this is clearly not the case.</p>
<p>The reasons put forward to explain the wage gap range from employer difficulty in assessing immigrant education credentials to outright discrimination. Economists refer to two types of “discrimination” in the labour market context, “<a href="http://www.dictionaryofeconomics.com/article?id=pde2009_S000544">statistical discrimination</a>” and “<a href="http://www.dictionaryofeconomics.com/article?id=pde2009_T000251">taste-based discrimination</a>.”</p>
<p>In the former, employers use observable traits (such as race) to make inferences about something like productivity. For example, an employer sees a job applicant with brown skin. The employer isn’t prejudiced towards brown people, but is worried (stereotypically) the employee is going to want to take trips “home” to Sri Lanka and would need a lot of vacation time. So the employer hires someone else equally qualified. Taste-based discrimination is more what we think of as prejudice — not wanting to hire someone purely because of skin colour.</p>
<p>Identifying causal factors that explain the wage gap is a difficult task - individuals who immigrate to Canada do so by choice. These choices are a function of a host of factors that could potentially jointly explain the decision to immigrate and labour market outcomes, including personal characteristics, job experience and education, to name just a few. Identifying discrimination in the labour market, and separating between taste-based and statistical discrimination, is even harder.</p>
<p>However, a 2011 <a href="http://oreopoulos.faculty.economics.utoronto.ca/wp-content/uploads/2014/03/Why-Do-Skilled-Immigrants-Struggle-in-the-Labor-Market.pdf">study by University of Toronto economist Phil Oreopolous</a> takes an important step in this direction.</p>
<p>In the study, thousands of computer-generated resumes were mailed out to companies that had posted ads searching for employees. The resumes were randomly assigned either a foreign or a “white” sounding last name, and were otherwise identical. The result: The resumes where the applicant had a foreign-sounding last name were less likely to receive a call back than identical looking resumes with a “white” last name.</p>
<p>When the author followed up with some of the recruiters, the overwhelming reason given for overlooking resumes with a foreign-sounding name was that they anticipated difficulty with language. Specifically, recruiters expected a lack of fluency in English, problems with communicating at work and difficulty for customers and co-workers in understanding a foreign accent. In other words, recruiters were statistically discriminating between job candidates based on their names.</p>
<h2>Can language proficiency close the gap?</h2>
<p>The census presents an opportunity to study the importance of English proficiency for the gap in labour market earnings between immigrants and native Canadians in 2016. The census provides information on wages, immigrant (and generation) status, as well as the language most commonly spoken at home. </p>
<p>Specifically, guided by the findings in Oreopolous’s study, I looked at how the gap in average wages changes when English is spoken at home. (For the purpose of this study, I looked at communities outside of Quebec, where French is the dominant language.) In 2016, 63 per cent of new immigrants living outside of Quebec most often spoke a language other than English or French while at home.</p>
<p>The latest census data says the native-first generation immigrant wage gap is 16 per cent at the national level. Once we examine whether immigrants speak English at home, things change — the wage difference is just 5.8 per cent. But for first-generation immigrants who don’t speak English at home, the gap jumps to 27.3 per cent.</p>
<p>For second-generation immigrants, there is barely any gap for those who speak English at home (0.7 per cent) but it’s still a significant gap for those who don’t speak English at home (a whopping 45.7 per cent).</p>
<p>This pattern also holds in the major metropolitan centres in the English-speaking parts of the country, which attract the most immigrants. </p>
<p>Interestingly, at almost 25 per cent, Toronto has one of the largest city level wage gaps in the country, explained at least in part by the fact that new immigrants tend to land in Toronto first and are more likely to be unemployed for a period of time. The three largest cities in English-speaking Canada, which also attract the most immigrants, also have gaps larger than the national average.</p>
<p>In Ottawa, immigrants of either generation who speak English at home actually earn more than natives on average. While it may be tempting to attribute the major differences across the cities to differences in culture, they are more likely due to regional differences in industrial composition and attendant labour demand. </p>
<p>The wage gap for immigrants who don’t speak English at home is very large. In Toronto and Calgary, first-generation immigrants who don’t speak English at home can expect to earn 37 per cent less than natives. Perhaps even more interesting is the fact that the gap across all cities for is larger for second generation immigrants who don’t speak English at home. </p>
<p><iframe id="Iaq0Y" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Iaq0Y/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Though these patterns are striking, they should not be interpreted as causal – immigrants can’t necessarily start speaking English at home and expect to see their future earnings increase. There are unobserved qualities of individuals that may correlate both with the tendency to speak English at home as well as with labour market earnings potential. Without holding these fixed in some way, we can’t say whether there is a causal relationship between English skills and the gap in labour market outcomes. </p>
<p>But supposing that the findings here are suggestive of a causal relationship, why does speaking English at home matter so much?</p>
<p>One obvious answer is that individuals who speak English at home speak better English in general — and this would mean better communication at work. This would be consistent with the worries that the recruiters in Oreopolous’s study had when deciding who to call back. Or perhaps individuals of foreign descent that speak English at home tend to have other important skills on average.</p>
<p>But another possibility is the labour market discriminates against individuals with weaker English skills even when English is not important for productivity. Sorting between these different explanations (and others) will require more data and a deeper look.</p><img src="https://counter.theconversation.com/content/84891/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arvind Magesan receives funding from Social Sciences and Humanities Research Council (SSHRC).</span></em></p>New census data provides a chance to understand why immigrants earn lower wages than Canadians who have been here for many generations. Whether immigrants speak English at home may be a clue.Arvind Magesan, Associate Professor of Economics, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/797562017-06-22T20:04:42Z2017-06-22T20:04:42ZHow to ask for a pay rise<figure><img src="https://images.theconversation.com/files/175152/original/file-20170622-3049-1pgpsne.jpg?ixlib=rb-1.1.0&rect=1%2C56%2C998%2C473&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Despite what RBA chief Philip Lowe says, asking for a pay rise isn't so simple for many employees. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>When Reserve Bank governor <a href="http://www.rba.gov.au/speeches/2017/sp-gov-2017-06-19.html">Philip Lowe argued that the real source</a> of workers’ unhappiness was an unwillingness to lobby for higher wages, he overlooked a key tenet of negotiation: we negotiate most successfully when we have highly valued (and scarce) skills. </p>
<p>Negotiation is all about who has the power. If your skills are not in high demand or are readily found elsewhere, you have less power. It would be unrealistic, for example, to suggest a secondary school student working on an hourly rate, or a semi-skilled factory worker whose industry is in decline, is able to negotiate higher wages. </p>
<p>To assert, as Lowe has, that the low jobless rate should encourage workers to ask for higher wages ignores the possibility that the jobless rate is not evenly distributed across sectors. You would only know who had the power to negotiate if you found out where the demand for skills was, sector-by-sector. </p>
<p>If you have skills in high demand, you should be able to negotiate a personalised employment contract that offers you a mix of economic and other benefits based on your skills. Much of the advice about renegotiating employment contracts is aimed at people who have skills to offer. </p>
<p>You can make your case for a pay rise by highlighting your unique skills and contributions to the organisation. You should provide a well-reasoned case for increased wages and explore some non-economic ways to enhance your overall remuneration package. A caveat on this approach is that it works better for men than for women, who violate the <a href="http://journals.sagepub.com/doi/pdf/10.1177/0149206311431307">stereotype-based expectations</a> that they display warmth and concern when they ask.</p>
<p>However, if your skills are the type that’s found elsewhere, a different strategy is called for. The traditional advice is to build your negotiating power by identifying alternative options, so you’re less dependent on your current employer. </p>
<p>The risk with this is your employer may decide they also have many alternatives and may be willing to lose an employee who asks for a wage increase. So the usual advice for these employees is to build alliances to strengthen their position – in short, <a href="https://theconversation.com/au/topics/collective-bargaining-9125">collective bargaining</a>. </p>
<h2>The big ask</h2>
<p><a href="https://hbr.org/2015/11/be-your-own-best-advocate;%20https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer;%20https://hbr.org/2016/06/how-to-negotiate-for-yourself-when-people-dont-expect-you-to">Here are some practical tips</a> for negotiating a pay rise. </p>
<p><strong>Prepare</strong></p>
<p>Start from the perspective that more of the world is negotiable than you might expect. Be clear about what you want. Help the other person to understand what you want and why you want it. </p>
<p>Do your homework. Gather information about what is a reasonable pay rise and use this information to develop a strong rationale for your request. </p>
<p><strong>Build the relationship</strong></p>
<p>We are better able to influence others when they like us. You should establish a rapport with whomever you’re asking. Try to send them signals that you’re trustworthy and approachable. This will not only help you now but down the track. </p>
<p>Be sure that you don’t damage your relationships when tensions surface in a negotiation. Rather than respond negatively or competitively, use points of tension to gather more information about your boss’s rationale.</p>
<p><strong>Show them you’re listening</strong> </p>
<p>Understanding the other person’s concerns and constraints usually results in better outcomes for both negotiators. If your boss doesn’t agree with your proposal, try to understand if something is holding him or her back. Are there external constraints that make it difficult for them to agree? </p>
<p>Frame your requests from the other person’s perspective. How will agreeing to your pay rise benefit them? And try to understand the reasons behind their questions. </p>
<h2>The moral question</h2>
<p>In the absence of a strong collective voice, recent research suggests that low-power workers may improve their outcomes if they elicit concern from their employers by, for example, <a href="http://psycnet.apa.org/journals/apl/100/6/1847/">expressing sadness</a> or <a href="http://www.sciencedirect.com/science/article/pii/S0749597815000990">seeking sympathy</a>. Appealing to an employer’s emotions may make them more open to renegotiating wages, because it shifts the framing of the request from a pragmatic (economic) perspective to a moral one. </p>
<p>Lowe’s comment actually raises a broader moral question: where does the onus for fair compensation lie? Placing responsibility on employees is likely to disadvantage the already disadvantaged: groups such as women, who are reluctant to ask and who are derogated when they do. </p>
<p>So perhaps organisations, which have a duty of care towards their employees, bear some of the responsibility for ensuring fair compensation. Employment relationships are underpinned by a social (psychological) contract and the expectation that each party will “do right” by the other. </p>
<p>At a time when company profit shares are at an all-time high and wages growth is flat, perhaps organisations should think a little harder about their side of the social contract.</p><img src="https://counter.theconversation.com/content/79756/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mara Olekalns receives funding from the Australian Research Council</span></em></p>Building negotiating power is crucial for anyone looking to ask for a pay rise. But for those who can’t, perhaps it’s the employers’ responsibility to ensure fair compensation.Mara Olekalns, Professor of Management - Negotiations, Melbourne Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/703902017-01-19T03:32:34Z2017-01-19T03:32:34ZAussie rules football still has a way to go to be considered ‘feminist’<figure><img src="https://images.theconversation.com/files/152467/original/image-20170111-29599-ifixfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Establishing unique voices from various female perspectives will help create a united front on issues of specific female concern.</span> <span class="attribution"><span class="source">Dean Lewins/AAP</span></span></figcaption></figure><p>There was some unwitting irony in the commentary about the growth of women’s AFL in 2016, when Penny Cula-Reid was given credit for her contribution. Herald Sun journalist Paul Amy <a href="http://www.heraldsun.com.au/leader/localfooty/penny-culareid-picked-up-in-afl-womens-draft-13-years-after-helping-get-girls-league-set-up/news-story/9e692e5cca813aa74a53b86cc6079014">explained</a>:</p>
<blockquote>
<p>She’ll be a trailblazer in 2017 just as she was almost 15 years ago when, as a schoolgirl, she went to the Victorian Civil and Administrative Tribunal and effectively forced AFL Victoria to create a youth girls’ competition. </p>
</blockquote>
<p>This was not a case about participation in a newly developed girls’ junior league – it was a case about the continued participation in an established junior Aussie rules league with the club Cula-Reid had played with since the age of six.</p>
<p>Cula-Reid and the other two female footballers did not win the case. At the same time, a worthwhile by-product of this loss was that it forced the creation of a youth girls’ competition. </p>
<p>In 2016 alone, there was a 56% increase in the number of female community club teams to 983, and a 19% increase in the total number of female participants. This continued a trend that <a href="http://www.afl.com.au/news/2016-11-22/womens-football-explosion-results-in-record-participation">has accelerated since 2013</a>. </p>
<p>The numbers are a little rubbery, because when you discount the 53,409 female Auskick participants (up 21% in 2015), you end up with an average of just over 332 players per community team. So a lot of female participation occurs outside formal community competitions, in school competitions and in other forms of the game such as <a href="http://afl9s.com.au/">AFL 9s</a>. </p>
<p>Regardless of this quibbling, there is no doubt there has been an explosion in female participation in football, particularly since 2013. </p>
<h2>Politics, feminism and sport</h2>
<p>Feminism is a broad church, made up of a number of different positions, all of which share a desire to improve women’s authority over their own lives. As sport remains the most evocative public demonstration of difference between the sexes, its importance to feminist politics cannot be neglected. </p>
<p>In an Australian sporting environment that has a history of <a href="http://www.abc.net.au/news/2015-09-11/convery-the-matildas'-pay-dispute-could-spark-real-change/6767916">few well-paid jobs in female team sports</a>, the new league in women’s AFL, along with the Big Bash, netball and football leagues, may open up careers for women (admittedly not as well-paid) that have previously been exclusively available to men. </p>
<p>The maxim “a rising tide lifts all boats” might apply to the economics of women’s sport generally, especially if established sports continue to lose players to the <a href="http://www.abc.net.au/news/2016-09-15/turf-war-in-womens-sport-would-be-great-for-female-athletes/7844516">new women’s AFL league</a>. </p>
<p>The danger is that the <a href="http://www.abc.net.au/triplej/programs/hack/should-female-afl-players-get-paid-the-same-as-men/7817118">relatively poorer wages</a> offered to women participants suggests the participants are likely, in the long term, to come from very specific social classes. Regular training, weekend games and drafting to distant clubs <a href="https://www.eurekastreet.com.au/article.aspx?aeid=49831#.WHX8YPl97IU">may necessitate</a> home relocation, sacrifice of educational and work opportunities, the need for more expensive childcare, and the loss of local support networks. Such sacrifices are more easily made by players, or parents, of independent wealth.</p>
<p>Unless some extra forms of support can be put in place at all levels of football (this may be where affirmative action is important), then other groups of women will miss out. Thus, the AFLW may end up subsidising the leisure pursuits of wealthy women.</p>
<p>At a participatory level, some local football organisations lament that they do not have the ground space and facilities to cope with the introduction of women’s AFL teams, and that local councils should do something about this. </p>
<p>But if men and boys have to play shorter games, or play or train less frequently, to allow women and girls access to playing time, then this is what equality demands.</p>
<h2>Costs of incorporation</h2>
<p>The history of Title IX in the US has shown that while coaching and administration of women’s collegiate sport was poorly paid, the labour market offered opportunities for females. <a href="https://sportslaw.uslegal.com/title-ix-and-other-womens-issues/">Title IX</a> of the US Education Amendments Act is a federal law that prohibits gender discrimination in any educational program that receives federal funding, including sports at all levels of the US educational system.</p>
<p>Once the women’s collegiate sports system became funded to (theoretically) equal levels to the male system, men entered the <a href="http://dx.doi.org/10.1123/ssj.8.1.47">coaching and administrative roles</a> – that is, the roles with authority – and replicated men’s sport with women participants.</p>
<p>Will this occur in the women’s AFL? It certainly <a href="https://www.eurekastreet.com.au/article.aspx?aeid=49831#.WHX8YPl97IU">looks like it could</a>.</p>
<p>Six of the eight head coaches are males, and several management positions are also going to men. It is important to note that most clubs have female coaches in development roles, so there are opportunities for careers in both areas in the longer term. But it is fraught. </p>
<p>The danger is that in this incorporation, the voices of women are lost. To flourish in the newly professionalised world of women’s AFL, will footballers like the enigmatic Mo Hope have to become something different? </p>
<p>More importantly, when voices from various female perspectives help create a united front on issues of specifically female concern, such as maternity leave and on-site childcare, without being shouted down, then we will know that Aussie rules football has become more feminist.</p>
<hr>
<p><em>This is part of a short series of articles on equality in, and access to, sport. Catch up on the others <a href="https://theconversation.com/topics/sport-access-and-equality-34779">here</a>.</em></p><img src="https://counter.theconversation.com/content/70390/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Burke does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Sport remains the most evocative public demonstration of difference between the sexes, so its importance to feminist politics cannot be neglected.Michael Burke, Researcher, Institute for Sport, Exercise and Active Living and Senior Lecturer, College of Sport and Exercise Science, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/585702016-05-01T15:42:44Z2016-05-01T15:42:44ZCould knowing how much your coworker earns help close the gender pay gap?<figure><img src="https://images.theconversation.com/files/120728/original/image-20160429-28139-1yznmut.jpg?ixlib=rb-1.1.0&rect=0%2C47%2C945%2C662&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Want to know how your salary jar stacks up?</span> <span class="attribution"><span class="source">Money jars via www.shutterstock.com</span></span></figcaption></figure><p><em>Editor’s note: This article is part of our collaboration with <a href="http://www.pbs.org/wgbh/point-taken/">Point Taken</a>, a new program from WGBH that will next air on Tuesday, May 3 on PBS and online at pbs.org. The show features fact-based debate on major issues of the day, without the shouting.</em></p>
<p><a href="http://www.pbs.org/wgbh/point-taken/#poll">Pay transparency</a> is all the rage these days. </p>
<p>President Obama <a href="http://www.dol.gov/ofccp/regs/statutes/eo11246.htm">has taken action</a> to increase pay transparency among federal contractors. The Equal Employment Opportunity Commission, which enforces laws prohibiting employment discrimination, recently issued a regulation requiring large companies to disclose aggregate salary information in <a href="https://www1.eeoc.gov/eeoc/newsroom/release/1-29-16.cfm">their annual informational filing</a>. And states have been taking action as well, with <a href="http://www.natlawreview.com/article/strict-new-california-fair-pay-act-will-become-effective-january-1-2016">California</a> and <a href="http://s3.amazonaws.com/cdn.orrick.com/files/firstlink.pdf">New York</a> enacting legislation to support pay transparency efforts.</p>
<p>Their primary goal is to eliminate the gender wage gap. Currently, in the United States, <a href="http://www.aauw.org/files/2016/02/SimpleTruth_Spring2016.pdf">women earn approximately 21 percent less than men</a>. The gap between men’s and women’s wages remains even when taking into account factors such as career choice (e.g., college-educated women become teachers more often than men do, and teachers are paid less than many other jobs requiring a degree), experience and education. <a href="http://www.aauw.org/files/2016/02/SimpleTruth_Spring2016.pdf">One study</a> found that 10 years after graduation, women earned 12 percent less than men after accounting for all other factors that could affect pay.</p>
<p>Pay transparency laws represent the latest effort to close the gap, which has remained stubbornly in place for decades. But will they be effective? </p>
<p>The answer depends in part on whether employees are willing to disclose their salaries and how employers address the concerns that are likely to arise when a salary gap is revealed.</p>
<iframe src="https://datawrapper.dwcdn.net/suLUh/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="450"></iframe>
<h2>No salary disclosure required</h2>
<p>Part of the problem is that with one exception – government employees – the laws currently in place to promote pay transparency do not actually require disclosure of individual salary information. </p>
<p>For example, the <a href="http://www.dol.gov/ofccp/regs/statutes/eo11246.htm">federal regulation</a> that has been touted as a pay transparency law only prohibits employers from retaliating against employees who disclose their own salary. California’s and New York’s laws are essentially the same. The idea behind these anti-retaliation laws is to allow employees to disclose their pay without repercussion, eliminating pay secrecy policies and customs.</p>
<p>For these laws to create actual pay transparency, however, employees must be willing to share salary information. And while there <a href="http://www.hreonline.com/HRE/view/story.jhtml?id=534359883">appears to be a trend</a> toward employee willingness to do so, it is at odds with the <a href="http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1345&context=bjell">longstanding social norm</a> against discussing pay.</p>
<h2>Finding a link to pay equity</h2>
<p>In the absence of a legal requirement to disclose wages, an increasing number of companies are making salary information transparent on their own. </p>
<p>Different companies have taken varying approaches to this. For example, Whole Foods <a href="http://www.cbsnews.com/news/at-whole-foods-paychecks-are-public/">allows workers to check</a> their colleagues’ salaries, while social media scheduler Buffer <a href="https://open.buffer.com/transparent-salaries/">publicly discloses the formula</a> it uses to determine employees’ salaries. At the extreme end of transparency, <a href="http://www.fedsdatacenter.com/federal-pay-rates/">many governmental employees’ salaries</a> are publicly available, depending on the state. </p>
<p>One could argue, and <a href="http://www.law.uci.edu/lawreview/vol4/no2/Estlund.pdf">many do</a>, that increased pay transparency decreases the gender pay gap. </p>
<p>The argument has logic: if employers disclose salaries, they will also be disclosing any gender pay gap that exists, and this will lead to efforts to eliminate it. This is precisely what happened at Buffer, which, after disclosing employee salaries, found a wage gap and <a href="http://www.theatlantic.com/business/archive/2016/03/pay-transparency-gender-gap/475683/">changed its compensation system</a> and hiring priorities to eliminate it.</p>
<p>Pay transparency in the federal workforce can also be seen as support for the argument that pay transparency helps eliminate the gender wage gap. <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">It is significantly lower</a> in the federal workforce – in which salaries are publicly available online – than in the private sector.</p>
<h2>Assessing pay transparency’s impact</h2>
<p>Despite this anecdotal evidence of the effect of pay transparency, a note of caution is warranted. </p>
<p>First, there appears to be no empirical study of the effect of pay transparency on the gender wage gap. Specifically, there is no systematic research of what happens to the gap when companies shift from withholding to disclosing employee pay. Nor is there research comparing the gender wage gap in companies that keep salaries secret with companies that disclose employee pay. </p>
<p>While <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">there is research</a> comparing the federal workforce’s gender wage gap with that in the private sector, it does not show whether pay transparency is a factor. And, in fact, it is quite probable that the most important factor explaining the smaller federal wage gap is the government’s highly structured pay and promotion system. </p>
<p>Second, when one looks closer at the anecdotal evidence, what it suggests is that pay transparency is only one piece at play. Comparing the experiences of Buffer, the example that appears to be most popular in the press, with Salesforce illustrates this. </p>
<p>At Buffer, the company disclosed salaries then took concrete steps to eliminate the gender wage gap that was revealed. In contrast, Salesforce <a href="http://fortune.com/2015/08/18/tech-transparency-wage-gaps/">conducted an internal review</a> but did not disclose salaries. On the basis of the review, the <a href="https://www.salesforce.com/blog/2016/03/equality-at-salesforce-equal-pay.html">company adjusted the pay</a> of six percent of its employees to eliminate the gender wage gap. </p>
<p>The common link in these approaches is not pay transparency but recognition of a gap between men’s and women’s pay and a commitment to close it. Thus, pay transparency can assist in pushing companies toward recognition of a problem, but it isn’t an essential component to eliminating it.</p>
<h2>Corporate attitude</h2>
<p>Indeed, a company’s attitude toward the wage gap and its causes may be more significant in eliminating it than putting in place a transparent pay policy. </p>
<p>Consider the fact that differences in an employee’s initial salary <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/governmentwide-strategy-on-advancing-pay-equality-in-the-federal-government.pdf">contributes to the gender wage gap</a>. Is this caused by differences in previous salary? Or that men are usually rewarded for negotiating a better salary – while <a href="http://thinkprogress.org/economy/2014/03/19/3416122/texas-republican-pay-gap-negotiate/">women are penalized</a> for doing the same? </p>
<p>Pay transparency would reveal a gap in starting salary, but the company could decide that it is not due to gender but “market forces” – e.g., the man had to be paid more to take the job in order to avoid a wage cut – or because of his negotiating ability. That would make it less likely that the company would take action. </p>
<p>To take another example, women take off more time than men do after the birth of a child. A “gender neutral” policy of basing raises on seniority will result in women having lower salaries over time than men do. Pay transparency will reveal this difference. </p>
<p>Yet seniority is generally considered a neutral, nongendered reason for a wage gap, and a company can explain away any differences based on this, claiming that it has nothing to do with sex. But isn’t a pay gap based on gender if it is caused by the fact that women have babies or that they stay home with sick children more often than men? </p>
<p>Companies have to be willing to reconsider many such components of compensation to eliminate gender disparities in pay.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/120780/original/image-20160501-28118-1kwaykb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Should absences caused by pregnancy count against a worker’s seniority?</span>
<span class="attribution"><span class="source">Pregnant worker via www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>Negative consequences</h2>
<p>Taking a step back and accepting that pay transparency would at least allow differences to be revealed, which could lead to a decrease in the gender pay gap, one must also consider the negative repercussions. </p>
<p>One downside to pay transparency is the effect on employee morale. A <a href="https://www.princeton.edu/%7Eamas/papers/card-mas-moretti-saezAER11ucpay">fascinating study</a> on the effect of revealing salaries of University of California employees showed that employees below the median salary for their position had decreased job satisfaction and an increase in desire to change jobs. </p>
<p>This was not offset by improvements in employee morale among those who were paid higher than the median salary. Thus, there was a net overall decrease in employee morale. </p>
<p>On the other hand, a recent <a href="http://fortune.com/2015/10/15/pay-transparency/">PayScale survey suggests</a> that transparency has the opposite effect, encouraging retention, because employees tend to think they’re more underpaid than they actually are.</p>
<p>To avoid negative consequences, the <a href="https://www.shrm.org/publications/hrmagazine/editorialcontent/2014/0914/pages/0914-salary-transparency.aspx">Society for Human Resource Management recommends</a> that employers be prepared to explain any reasons for pay disparities that are revealed. This also suggests that how an employer handles a pay gap matters more than the disclosure of it. </p>
<p>Putting this all together, pay transparency in and of itself doesn’t necessarily help close the gender pay gap. It creates opportunities for employers to reconsider their current compensation systems but doesn’t mean they’ll necessarily do anything about it. </p>
<p>So while pay transparency is a good idea, on its own it probably won’t be able to eliminate the persistent pay disparities between men and women.</p><img src="https://counter.theconversation.com/content/58570/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nancy Modesitt does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Pay transparency laws are the latest effort to eliminate the still-yawning gap between the salaries of men and women. Do they work?Nancy Modesitt, Associate Professor of Law, University of BaltimoreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/472732016-04-18T00:32:23Z2016-04-18T00:32:23ZMind the gap in local and international aid workers’ salaries<figure><img src="https://images.theconversation.com/files/95303/original/image-20150918-12375-12ka4w2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Differential treatment between international and local aid workers may undermine international aid programs</span> <span class="attribution"><span class="source">lculig/www.shutterstock.com</span></span></figcaption></figure><p><em>An audio documentary by co-author Anna Strempel explores the effects of a gap in wages between local and expatriate workers in the development and aid sector</em>. </p>
<p><em>Anna Strempel is a graduate of Monash University Master of Journalism and International Relations and recipient of the Australian National University Indonesia Project’s Research Travel Grant and the Victorian government’s Hamer Scholarship.</em></p>
<p><em>Listen to the podcast based on her Master’s research thesis below:</em></p>
<p><audio preload="metadata" controls="controls" data-duration="2936" data-image="" data-title="Wealth of Resentment" data-size="70473234" data-source="Anna Strempel" data-source-url="" data-license="CC BY-SA" data-license-url="http://creativecommons.org/licenses/by-sa/4.0/">
<source src="https://cdn.theconversation.com/audio/383/wealthofresentment-tc.mp3" type="audio/mpeg">
</audio>
<div class="audio-player-caption">
Wealth of Resentment.
<span class="attribution"><span class="source">Anna Strempel</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a><span class="download"><span>67.2 MB</span> <a target="_blank" href="https://cdn.theconversation.com/audio/383/wealthofresentment-tc.mp3">(download)</a></span></span>
</div></p>
<hr>
<p>Imagine finding out that your colleagues earn five times more than you. Not only that, but they get all sorts of benefits you’re not eligible for. </p>
<p>They take a month of leave; you get 12 days. Your employer pays for their accommodation, health insurance and even their children’s school fees; you don’t get any of that.</p>
<p>But you have comparable skills and qualifications. You do the same work. In fact, you understand the context of your work better than your higher-paid colleagues. </p>
<p>So why are they earning so much more than you? What if you found out it was simply because of your nationality? </p>
<p>In the humanitarian aid and development sector, this is the reality. Local staff are paid far less and receive fewer benefits than their expatriate colleagues, even when they do similar work and have similar qualifications. </p>
<h2>Making aid ineffective</h2>
<p>We’ve studied the effects of the wage gap between local and international staff working in lower-income countries in an ESRC-funded project called <a href="http://www.massey.ac.nz/massey/learning/departments/school-of-psychology/research/poverty/add-up/add-up_home.cfm">ADDUP</a> (Are Development Discrepancies Undermining Performance?). We call this differential treatment the dual salary system. </p>
<p>Expatriates are often quick to dismiss dual salary systems as a non-issue. But local workers told us a different story. They said disparities created significant feelings of workplace injustice. They felt less valued than their expatriate colleagues. </p>
<p>Wage disparities are often a taboo topic, especially when power relations are involved. Socially responsive and accountable research like the ADDUP project can “speak truth to power”. This is especially important because differential treatment between international and local aid workers may undermine international aid programs. </p>
<p>Ishbel McWha-Hermann, now based at the University of Edinburgh, who is a co-author of this article, found that the fall-out from pay disparities can damage relationships in the workplace and thereby interfere with aid effectiveness. Employees “form work groups and alliances <a href="http://www.developmentinpractice.org/journals/roles-and-relationships-between-expatriates-volunteers-and-local-development-workers">based on observed differences and similarities</a>”. A likely source of comparison is socioeconomic status linked to salary. </p>
<p>She warns that large pay gaps “may be <a href="http://www.globalfocus.org.nz/wp-content/uploads/2014/04/Just_Change_18.pdf">undermining poverty-reduction initiatives</a> before they even reach the community”. </p>
<p>The OECD wants wealthy countries to spend 0.7% of their Gross National Income on foreign aid. While the UK met this target two years ago and enshrined it in law, Australia’s aid budget has been slashed. The Lowy Institute says the former Abbott government’s cuts to foreign aid were the <a href="http://www.lowyinstitute.org/issues/australian-foreign-aid">largest ever</a> and will mean Australia’s aid expenditure falls to just 0.22%. </p>
<p>With the aid program already under pressure, the negative effects of pay disparities may be making it even more difficult for programs to achieve their goals.</p>
<h2>Causes of the wage gap</h2>
<p>The wage and benefits gap cannot be explained by differences in experience or skills. ADDUP compared local and expatriate workers doing similar work with equivalent skills and experience. Rather, dual salaries exist because expatriates originate from higher-income economies and labour markets. </p>
<p>Appropriately enough perhaps, dual salaries are popularly referred to in some Pacific countries as “economic apartheid”. Having this kind of nomenclature in the aid sector is ironic considering its poverty-reduction aim. </p>
<p>The dual salary system is a difficult structural inequity that makes it hard for many workers in aid and development – both local and international staff alike – to work together, support each other and achieve project goals. </p>
<h2>How big is the gap?</h2>
<p>Our research measured the size of the wage gap and its effects on workers in six lower-income countries: India, China, Malawi, Uganda, Solomon Islands and Papua New Guinea. </p>
<p>We surveyed nearly 1300 local and expatriate workers from around 200 organisations. These organisations were drawn from the aid, education, government and business sectors of the six countries. Participants worked in a range of job roles, from teachers, to engineers, to doctors and managers, with expertise in areas like microfinance, child labour, program administration and much more. The organisations draw aid funding from governments and donors around the globe.</p>
<p>Across the ADDUP sample, local staff were paid four times less on average than their international counterparts. This was despite having similar education and experience. In Papua New Guinea and the Solomon Islands, the average rose to nine. In individual cases the difference was far greater. Alarmingly, 80% of local workers said that their pay was not sufficient to meet their everyday needs.</p>
<p>Disparities are not limited to salaries. They include accommodation allowances, vehicles, household staff, school fees, insurance and other benefits. These commonly form part of expatriate packages that are not available to local staff. </p>
<h2>Similar findings in the corporate sector</h2>
<p>While ADDUP is to date perhaps the most detailed study of pay disparities in the humanitarian sector, research from the corporate sector has had similar findings. A <a href="http://onlinelibrary.wiley.com/doi/10.1002/tie.5060380206/abstract">study of local and expatriate managers</a> in multinational companies in Singapore, for example, found salary disparities were causing resentment and dissatisfaction among local managers. </p>
<p>The Singaporean study found that dissatisfaction relating to disparities ultimately reduces productivity and encourages high staff turnover. </p>
<h2>Local ‘brain drain’</h2>
<p>Our research also found that dual salary systems were contributing to a “brain drain”. </p>
<p>Talented local staff often leave their home countries for higher-paying jobs overseas. </p>
<p>This may make it hard for the humanitarian sector to achieve its goals of building capacity in aid recipient countries and increasing local ownership of development initiatives.</p>
<h2>A search for a solution</h2>
<p>Many NGOs are aware of the issue and concerned about it. Together with NGO umbrella organisation <a href="http://chsalliance.org/">CHS Alliance</a> (formerly known as People in Aid) and <a href="http://www.birchesgroup.com/">Birches Group</a>, we are working to develop evidence-informed good practice in the domain of sustainable livelihood and living wages for aid and humanitarian workers. </p>
<p>This <a href="http://project-fair.org/">partnership</a> hopes to identify wage policy options that align with local workforce aspirations and can ensure sustainable human services in the aid and development sector.</p>
<p>The new round of global development goals – the Sustainable Development Goals (SDGs) – has highlighted the importance of decent work, reducing inequality and enabling sustainable livelihoods for the eradication of poverty everywhere. </p>
<p>If the SDGs are to avoid the criticisms of their predecessors, the Millennium Development Goals, we will need to vertically integrate global goals with local, everyday workplace practices.</p>
<p>This project, focused as it is on everyday workplaces and organisational policies, is an example of that kind of process, in an area where we can all make a difference.</p><img src="https://counter.theconversation.com/content/47273/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stuart C. Carr receives funding from DFID/ESRC Joint Poverty Alleviation Fund.</span></em></p><p class="fine-print"><em><span>Ishbel McWha-Hermann receives funding from ESRC. </span></em></p>In the humanitarian aid and development sector, local staff are paid less and receive fewer benefits than their expatriate colleagues, even when they do similar work and have similar qualifications.Stuart C. Carr, Lecturer, Industrial & Organizational Psychology Programme, Massey UniversityIshbel McWha-Hermann, Early Career Fellow in International Human Resource Management, The University of EdinburghLicensed as Creative Commons – attribution, no derivatives.