What if all these new legislative initiatives at pay transparency are solving the wrong problem? Touted as a solution to pay inequity, a recent study lends much reason to question the viability of that approach. And from personal experience as a “big law” associate, I know that “transparency” is not always as clear as it may seem.
Can Pay Transparency Hit the Bull’s-Eye?
I have been having a lot of conversations about this subject recently. I have spoken with reporters, some “on background” and some for articles in which I have actually been quoted, conversed with colleagues about how we think the latest laws will play out, and had thorny practical discussions with my clients who are struggling to understand just what they need to do in order to be in compliance with laws that are incredibly localized when their recruiting area is incredibly diffuse. I am particularly proud of and grateful for my recent conversations, posted in Forbes.com (New Wage Transparency Law Has Overlooked Problems and Why Your Company May Need A ‘No Haggle’ Rule) with award-winning author, coach, mentor and researcher of the secrets to professional success Dr. Ruth Gotian. All these conversations are driven by recent legal changes, which in certain jurisdictions now mandate that employers disclose and in some instances affirmatively and publicly publish, the range of what they are willing to pay for any particular job opening.
I have read commentary from many others, including colleagues who I hold in high esteem, on this very same subject. And there is one statistic that I found buried in the midst of a recent article published by SHRM that has me feeling more discouraged than ever and wondering whether legislators are simply throwing arrows at a dartboard and hoping for a bull’s-eye.
Clarifying the Cause and Meaning of “Pay Inequity”
The federal government statistics we use when we refer to a pay equity gap are based on the average earnings of individuals in various demographic categories, without controlling for related business factors. Payscale has reported that when controlled for job responsibilities, education and experience, women earn 99 cents for every dollar earned by a man, and the pay disparities among men of different races similarly only differ within the range of a penny.
So do we have a serious pay inequity problem? Job responsibilities, education and experience have long been recognized as entirely legitimate, nondiscriminatory factors that may be considered in making employment decisions. While facially non-discriminatory, factors such as education can also be misused as a proxy that excludes or marginalizes individuals of color who otherwise possess abundant performance potential. But absent statistical proof of a disparate impact, and evidence undermining the legitimacy of the criterion applied, our legal system does not recognize differences in treatment based on those factors to be evidence of discrimination. And if differences in pay based on education, job responsibilities, and experience are widely recognized to be lawful, then what is it that we expect pay transparency will achieve?
Back in the Day…Lessons from Personal Experience
Back when I was an associate at a large law firm, I took comfort in the lockstep pay scale that governed my first eight years with the firm. It was my law school graduation date that determined how much I would be paid, and I knew the same was true for the other men and women associates in the offices surrounding me.
There are of course a few deviations even in the most lockstep of systems, and in law firms associates may be told they are taking a step back by a year or two in the pay scale based on intervening work experience before joining the firm that may not directly relate to the work of the department with which they are now associated. But it was all transparent, or seemingly so, and I never had reason to question whether I was being paid differently as a woman.
I made a conscious choice relatively early in my large law firm career to scale back my work schedule, first to allow for advanced legal studies and then to care for my children, and my compensation continued along the lockstep track but with a proportionate reduction that aligned to my reduced billable hours commitment. That too was transparent and I was and remain so grateful for the opportunity I was given to continue my career with the firm in that capacity.
But all was not quite as transparent as it seemed. I had a 1200 hour per year billable expectation, and I made it my business to meet and usually exceed that billable target every single year. My compensation was in line with that target. What was less apparent was that some associates who were classified as full-time employees, and therefore expected to meet a 2000 hour per year billable target, did not consistently achieve their objective. I know anecdotally from my work over the years with other large law firms that those who fall regularly short of the billable hours target receive taps on the shoulder and a nudge to secure alternative employment outside of the firm. There is only so long that they are carried on a more lucrative financial wave than that which applied to people like me who worked (and were paid) for a part-time schedule.
So I know firsthand what pay transparency looks and feels like, and I know it not to be a panacea that achieves true equality. The point that stymies me is that if our societal problem pertains to differences in pay that align to differences in the type of work we are performing, the training we received before engaging in that work, and the years of experience we have developed, then how on earth is pay transparency going to change that societal problem? It feels instead like additional window dressing to claim we are solving a problem when what actually we are doing is likely to have little or no impact.
Let’s Name the Real Problems
As a step in a forward direction, I suggest we begin by naming our actual problems:
Women and certain marginalized groups are more likely to take jobs that fall on the lower end of the overall societal pay scale. As a result, their lifetime earnings are likely to be less than those of white men.
Women and certain marginalized groups are less likely to accrue as much seniority in the jobs that they take because life factors may necessitate their temporary exit from the job market, or their experiences at work may be such that they eventually choose to leave, often for less lucrative positions, rather than stick it out in an environment where they do not fully feel they belong.
We Need Different/Better Solutions
The existence of these specific problems is not new news. But the laws on pay transparency seem entirely irrelevant to solving them. Instead, we need to take several reflective steps back as a society. We need to give serious thought to whether we are under-compensating people for caretaker and other types of roles that currently fall on the lower end of the pay spectrum. Supply and demand helps to drive wages, but so does the government, and reimbursement rates for child care, elder care services, and preschool education that leave people just above the poverty level send a message that we are looking to do these things on the cheap and do not place as much value on them as a society.
As for our workplaces, our laws against harassment and discrimination can really only go so far. My earliest exposures in corporate America to what was then entitled diversity and inclusion initiatives was greatly underwhelming. They felt like lip service, comprised of special recognition days and a handful of guest speakers over the course of a 12 month period and I could not imagine how any of that made those who were under represented feel wanted and included. But D&I has evolved to Diversity, Equity, Inclusion and Belonging, and more recently I have had the good fortune to work with many talented, insightful leaders who are pressuring organizations to turn a mirror on themselves, to look at the composition of their workforces to consider whether those align with the organization’s values, to search for where people may be discouraged from applying or may choose to leave before they or the organization have been able to enjoy the benefits of their contributions, and to develop creative solutions. I regularly tell DEIB professionals that I do not envy their jobs. To be effective, they must lead a course of soul-searching, break down systems, analyze their component parts, and get buy-in to effectuate change.
I applaud the objective of getting us to a point in society where we all feel valued and appropriately compensated for the work that we do. But no wave of a magic legislative wand is going to get us there. Let’s instead buckle down at each of our organizations, partner with those who are developing some expertise in this area, roll up our sleeves and get to work.
By Tracey I. Levy