Occam's Razor

The stay at home mom is now almost legend. Women are at the cusp of being a majority of the workforce. One reason may be that women earn on average 77 cents on the dollar that men earn. All things being equal, that’s a considerable discount if you are an employer. Why wouldn’t you want to hire more women if you could pay them less?

Few believe that the wage gap is entirely due to sex discrimination. Women after all have babies, and this can inconveniently take them out of the workforce for a while. When they rejoin the workforce, often it is in a new position that comes with an entry-level salary. This is unfortunate but is not illegal. Many conservatives will argue that this alone explains the wage gap.

Traditionally fewer women have had college degrees than men. Now women form the majority of college students, so that suggests this will change in time. Some professions such as in science and engineering have traditionally been unrepresented by women, and these jobs often pay more than jobs on average, which might skew the average salaries higher for men. Still, hardly anyone who has studied the issue will dispute the assertion that some of the pay gap is due to sex discrimination. The discrimination may not be overt. It may simply be women setting their salary requirements too low and employers discreetly pocketing the savings. It’s also hard to ask for a fair salary when you don’t know what a fair salary is.

A lot of people resent sharing their salary information. It’s not hard to see why, as one of two things are likely. First, others will discover you are paid a lot more than they are for roughly the same work, which might engender feelings of hostility and resentment toward you. Second, you will realize others are paid considerably more than you while doing the same work, and that’s embarrassing. Regardless, employers can and do use the confidentiality aspects of salaries to their advantage. To truly get equal pay for equal work, this has to change.

But how? Who is going to want to disclose their salary when it engenders feelings of shame or anxiety? On the other hand, how can women have confidence that they are getting paid equivalent to a man without some disclosure?

The tools to find out how much your market wage should be are rudimentary at best. The Department of Labor keeps statistics on wage rates for a variety of professions, but of course wage rates will vary substantially depending on where you live and the local cost of living. The statistics are also highly bracketed. What you really need to know is what does someone in my profession, hopefully at the same company and at the same location, with similar time at the company and similar responsibilities earn? Companies are under no obligation to provide this information.

One way of course is to demand what you consider a fair salary and if your employer does not agree to it to quit. It helps enormously of course to have another job offer waiting before trying this. But it doesn’t necessarily tell you if your other offer is fair either.

I have a potential solution to the pay gap issue. What are needed are independent third-party labor assessors that would collect and verify pay data. Here’s how it could work.

Each community would have one person designated as an occupational salary and benefits assessor. I’m not sure how many would be needed, but let’s say it’s one person for every 10,000 employed people. Ideally the person would be funded by non-profit agencies, but it would also be reasonable for the person to be someone guaranteed to be impartial, such as a government employee, perhaps an employee of the Department of Labor, either for the federal government or for the state and county government. Their task is to make sure that there are no major pay discrepancies in various local companies based on categories that are clearly illegal, such as by sex. Employees could schedule meetings with their labor assessor to input their salary information, or send them documentation electronically on a periodic basis.

These labor assessors would need credentials of course and they would be sworn to maintain the confidentiality of information provided by an employee. The employee would provide the assessor with pay stubs and other related information so the information could not be faked. This might include employer 401-K contributions, employer pension plans, a resume of their work history, evidence of their certificates, diplomas, SAT scores and GPAs. Of course it would also be important to know key information like age of the person, time in job, their gender, their race, the position title, a description of their duties, etc.

The assessor would take the information, verify it, and put it into a database that would anonomize the employee’s information. The assessor may even have the duty to audit a particular company, particularly one suspected of practicing pay discrimination. Interviews would be done off site and perhaps in the privacy of someone’s home if needed. Periodically, perhaps annually, the employee would be asked to update information regarding salary, position and current job duties. It might even require compelling the employee to provide the information. I realize labor assessors could also demand the information from the company, but there is the possibility that an employer might lie or inflate benefits. It is better to get the information directly from an employee.

Eventually this would allow an understanding of how employees in similar skills and positions are paid within the same company. Perhaps the information could remain confidential and the employer could be given some time to rectify pay inequalities that are discovered. If that does not occur the bulk information could be publicly disclosed and if not corrected legal action initiated. This would move the feelings of shame from the employee, where they do not belong, to the employer, where they do belong. It would likely reveal other pay disparities that are illegal: perhaps disparities based on race, age or handicaps.

Lacking any of this, it is hard to see how the situation will change. This is because pay disparities will be purely anecdotal in almost all cases, given the lack of information. Given the undeniable fact that women in general tend to make much less than men, such a system could fundamentally transform pay fairness in the workplace, as well as increase the standard of living for tens of millions of women across the country.

If someone has a better idea, I’d like to hear it.