Companies with more than 100 employees in California could be required to publicly share how much they pay their workers in an attempt to close the gender and racial pay gaps.
Sen. Monique Limón, D-Santa Barbara, introduced a bill this week that would require companies to share aggregated data on wages broken down by race, gender, and ethnicity on their websites in addition to salary ranges on their job postings. It’s an attempt to shrink California’s gender and racial pay gap through pay transparency.
In Santa Clara County alone, women made 71 cents for every $1 their male counterparts earned in 2018, according to an analysis by the California Budget & Policy Center. Throughout California, wage gaps cost women a collective $46 billion in 2020, and people of color $61 billion, according to a report from Trusaic, a software company that supports the bill and helps businesses address gender pay disparities and analyzed wage data from companies that was privately shared with the government.
“The only way to minimize this is to be more transparent,” said Limón. “Transparency allows the employee to make the best decisions possible about where they are applying and to understand what their employer offers.”
But the proposal, co-authored by Senator Nancy Skinner, D-San Francisco, will likely face opposition from business associations across the state. While the California Chamber of Commerce declined to comment before fully analyzing the bill, the organization has opposed similar legislation in the past.
Businesses worry that the data won’t account for nuances in compensation – such as seniority, part-time work, and education – and could present an inaccurate picture of a wage disparity.
Limón’s legislation builds off of a bill passed in 2020 that requires companies to privately report wage data to the California Department of Fair Housing and Employment. If the new legislation passes, companies would also have to report all wage data on their websites, disclose salary ranges on job postings, and include data on contracted workers. If companies fail to disclose the data, they could be fined $100 per employee, and $200 per employee if they continue to ignore the requirement.
Advocates hope that more pay transparency will allow the public, lawmakers and researchers to identify companies with a poor track record of equal pay, help companies identify wage gaps that may have been previously unknown, and empower applicants and employees to better negotiate wages to close the gaps.
The Trusaic analysis found that among executives, people of color were paid an average of $12,700 less annually than white executives. In manufacturing roles, the difference is $7,300.
Those gaps “take an incredibly harmful toll, particularly on women of color, and their families,” said Jessica Stender, policy director at Equal Rights Advocates, a co-sponsor of the bill. “That’s money that could go to rent, utilities, savings.”
Similar transparency laws in Colorado and New York are too new to boast robust findings. But advocates point out that federal employees, whose salaries are public, have a much smaller pay gap than the national average for all workers and research has found that women are able to negotiate better wages when armed with publicized salary information, according to a 2020 report from the National Bureau of Economic Research.
But past attempts to force public disclosure of wage data faced opposition from business groups worried that the public data could depict a far worse disparity than actually exists, inviting public outcries and even legal action.
Some companies have already publicly shared wage data. After former President Barack Obama required companies to privately report wage data to the federal government the technology giant, Intel, in 2019 shared compensation data for all its U.S. employees in 2017 and 2018, providing a rare look into the pay of tech employees by gender, race and occupation.
“We’ve learned that transparency is our strength and something that is critical for real progress,” Barbara Whye, Intel’s chief diversity and inclusion officer said at the time. The software company, Adobe, also publicly released aggregated data on its employees compensation by gender and has said it has since closed its gender gaps.
“Whether or not we have a pay equity issue is not the debate,” said Limón, “it’s how we narrow the gap.”
This article is part of the California Divide project, a collaboration among newsrooms examining income inequality and economic survival in California.
Source: www.mercurynews.com