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Hearing of March 16, 2016 - Public Input into the Proposed Revisions to the EEO-1 Report

Written Testimony of Lisa M. Maatz
Vice President of Government Relations
American Association of University Women

Chairwoman Yang and members of the Commission, thank you for the opportunity to testify today on the critical issue of pay equity. AAUW appreciates the Commission's ongoing and clear commitment to equal pay for equal work, and strongly supports the Commission's latest efforts to tackle the persistent gender and racial pay gap through improved data collection.

I am the Vice President of Government Relations at the American Association of University Women. Founded in 1881, AAUW has approximately 170,000 members and 1,000 branches nationwide, as well as more than 900 college and university partners across the country. AAUW has long fought to end gender pay discrimination, having released our first report on pay equity in 1913. As early as 1922, AAUW was calling for a gender-fair reclassification of the U.S. Civil Service and a repeal of gender-based salary restrictions in the U.S. Department of Labor's Women's Bureau. In 1955, AAUW supported a bipartisan bill introduced by AAUW members Reps. Edith Green (D-OR) and Edith Rogers (R-MA) requiring "equal pay for work of comparable value requiring comparable skills." Congress eventually enacted the Equal Pay Act,1 a version of the 1955 bill, in 1963.

Today, AAUW continues its mission to end pay inequality through advocacy, education and research. We lead the nationwide coalition dedicated to passing the Paycheck Fairness Act, a much needed and long overdue update to that 1963 law. While passage of this critical legislation has been mired in the heightened partisanship of Capitol Hill, AAUW strongly urges that other strategies be pursued that can help to close the gender pay gap. Equal pay legislation at the state and local levels is one such strategy; administrative action by the executive branch is another useful avenue in the face of congressional gridlock.

In that vein, I am pleased to speak with you today about AAUW's strong support for the EEOC's latest rulemaking initiative to collect summary pay data in an effort to better understand compensation patterns. The EEO-1 has long been a useful tool to gather data that helps protect the civil rights of all employees. The addition of compensation data to the EEO-1 is both welcome and timely. By collecting higher quality data, the Commission and the federal government as a whole can better do their part to ensure that all Americans enjoy the fair and level playing field that is the basis for economic security for all.

AAUW strongly believes the proposed rule is an innovative improvement over the April 2014 presidential memorandum regarding data collection for the Department of Labor's Office of Federal Contracts Compliance Programs (OFCCP). The proposed rule outlines a more efficient process that is dramatically less costly for business, largely because it utilizes existing mechanisms to collect and report the data through the annual EEO-1 filing process. The new proposal will cover more than 63 million employees (more than would have been covered by the OFCCP rulemaking), and the data collected will provide critical insights into the pay gap based on gender, race and ethnicity. AAUW has long asserted that this kind of transparency is associated with a smaller pay gap, and that implementing this kind of nationwide data collection is an important and proactive step in our collective efforts to ensure fair pay for all.

The Persistent Gender Pay Gap, by the Numbers
AAUW's strong support for the proposed rule for improved EEO-1 data collection is buttressed by the clear and convincing data that the gender pay gap is not a myth, but rather a pernicious problem that undermines the economic security of American families. To that point, I am pleased to share findings from AAUW's research reports, The Simple Truth about the Gender Pay Gap and Graduating to a Pay Gap: The Earnings of Women and Men One Year after College Graduation. Our reports provide reliable evidence that sex discrimination in the workplace continues to be a problem for women, who, on average, when working full-time earn just 79 cents for every dollar a full-time male worker earns. It's math, not myth, and our reports demonstrate just how much this pay gap impacts women, families, businesses and the economy.

As it currently stands, women who work full-time typically earn about 79 cents for every dollar a full-time male worker earns.2 Over a lifetime of work (47 years), the total estimated loss of earnings of women compared to men is $700,000 for a high school graduate, $1.2 million for a college graduate and $2 million for a professional school graduate.3

Critics charge that pay differences between men and women are simply a matter of personal choices. However, our analysis found that just one year after college graduation, women were paid 82 percent of what their similarly educated and experienced male counterparts were paid.4 Ten years after graduation, the pay gap widened, and women were paid only 69 percent of what men were paid - despite the fact that women were more likely to obtain an advanced degree.5 In part, these pay gaps do reflect men's and women's choices, especially the choice of college major and the type of job pursued after graduation. Yet not all of the gap can be "explained away." After accounting for a litany of factors-college major, occupation, economic sector, hours worked, months unemployed since graduation, GPA, type of undergraduate institution, institution selectivity, age, geographical region, and marital status-there is still a seven percent, unexplained difference in the earnings of male and female college graduates one year after graduation.6 While detractors like to say that seven percent doesn't seem like such a large difference, I would challenge them to relinquish seven percent of their paycheck for no good reason. I'd further challenge them to forgo the compounding raises, bonuses, and retirement benefits that are often based on salaries. Suddenly, seven percent doesn't seem so inconsequential.

It's important to remember that the pervasive pay gap does not affect all women equally. Most women of color, older women, moms, and women who have achieved higher levels of education experience an even larger pay gap. Compared with salary information for white male workers, Asian American women's salaries show the smallest gender pay gap, at 90 percent of white men's earnings. Meanwhile, compared to white men's wages, African American women are paid 64 percent, Native Hawaiian and Other Pacific Islander women are paid 62 percent, and American Indian and Alaska Native women are paid 59 percent. Hispanic and Latina women experience the largest pay gap, taking home just 54 percent of what white men were paid in 2014. In the same year, for full-time workers ages 20-24, women were paid 92 percent of what men were paid on a weekly basis. But among workers 55-64 years old, women were paid only 76 percent of what their male peers were paid. As a rule, earnings grow as years of education increase for both men and women. However, at every level of academic achievement, women's median earnings are less than men's median earnings, and in some cases, the gender pay gap is larger at higher levels of education.7 While a college degree greatly improves a women's earning capacity, it does not improve her earnings on the same scale as her male counterparts.

It is increasingly clear that the gender pay gap follows women throughout their lives, and in insidious ways-women who complete college degrees are less able to pay off their student loans promptly, leaving them paying more and for a longer time than men. In 2012, among students who graduated in 2007-08, women working full time had paid off 33 percent of their student loan debt on average, while men working full time had paid off 44 percent of their debt. African American and Hispanic women working full time earn considerably less than their male counterparts, and they struggle to pay off student loans promptly; four years after graduation, they had paid off less than 10 percent of their debt-much less than other women and men.8

Paying women equally would not just unburden them from debt more quickly, it could significantly impact the state of poverty in the U.S. A recent analysis found that the poverty rate for working women would be cut by more than half, from 8.2 percent to 4 percent, if women received equal pay to men of the same age, with the level of education, who work the same number of hours, and have the same urban/rural status.9

Equal pay is not simply a women's issue-it's a family issue. Between 1967 and 2012, the percentage of mothers who brought home at least a quarter of the family's earnings rose from less than a third (28 percent) to nearly two-thirds (63 percent).10 Families increasingly rely on women's wages to make ends meet. A majority of mothers are in the paid labor force,11 and a growing number of them are responsible for supporting their families. For the 40 percent of mothers with children under the age of 18 who are their families' sole or primary breadwinner,12 the gender pay gap can contribute to poor living conditions, poor nutrition, and fewer opportunities for their children. Despite the discriminatory wages women take home, there's no women's discount on rent, electricity or any of life's other necessities.

Women who take time away from the workforce to care for children-23 percent of mothers, as compared to only 1 percent of fathers, measured 10 years after graduation-often encounter a "motherhood penalty" that extends beyond the actual time out of the workforce. Experimental research has documented that employers are less likely to hire mothers compared with childless women, and when employers do make an offer to a mother, they offer her a lower salary than they do other women.13 Fathers, in contrast, do not suffer a penalty compared with other men. Many fathers actually receive a wage premium after having a child.14

All of these statistics have real world consequences for women, families, businesses and the economy. Unequal pay early in women's careers compounds throughout a lifetime, hindering women as they try to pay off their student loans, contribute to and raise their families, and thrive in retirement. Unequal pay also leads to workplace dissatisfaction, low morale, and higher turnover. But compensating women equally can remedy many of these problems. Paying women the salary they have rightfully earned is not only the fair thing to do, it puts more money into workers' pockets. That additional income can then be infused into the economy, while also alleviating some of the burden on government programs to support those who are struggling to make ends meet. Equal pay is good for women, good for families, and good for the nation.

Robust Data is Essential to Closing the Gender Pay Gap
Research and statistics clearly show the existence of the gender pay gap. Over 50 years ago, Congress passed the Equal Pay Act to remedy the issue. Yet the gap remains. If progress continues at the current rate, we will not achieve pay parity for men and women until 2059.15 But access to robust data can help address the problem now.

Discussing wages continues to be a taboo in the modern American workplace. This is a major contributing factor to the pay gap. Shining a light on existing pay practices, gathering data about pay discrepancies, and giving experts and employers the information they need to correct the problem will help create parity between men's and women's wages.

Aggregated data exposes trends in hiring, paying, and promoting employees, which can inform interventions within and across businesses. Data can reveal sex segregated jobs, a lack of women in positions of power, and unequal salaries, benefits, or bonuses. Data may show that employees of the opposite sex are paid disproportionally for the same job, or for different jobs that require similar skills, education and experience. Once these issues are apparent, businesses can receive technical assistance to remedy the gaps, or agencies can create interventions that seek to eliminate the problem before it even starts. Equally important, the data will bolster the EEOC's ability to provide robust technical assistance as well as enforce existing law. The EEOC will be better equipped to investigate allegations of pay discrimination at companies that are suspect, while reducing the likelihood of reviewing employers that are expected to be in compliance.

In addition to direct government interventions, data will empower businesses to take preemptive action. Many employers are interested in doing the right thing and eliminating the gender pay gap, they simply do not realize that there is an issue. Exposing the data allows employers to make appropriate, pro-active corrections before costly interventions are required. It will also set benchmarks so future salaries are appropriately calibrated and prior salary history or negotiations will not drive compensation decisions.

For example, Mark Benioff, CEO of Salesforce, voluntarily worked to correct the gender pay gap at his company once he knew it existed. Similarly, PricewaterhouseCoopers publicized their gender pay gap number. The transparency pushed the company toward remedying their wage discrepancy and promoting more women to partner.16 Data also allow businesses to maintain parity. The clothing retailer Gap, announced that it had eliminated its gender pay gap, but would continue to use data analysis to ensure that the pay gap never widens.17 While all of these businesses are able to tout their gender pay equality, they are also avoiding potential costly litigation that comes with being unwillingly forced into compliance.

Changing the EEO-1 is an Appropriate Response
The proposed changes to the EEO-1 constitute a necessary and appropriate step in closing the gender pay gap through data collection. AAUW strongly supported President Obama's 2014 executive order directing the U.S. Department of Labor to collect wage data for federal contractors, and supports this innovative modification to streamline the data collection process and cover more employers.

This timely adjustment is in direct response to comments received regarding the 2014 executive order, specifically concerns raised by the business community about reporting burdens. Employers are already required to provide data relating to race, ethnicity, sex, and job category via the EEO-1. This proposal merely adds pay ranges and hours worked to that list. By gathering that information through the EEO-1, the proposed rule is utilizing existing data collection mechanisms that are familiar to most businesses. As such, the proposed revisions have the potential to both lower the compliance burden on businesses and the implementation costs to government. This is a fair and reasonable response to the concerns voiced by some employers.

AAUW strongly believes that the Commission's proposal takes aim at reducing the gender and racial pay gap in three important ways:

  1. Increasing public transparency on compensation, which is known to help shrink the gender pay gap.
  2. Supporting employer efforts to self-monitor compensation practices, and proactively make appropriate changes to ensure compliance with relevant laws.
  3. Strengthening the EEOC's existing technical assistance programs and enforcement efforts.

The compensation data collected by the revised EEO-1 will give the public valuable insight into the dimensions of the pay gap by both geography and industry. For the first time, employers will also be able to benchmark their performance against their competition, and track changes over time. Businesses will also be able to empower their human resource departments to make proactive, data-driven changes to address any pay gaps that may exist. Equally important, the new compensation data will strengthen the EEOC's ability to investigate allegations of pay discrimination and better enforce existing law. This proposal highlights the path forward for the private and public sectors to collectively better address the critical issue of equal pay.

Lastly, the landscape of equal pay laws varies widely across the country. With the federal Equal Pay Act of 1963 past due for an update, state legislatures have taken it upon themselves to amend laws protecting employees from pay discrimination. Therefore, employers with businesses in multiple states are subject to different pay discrimination laws. The reporting required by the EEO-1 will help businesses to monitor their own pay practices and ensure that they are in compliance with all relevant state and federal laws.

Conclusion
With a record number of women in the workforce and nearly two-thirds of women functioning as primary or co-bread winners for their families, equal pay for women is critical to families' economic security. Despite critics' insistence that the pay gap is a myth, we know the truth: it's math. It's time to pay women equally. America is a nation founded on the ideal that all of us are created equal-that ought to hold true at home and at work. Paying people fairly for the work they do shouldn't dependent on their gender, race or ethnicity.

To eliminate the gender pay gap, we need good information. Access to appropriate data is necessary to shine a light on disparate pay practices, reveal trends, and support employers in proactively improving systems and correcting errors. The proposed revisions to the EEO-1 are a fair and reasonable way to gather that data. This proposal relies on existing data collection mechanisms that are familiar to businesses, thus minimizing the burden on employers and streamlining the process for government agencies. AAUW strongly supports changes to improve the EEO-1 form, and thanks the Obama Administration and the Commission for taking this important next step in the fight to close the pay gap. We also appreciate the EEOC's consultation with industry and relevant stakeholders throughout the proposal process. Lastly, AAUW thanks the Commission and the Obama Administration for their public commitment to promptly completing the rulemaking process and updating of the Employer Information Report (EEO-1) form. AAUW strongly supports the proposed rule and urges its expeditious adoption.


Footnotes

1 Public Law No. 88-38.

2 American Association of University Women (2016). The Simple Truth about the Gender Pay Gap. Washington, DC: AAUW. http://www.aauw.org/files/2016/02/SimpleTruth_Spring2016.pdf.

3 National Committee on Pay Equity. (2014). The Wage Gap Over Time: In Real Dollars, Women See a Continuing Gap. www.pay-equity.org/info-time.html.

4 Corbett, Christianne, and Catherine Hill. (2012). Graduating to a Pay Gap: The Earnings of Women and Men One Year after College Graduation. Washington, DC: AAUW. http://www.aauw.org/resource/graduating-to-a-pay-gap/.

5 Hegewisch, Ariane, and Heidi Hartmann. (2014). Occupational Segregation and the Gender Wage Gap: A Job Half Done. Washington, DC: Institute for Women's Policy Research. http://www.iwpr.org/publications/pubs/occupational-segregation-and-the-gender-wage-gap-a-job-half-done.

6 AAUW, Behind the Pay Gap.

7 AAUW, The Simple Truth.

8 Ibid.

9 Institute for Women's Policy Research (2016). The Economic Impact of Equal Pay by State. Washington, DC: IWPR. http://www.iwpr.org/publications/pubs/the-economic-impact-of-equal-pay-by-state.

10 Glynn, Sarah J. (2014). Breadwinning Mothers, Then and Now. Washington, DC: Center for American Progress. https://cdn.americanprogress.org/wp-content/uploads/2014/06/Glynn-Breadwinners-report-FINAL.pdf.

11 Current Population Survey, reported in U.S. Department of Labor, U.S. Bureau of Labor Statistics. (2015). Employment Characteristics of Families 2014. USDL-15-0689. www.bls.gov/news.release/pdf/famee.pdf.

12 Wang, Wendy, Kim Parker, and Paul Taylor. (2013). Breadwinner Moms. Pew Research Center. www.pewsocialtrends.org/2013/05/29/breadwinner-moms.

13 Correll, Shelley J., and Stephen Benard. (2007). Getting a job: Is there a motherhood penalty? American Journal of Sociology 112 (5): 1297-1338; Kricheli-Katz, Tamar. (2012). Choice, discrimination, and the motherhood penalty. Law and Society Review 46 (3): 557-87.

14 Glauber, Rebecca. (2008). Race and gender in families and at work: The fatherhood wage. Gender and Society 22 (1): 8-30; Killewald, Alexandra. (2012). A reconsideration of the fatherhood premium: Marriage, coresidence, biology, and fathers' wages. American Sociological Review 78 (1): 96-1.

15 Institute for Women's Policy Research. Pay Equity & Discrimination. Washington, DC: IWPR. http://www.iwpr.org/initiatives/pay-equity-and-discrimination.

16 Bellstrom, Kristen (2015). Salesforce Spent $3 Million to Close the Gender Pay Gap. Here's Why That's a Big Deal. Fortune. http://fortune.com/2015/11/07/salesforce-3-million-close-pay-gap/.

17 Bhasin, Kim (2014). How Gap Instituted Equal Pay for Men and Women. Huffington Post. http://www.huffingtonpost.com/2014/09/05/gap-equal-pay_n_5768780.html.