8 years of the Lilly Ledbetter Fair Pay Act
This Sunday, January 29th, marks the eighth anniversary of the Lilly Ledbetter Fair Pay Act, which helps to prevent pay discrimination. While there is no silver bullet to end gender and racial pay disparities (though we have some ideas here and here), ensuring that workers can use the legal system to receive equal pay for equal work is crucial. The Lilly Ledbetter Fair Pay Act lets workers do just that, by giving them the right to file suit 180 days after the last pay violation and not only 180 days after the initial pay disparity.
The research is conclusive: pay differentials exist and sometimes to a grave degree. Women of color face an extra penalty in the labor market and that shows up in their significantly lower wages. Typical black women are paid 65 cents on the typical white male dollar, while Hispanic women are paid a mere 58 cents on the dollar.
Furthermore, wage gaps are a problem across the wage distribution and among workers of every education level. As you can see in the chart below, women are paid less than men at every level of education. Among workers with a high school degree, women are paid 78 percent of what men are paid (or 78 cents on the dollar). Among workers who have a college degree, the share is 75 percent, and among workers who have an advanced degree, it is 73 percent.
Women earn less than men at every education level: Average hourly wages, by gender and education, 2015
|Less than high school||$13.93||$10.89|
The second chart below compares wages of white and black workers by education level. As you can see, while a college education results in higher wages—both for whites and blacks—it does not eliminate the black-white wage gap. African Americans are still earning less than whites at every level of educational attainment. Even for black workers with a college degree, they earn only 81 cents on the dollar compared to white workers. It’s 84 cents on the dollar for those with an advance degree.
In other words, women and people of color cannot educate themselves out of the gender wage gap.
African Americans are paid less than whites at every education level: Average hourly wages, by race and education, 2015
|Less than HS||$13.57||$11.25|
We should use all the tools at our disposal to eliminate discrimination in hiring, promotion, and pay. Unfortunately, women and workers of color often lack the vital information about their peers’ pay to be able to even know whether they are being paid fairly or not. Pay transparency is a key tool to help reduce wage disparities, giving workers more information about what similar workers are paid and whether they’re being undercut. Reducing these informational asymmetries and setting clear standards of pay can eliminate or diminish the effects of racial and gender discrimination, whether it’s societal or endemic to a specific firm. In some workplaces, this is accomplished through negotiations by unions. Accordingly, the gender pay gap in unionized workforces is smaller than in nonunionized workforces.
It’s also important to remember that these wage disparities are only one way the economy shortchanges women and workers of color. At the same time the gender wage gap has persisted and racial wage gaps have worsened, hourly wages for the vast majority of workers have stagnated, as the fruits of increased productivity and a growing economy have accrued to those at the top. A progressive economic agenda, one that seeks to truly maximize the economic potential of women and workers of color, must focus on both closing the gender and racial wages gap and raising wages more generally.
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