APU Business Original

Pay Discrimination: Has It Really Changed Since the 1960s?

Pay discrimination is illegal – but only when the discrimination is shown to be based upon a class that is protected under the law. For example, pay discrimination based upon race, ethnicity, color, national origin, religion, disability, age (for employees 40 years of age or older), gender, and sexual orientation are all prohibited by federal law. Some states have expanded on federal protections with an even more expansive array of bans.

It’s important to note that not all pay discrimination is illegal, however. Differences in pay between employees that have legitimate bases – such as skills, experience, credentials and other job attributes – is perfectly legal.

Additionally, pay discrimination for any reason not related to one of the protected classes is also legally defensible. So if an employer wanted to pay employees who like the color red half as much as employees who like the color blue, this type of behavior would theoretically be fine as long as there is no correlation between color preferences and protected characteristics such as race or gender.

It’s also important to remember that pay discrimination doesn’t have to be intentional to be illegal. Intentional discrimination based upon a protected class (known legally as disparate treatment) is prohibited by law.

But if an employer adopts pay determination practices that appear to be benign but which have the effect of discriminating based upon a protected class (known as disparate impact), this too is illegal. So under the law, employers must do more than simply refrain from intentional discrimination. They must also monitor their own behavior to ensure that even well-intentioned pay decisions don’t lead to inadvertent discrimination.

Attempts to Prohibit Pay Discrimination

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The Equal Pay Act was the first law to prohibit pay discrimination.

The first law to prohibit any kind of pay discrimination in America was the Equal Pay Act (EPA) of 1963, which focused exclusively on gender-based discrimination. A year later, the Civil Rights Act was passed and Title VII of this act expanded pay discrimination provisions to cover race, ethnicity, color, national origin, and religion.

These earliest anti-discrimination laws are poised to turn 60 soon. Disability protections were not added until 1990 with the passage of the Americans with Disabilities Act (ADA). Just three years ago, protection for sexual orientation/gender identity was added through the Supreme Court decision in Bostock v. Clayton County.

The State of Pay Equality and Pay Discrimination in 2023

So what is the state of pay equality and pay discrimination in 2023, in the wake of more than a half-century of protections against illegal discrimination? While statistics certainly indicate that progress has been made, we still have a long way to go.

Let’s look at gender first. In 1963, the year that the EPA was passed, women were making an embarrassing 59 cents on the dollar compared with men, according to the National Commission on Pay Equity. As of 2020, that difference had moved to 82 cents on the dollar for women compared with men, according to the U.S. Census Bureau.

So there has been some improvement. But women today are still being paid nearly 20% less than men on average, which should tell us that more legal protections for women are still needed.

The Lily Ledbetter Equal Pay Act of 2009, signed into law by President Barack Obama, helped to continue the forward momentum toward true pay equality, notes Ogletree Deakins. But since then, there has still been an onslaught of litigation over gender-based pay discrimination claims, including some recent cases involving pay discrimination allegations among faculty at colleges and universities.

What about racial pay discrimination? Of course, we could look at many different races and many binary comparisons. But for the sake of a brief illustration, we can look at pay disparities between Black and White Americans. In 1963, Black families earned on average 55 cents on the dollar compared with White families – even less than women at the time.

However, the improvement over time has been greater with respect to overall racial disparity. For instance, Black men in 2020 earned 87 cents on the dollar compared with White men, according to the Society for Human Resource Management. Still, we haven’t reached true parity in pay across racial demographics, so there is still work to be done here.

Let’s take religion as a final example. While data on pay disparities by religion are not as prominent in existing research, there is some evidence that religion plays a role in wage gaps across other classes, such as gender and race.

For example, Forbes reported in 2021 that, in the most religious states in America, women actually earned significantly less compared with men than they do against the national average as a whole. The difference is eight cents on the dollar, which is substantial. And the effect is magnified even further for women who are members of racial minority groups.

What Else Can We Do to Ensure Equal Pay?

So while we have made some progress since the mid-twentieth century, more effort is needed to put an end to illegal pay discrimination in various industries. But what else can we do?

One thing that some state legislatures have begun to put forward are requirements for pay transparency. This strategy gives private-sector employees a way to hold their employers accountable for pay equality.

Another possible strategy would be a government audit function for income reporting that would allow for investigation into potential instances of illegal pay discrimination, similar to the way the IRS audits tax filings for fraud or impropriety. There are many ideas we could try as a nation to continue to shrink the pay gap between members of different protected classes.

Obviously, it should go without saying that the ultimate goal is not to arrive at a place where every employee gets paid exactly the same wages for the same job. That would not be fair and it would not make sense, as it would ignore the potential factors – education, experience, skill, knowledge, etc. – that could serve as legitimate bases for appropriate differentiation in pay levels from one individual to the next.

But when it’s obvious that women and minorities are still being paid 10, 20 or 30% less than other members in society, that should raise serious concerns about fairness.

There is no justification or excuse for such large disparities in pay across protected classes, so pay discrimination is still happening. It’s therefore important that we continue the fight until we reach a point of true fairness and pay equality in modern American society.

Gary Deel

Dr. Gary Deel is a Faculty Member with the Wallace E. Boston School of Business. He holds an A.S. and a B.S. in Space Studies, a B.S. in Psychology, a J.D. in Law, and a Ph.D. in Hospitality/Business Management. Gary teaches human resources and employment law classes for the University, the University of Central Florida, Colorado State University and others.

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