PRESIDENT TRUMP has made the rolling back of government regulations his business. Just before Labor Day, his administration announced that yet another rule will not be going into effect: this time, a regulation that would have required companies to provide the government with information on their employees’ compensation, with the goal of helping to locate areas of possible pay discrimination along lines of race and gender.
Under President Barack Obama, the Equal Employment Opportunity Commission developed the regulation to address stubborn disparities in pay — what’s known as the “wage gap.” Using data from the Bureau of Labor Statistics, the Pew Research Center found that white women on average earned 82 cents on the dollar compared to white men in 2015, though the difference in wages has been narrowing for the past 30 years. Black, Latino and Asian women earn even less — and the gap persists when the earnings of women of color are compared with those of men in their own racial or ethnic group. While differences in education, experience and industry account for much of this discrepancy, many economists believe that the remaining gap stems from discrimination.
The EEOC had been set to collect its first batch of data by March 2018. Then the Office of Management and Budget froze the rule, voicing concerns that gathering pay information would place an outsize burden on employers for little benefit. The EEOC is now conducting a review of the regulation.
The rule would not have closed the wage gap single-handedly or proved that all pay disparities stemmed from discrimination. But this was never the goal. By requiring companies with more than 100 workers to report how much, in total, employees of different races and genders worked and were paid in different categories of jobs — and by publishing the aggregated data — the EEOC aimed to push employers to notice and address wage disparities on their own. Research shows that pay transparency of this sort can help shrink gaps in compensation. In fact, the British government recently implemented a similar measure to encourage just that.
The regulation also would have provided the EEOC with a body of data with which to more effectively evaluate complaints of pay discrimination and to identify employers with potentially concerning practices. It’s true the data in question would have been a rough measure only. And to be sure, the requirement would have increased paperwork for employers, although the Obama administration tried to keep the workload light by asking for information that companies already record in some form. But more detailed information will almost always require more paperwork. It’s a question of striking the right balance for the benefit achieved.
While the policy is under review, the EEOC has the opportunity to reevaluate that balance. It may be that government could use a lighter touch in gathering data — perhaps by requiring only larger employers better equipped to handle the workload to submit information. But the government shouldn’t write off the benefit of pay transparency in helping narrow the wage gap.
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