There's a situation that many, if not all of us have been in, and it's pretty embarrassing: that awkward moment when you realize that a colleague makes more than you do.Upon discovering the disparity, there are usually a few things that race through the mind:
- Are they smarter than I am?
- Are they colluding with someone?
- Are they adding more value than I am?
We're often wrong.
The Unexplained Gap
Pay discrimination is real, and it seems to be a market failure that's not fixing itself. The convergence of male and female wages that we saw in the 1980s slowed down significantly in the 1990s and has seemed to plateau to a gap that's budged very little since (Blau, Kahn 2006). This "unexplained gap" has been the subject of much discussion, and now, finally, legislation to follow up the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act of 2009. That's the Paycheck Fairness Act.
What's the bill say?
Basically, the Paycheck Fairness Act makes it harder for employers to prevent employees from discussing their wages amongst themselves. The idea is to make wages more transparent and hold companies accountable for discrepancies in pay between employees that have little distinguishing them other than gender.
Who's backing it?
The biggest proponents you'll hear about are President Barack Obama and Kirsten Gillibrand (D-NY).
Will the Paycheck Fairness Act actually reduce pay discrimination?
The process an employee must go through to put the Paycheck Fairness Act into practical use is pretty arduous, but the hope is that increased transparency will encourage compliance on the part of employers.