Dive Brief:

• Transparent pay policies neutralized the gender pay gap between men and women holding the same position across most jobs, according to a PayScale, Inc. report released Jan. 22. The compensation and software data company found that even when comparing men and women who worked the same job in the same geographic location, women still earned 98 cents for every dollar earned by men, when compensable factors are controlled.
• At organizations without pay transparency, the most significant gender wage gap is for women in the director level ($0.91). Women directors and executives still faced discriminatory pay penalties for their gender, "however, that gender pay gap is diminished with transparent pay practices," the report stated. "Women are estimated to earn between $1 and $1.01 for every dollar a man earns in 2019 for organizations that have enacted transparent pay practices," according to the report. Millennial women in a transparent pay work environment do slightly better ($1.02) than other generations.
• Despite pay transparency in male-dominated occupations, like protective services and maintenance and repair jobs​, the gender wage gap did not completely disappear. It also remained in industries such as food services, accommodation, retail and customer service. "These industries are generally long-standing blue collar industries where there is a lot of turnover," Wendy Brown, director of content marketing at PayScale, told HR Dive in an email. Brown said that barriers to transparent pay processes could include lack of access to compensation software.

Dive Insight:

Pay transparency along with "pay equity issues are going to come to the forefront" in 2020, Fisher Phillips Attorney Jennifer Sandberg recently told HR Dive.  

Felicia Davis, a partner at Paul Hastings, told HR Dive in July 2019 that "many external factors are putting pressure on employers to be more transparent about compensation." Davis added that "employees are asking more questions, shareholder groups are asking employers to be more transparent, and foreign countries are asking for more information to be reported."

Additionally, the U.S. Equal Employment Opportunity Commission announced in its November 2019 regulatory agenda that it may adopt pay data reporting requirements for employers via rulemaking. But this follows a September 2019 announcement that it would not renew its request to collect employer pay data broken down by sex, race and ethnicity from companies with over 100 employees, known as Component 2. The addition of Component 2 was initially adopted by the Obama administration but blocked by the Office of Management and Budget in 2017.

Despite EEOC's changes, a limited number of states, including New York and California, do have pay transparency laws. And most employees nationwide are legally protected to discuss their salaries.

Furthermore, Section 7 of the National Labor Relations Act of 1935 prohibits employers from retaliating against workers when they "discuss their wages or working conditions with their colleagues as part of a concerted activity to improve them," according to the Women's Bureau of the U.S. Department of Labor. In April 2014, former President Barack Obama signed Executive Order 13665 that prohibits federal contractors from retaliating against employees who inquire about, discuss or disclose compensation information.

Ongoing research has revealed that enhancing pay transparency can revitalize wage growth in the U.S. 

"Our leadership realizes that compensation is a huge part of the bottom line budgets for organizations and approach it as a strategic lever in our organizational success," PayScale's Brown told HR Dive.

The company is currently at level four out of the five levels of its pay transparency spectrum.

Brown said that "every employee at PayScale understands how their job is priced, what the range is for their position, which skills or the compensable factors went into determining the price of that job, and where an individual falls within the range (range penetration)."