New Bill in California Will Help Abolish Gender Pay Gaps and Racial Pay Disparities

A new law has recently been passed in California in an attempt to combat the gender pay gap and racial pay gaps within the US. On September 30, the Californian governor Gavin Newsom signed Senate Bill 973 (SB 973) into law. This law enforces significant pay reporting requirements. The State Legislature has expressed how California believes that the collection of data will enable the state to “more efficiently identify wage patterns and allow for targeted enforcement of equal pay or discrimination laws.”

As of 2021, the new law will be imposed. It will require certain companies to annually submit information regarding their employees’ pay data. This data will be categorized by gender, race, and ethnicity. The information will be reported to the Department of Fair Employment and Housing (DFEH).

An attempt was made last year to introduce a similar bill. However, it did not pass the necessary hurdles in time for the end of the legislative session. The new legislation is in response to the Trump administration’s attempt in August 2017 to prevent a revision of the Federal Employer Information Report (EEO-1), created during Obama’s presidency. This report demands employers to publicize their pay data by gender, ethnicity, and race.

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The New Law- SB973

The new law demands that employers with 100 or more employees annually submit an Employer Information Report (EEO-1) to the DFEH. This must disclose the number of employees working for the company and the number of hours they have worked. The report must also detail:

  • The gender, race, and ethnicity of the employees
  • All the job categories included in the EEO-1 report
  • Which employees’ annual earnings land within each pay band used by the U.S. Bureau of Labor Statistics within the Occupational Employment Statistics Survey

Those employers that have more than one company must submit a report for each business they own. This includes an integrated report detailing all the employers that work for the company. The first report must be submitted by the 31 of March 2021.

This new law is aimed to help combat gender discrimination as well as racial discrimination in the workplace. The new law is of great significance within the USA. As it is a country still plagued with disparities in wages between women and men and those of different races.

Pay Gaps in the US

There is still a huge issue within the US regarding the disparities in pay due to gender bias and racial discrimination. Theoretically, the US should be a nation where men and women from all nationalities and races receive the same amount of pay when doing the same job. This is due to Employment Laws on Discrimination Protections that are in place within the US. This includes the Equal Pay Act, which was established in 1963, and the VII of the Civil Rights Act, created in 1964. These laws make it illegal to discriminate against employees based on their gender, race, sex, or religion. However, the reality of the situation is that mass discrimination executed through disparities in wages still widely occur throughout the USA. These take place regardless of the national laws in place.

Gender Pay Gap

The Equal Pay Gap was signed by President Kennedy and came into force in 1963. It was created as an amendment to the Fair Labors Standard Act. It was one of the first laws enforced in American history which aim to reduce gender discrimination within the workplace.

Although the gender pay gap in the US has rapidly decreased since the law came into action, over the past 15 years it has not continued decreasing and has remained stable. Analysis from the Pew Research Center which assessed the median and hourly earnings of full and part-time workers revealed that in 2018, women earned 85% of the amount men earned. Based on this data, women would have to work an extra 39 days to earn what their male counterparts earned in 2018. By comparison, another study conducted in 2017 by the Census Bureau revealed that full-time working women earned 80% of what a male working the same job earnt.

Additionally, data obtained from a 2017 study conducted by the Pew Research Center, found that 4 in 10 women (42%) claim to have experienced gender discrimination in the workplace. This is compared to the 2 in 10 men that claim to have experienced gender discrimination. Furthermore, gender pay gaps were one of the most reported forms of discrimination. 25% of the women surveyed claimed to earn less than their male counterparts. Whilst only 5% of men lay claim to earning less.

Racial Pay Gaps

The racial pay gap is also a grave issue within the USA. 56 years after the creation of the Civil Rights Act, black women and men still earn significantly less money than their white counterparts. A survey conducted from 2017-2019 by PayScale– the American compensation and data company, revealed that in the US, black men in relation to white men had the largest “uncontrolled pay gap.” The average revealed that black men earned 87 cents for every $1 earnt by a white man. The second-largest gap was attained to Hispanic workers, who earned 91 cents for every $1 a white man earnt.

The study also found that black men in management positions still received less money than their white counterparts. Black men working in executive-level positions with the same qualifications as their white equivalent, earn 97 cents for every $1 earnt by white men. The study also revealed that racial disparities increased as black men climbed up the corporate ladder.

Gender pay gap

Gender and Racial Pay Gaps

By analyzing data based on gender and racial parameters, the 2016 U.S. Census Bureau’s Current Population Survey revealed that already the gender pay gap between women and men is high (women earn 80 cents for every $1 earned by men). However, when you combine this with race, the disparity in pay is even more significant. Black women working full time received 63 cents for every $1 paid to white men. This is a loss of $21,001 annually. Furthermore, to earn the same amount a white male earns in 12 months, women would have to work for more than 19 months. This phenomenon is also heavily present among black women working in high wage jobs. Black women working full time in high-powered jobs (such as engineers, lawyers, etc) on average earn $70,000. By comparison, white men in the same job earn $100,000. Resuming in a loss of $40,000 a year.

It is clear that gender and racial disparities are still heavily present within the US. Regardless of the Equal Pay Gap and VII Act. Due to this, more has to be done to reduce inequalities in pay across the country.

As presented through this article, California is taking great strides in combatting pay discrimination and promoting greater equality within its workforce. However, this is not enough. Other states in America must follow in California’s footsteps by abolishing gendered and racial disparities in pay. All states must actively seek a more equal and just future for women and people of color.

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