In 1979, Lilly Ledbetter started working for Goodyear Tire and Rubber Company. Toward the end of her 19 years there, Ledbetter began to suspect she was paid less than her male colleagues in the same position. An anonymous note confirmed her suspicion, and Ledbetter complained to her supervisor about unfair compensation. Her employer retaliated, so Ledbetter went on to file a complaint with the Equal Employment Opportunity Commission (EEOC). In 1998, she filed a pay discrimination case against her employer on the basis of sex under Title VII of the Civil Rights Act of 1964. The case made it to the Supreme Court but was struck down.
Not knowing about co-workers’ pay leaves many women unaware of workplace pay discrimination. In 2020, full-time, year-round women workers still earn 18 percent less than men. IWPR’s policy brief “On the Books, Off the Record: Examining the Effectiveness of Pay Secrecy Laws in the U.S.” connects pay secrecy practices to this persistence of the gender pay disparity.
A growing body of research finds that pay transparency is associated with smaller gender pay gaps. Improving pay transparency has been a focus area of recent legislative efforts at the state level to improve pay equity. In 2014, President Obama signed an executive order barring federally contracted firms from maintaining pay secrecy policies. In just the past decade, over a dozen states plus the District of Columbia have adopted legislation banning employers from retaliating against workers who discuss pay. The scope of these anti-secrecy laws varies across states, but they all explicitly ban employer retaliation.
Despite recent legislative efforts, pay secrecy practices are still widespread in the United States and disproportionately affect women, according to a new analysis released by the Institute of Women’s Policy Research. About half of full-time workers are either discouraged or formally prohibited from discussing pay in the workplace. The new study uncovers substantial gender differences: First, women are more likely than men to work under a formal pay secrecy policy (15.7% women and 10.9% men). The majority of women (52.2 percent), compared with 46.8% men, are not free to access or discuss pay information in the workplace. Second, women are significantly more likely than men to violate formal prohibitions against discussion pay. Clearly, women are dissatisfied with the status quo.
These findings suggest that women workers are caught in a double bind. They likely have more to gain from knowing what colleagues earn, yet they are more likely than men to be subject to formal pay secrecy policies. The fact that more than half of women work under pay secrecy policies of some kind suggests women are left responsible for uncovering illegal pay discrepancies. Women workers are pushing back against pay secrecy rules, but doing so would likely lead to retaliation, like in Lilly Ledbetter’s case.
Workplace transparency practices not only help reveal existing pay gaps but can also help equalize opportunities on the bargaining table. Gender differences in negotiation outcomes are less pronounced when the terms of negotiation and the bargaining range are clear.
The new study further reveals that public-sector workers and unionized workers are much less likely to be subjected to pay secrecy policies than their private-sector and nonunion counterparts. Existing research also finds lower gender pay gaps in the public sector and among unionized workers. Investing in public-sector jobs and strengthening workers’ rights to unionize would thus be particularly effective in increasing pay transparency as well as improving pay equity.
Lilly Ledbetter’s story continues: The setback in the Supreme Court ignited equal pay activist groups, which led to the creation of her namesake bill, the Lilly Ledbetter Fair Pay Act. The bill resets the clock for filing a pay discrimination lawsuit with each new paycheck affected by that discriminatory action. On January 29, 2009, it became the first bill signed into law by President Obama.
Achieving equal pay demands our collective efforts.
As Lilly Ledbetter said in 2008, “There will be a far richer reward if we secure fair pay. For our children and grandchildren, so that no one will ever again experience the discrimination that I did. Equal pay for equal work is a fundamental American principle.”
