Why Pay Transparency Laws Are Crucial for Women of Color

Women of color have work to do when it comes to salary negotiations. 

By not engaging in pay discussions at the beginning of their careers, women can lose over $1 million in lifetime earnings. Research indicates underrepresented groups are less likely to negotiate their salaries because of biases and discrimination. 

Experts say pay transparency laws can effectively shrink the racial and gender pay gap by increasing women’s salaries. As we celebrate International Equal Pay Day on September 18, DiversityInc explores the game-changing laws — where they have been implemented, what companies have done and are doing to shrink the gap and how women of color can control their pay outcomes. 

Which States Have Pay Transparency Laws?

Seventeen states, including Colorado, Maryland and Nevada have pay disclosure laws, with more expected in 2023. 

Some laws require employers to provide a pay range in job ads or salary information during the hiring process. Other laws ban employers from requiring job applicants to disclose their salary history. Pew Trusts says pay transparency laws benefit minority candidates the most because the group is more likely to receive lowball offers.

Pay transparency laws are still relatively new. 

In 2018, California became the first state in the nation to legally require employers to provide the pay range for a job. In 2022, the state passed a first-of-its-kind law requiring all companies hiring in California with more than 100 employees to show their median racial and gender and pay gaps. Governor Gavin Newsom has until September 30 to veto it or sign it into law. 

“It’s high time to level up the playing field,” says Monalisa Chati, mentor to women in the tech industry and a Strategy and Business Operations Leader at ServiceNow, a cloud-based platform developer.

As pay transparency laws don’t exist in every state or jurisdiction, this leaves companies to decide how they will address the topic.

Research from JUST Capital found that only 23% of companies disclose that they have pay equity analyses. Apple and Cisco are among the companies that have publicly shared the results of their gender pay equity research. In 2022, Microsoft said it will include pay ranges in all of its U.S. job listings beginning no later than January 2023. Experts say the move could prompt more companies to make pay disclosures to attract and retain talent. 

READ: How to Retain Diverse Employees in the Great Resignation

The Race and Gender Pay Gap

Globally, women only make 77 cents for every dollar men earn, according to UN Women, the United Nations entity dedicated to gender equality. The gap is greater for women of color, mothers and immigrant women and tends to be larger in developing countries. 

In 2020, women earned 82 cents for every dollar paid to men. The pay gap is even greater for women of color. At the bottom of the pay parity scale are Latinas who make 49 cents for every dollar paid to white men.   

Equal pay laws could help provide needed income for women whose earnings support their families. Thirty-four million households in the United States are headed by women, with the majority led by Black mothers. Black women earn 58 cents for every dollar made by white men and lose nearly a million dollars in their lifetime because of the pay gap, according to the National Women’s Law Center

Recent studies have highlighted the effectiveness of pay transparency laws, though research from the Harvard Business Review (HBR) found that while the laws are beneficial, they can have unintended consequences like compressing pay. HBR says that could prompt employees to seek non-monetary ways to receive benefits from employers and increase the number of managers granting alternative rewards to employees. 

Global Pay Transparency Legislation  

Pay inequality isn’t only a hot topic in the United States — it’s a reality around the globe. 

While no country has yet achieved full gender parity, the World Economic Forum notes that countries including Iceland, Rwanda, New Zealand and Nicaragua have made significant advancements in pay transparency laws. Most recently, the European Union parliament backed a proposal that requires employers with at least 50 employees to publish pay gap data. But there’s more work to be done. The World Bank notes that equal pay for equal work is only mandated in 90 economies worldwide.  

“Although the number needs to increase exponentially, U.S. companies should look to those countries for guidance in implementing and enforcing wage equality,” says Lorise Diamond, Executive Director of Linguistic Communication Development Center, a non-profit start-up and a writing consultant at Claremont Graduate University.

“An effective template is in place. But without a real commitment from men to share power and authority or strategic demands for change from women, wages between women and men will remain imbalanced,” she adds. 

READ: Women of Color Undervalued Despite DEI Focus

Women Negotiating Salary 

Employees that feel they are not paid fairly are more likely to leave their employer. But still, many women of color view negotiations as a privilege.  

Yanira Guzmán, founder of The Career Gem, a full-service career coaching business and Clarissa Fuselier, Principal Strategist and founder of the consulting company Inclusion.Logic both admit that they didn’t negotiate compensation when their previous employers promoted them. 

“We grow up thinking, I’m earning more than my parents ever could think of,” says Guzmán, a first-generation Latina. “Can I ask for more? Yes — and you should never take the first offer.”

Fuselier says understanding the connection between pay transparency laws, the race and gender pay gap and the salary negotiations can empower women of color. 

“Once you start to realize there is a pay gap that exists between men and women in the workforce – and even more so between women and women of color in the workforce – then you start to realize, I need to be confident with my worth,” she says. “Until you start understanding how that dollar amount equates to the work, you won’t be able to advocate for yourself.”

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