About the Obama Administration’s New “Equal Pay Pledge”

During yesterday’s "United States of Women" event, the Obama Administration announced a new "Equal Pay Pledge." 

The “Equal Pay Pledge” pressures  private companies to review gender pay data annually and change their practices if there seem to be discrepancies in how women are paid compared to men. It’s part of the Obama Administration’s efforts to remedy perceived gender discrimination, by applying not-too-subtle pressure on the private sector.

So far, 28 companies signed the Equal Pay Pledge in advance of the White House’s announcement including Airbnb, Amazon, American Airlines, Care.com, Deloitte, Expedia, Gap Inc., Glassdoor, Johnson & Johnson, L’Oréal USA, PepsiCo, Pinterest, Salesforce, and Staples among others.

The pledge reads:

We applaud the growing number of countries that have already made significant progress in closing their gender wage gap. Despite passage of the Equal Pay Act of 1963, which requires equal pay for equal work, the gender pay gap in the United States persists. Women working full-time earn only 79 percent of men’s wages, and we are committed to taking action individually and collectively to reduce that national pay gap.

We believe that businesses must play a critical role in reducing the national pay gap. Towards that end, we commit to conducting an annual company-wide gender pay analysis across occupations; reviewing hiring and promotion processes and procedures to reduce unconscious bias and structural barriers; and embedding equal pay efforts into broader enterprise-wide equity initiatives. We pledge to take these steps as well as identify and promote other best practices that will close the national wage gap to ensure fundamental fairness for all workers.

The underlying assumption with this pledge is that companies are not paying women the same as men in the same roles. It’s based on the wage-gap that liberals often trot out. They claim on average women are paid 77 cents (or 79 cents) on the dollar compared to men, claiming that this average difference in pay is evidence of sex discrimination.

However, this statistic ignores the many factors that affect earnings such as the choices women make. Many women take time out to raise children and women tend to major in college in the less lucrative fields. The pay pledge also treats individuals as cogs, ignoring such matters as industry, specialty, years of experience, dangerous nature of some jobs, number of hours worked, and other factors. When these factors are controlled for the gap in wages shrinks to a few percentage points. That could be due to legitimate discrimination or some other unknown. Where there is discrimination based on gender, employees should and do have legal recourse.

Pledges like this are just PR stunts. If a private company chooses to sign on as an act of goodwill or perhaps fear of the government, that’s fine for them, but that’s their choice. They may promote their efforts as selling point to lure good talent way from competitors. However, the numbers indicate that gender pay discrimination is not as rampant and that these efforts may be just for the headlines.