Businesses Won’t Have to Report Pay Based on Gender and Race

The Wall Street Journal reports this morning that the Trump administration is going to nip in the bud an Obama administration proposal that would have required employers to collect and report to the federal government what they pay employees on the basis of race and gender.

The Journal reports:

The data-collection requirement was proposed by the Obama administration in 2016 as part of its efforts to address pay disparities among workers of different groups.

The Trump administration will stay the implementation of the rule, which would have required employers to report the pay data for the first time in the spring.

“It’s enormously burdensome,” said Neomi Rao, administrator of the Office of Information and Regulatory Affairs, which analyzes the cost of federal rules and regulations. “We don’t believe it would actually help us gather information about wage and employment discrimination."

The Obama administration proposal directed the Equal Employment Opportunity Commission to begin collecting wage and pay data from private employers with 100 or more employees and federal contractors with 50 or more employees. The proposal effectively expanded the range of data employers were required to report beginning this year on a form called the EEO-1. That form has been used for decades to collect information on the racial and gender makeup of the American workforce but hasn’t measured how different groups are paid.

The Obama administration said the proposal would better allow the EEOC to analyze and combat pay discrimination.

The exorbitant cost of collecting the information wasn't the only problem.

The proposal treats employees as cogs, identifiable only by race and gender. It assumes your pay can be evaluated by looking merely at these attributes. Talent, dedication to getting the job done, and willingness to work hard aren't factored into the equation.

These proposals would have had a terrible effect on merit pay.  The EEOC can't see these factors when it looks at racial and ethnicity data. It is easy to see that employers would simply not be able to reward outstanding employees for fear of being sued by somebody who was, deservedly, paid less.

Ivanka Trump issued a statement saying that, while she supports transparency, the Obama proposal simply would not have produced the desired results.

But they might have made it risky for an employer to reward to a hardworking employee.