Opinion: Will the Pay Equity Act Work?

Opinion: Will the Pay Equity Act Work?

The County Council grapples with gender gap in government compensation

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County Council Member Evan Glass has introduced the Montgomery County Pay Equity Act, which he claims will address “a major reason for wage inequity between women, men and nonbinary employees” of county government.

Regular Bethesda Beat readers will recall that I published a series on this issue before the bill was introduced; here are links to Part 1, Part 2 and Part 3.  At the time I crunched the county’s salary data, I had no idea that Glass was developing legislation on this matter.  But since the data analysis is available, we can use it to evaluate the efficacy of Glass’s bill.

Glass is addressing a real and serious issue. As I found, there is a significant gender pay gap in county government.  Glass’s bill would deal with it by prohibiting the county from asking employment applicants for their salary history.  He explained his approach at his bill introduction press conference:

When hiring managers have the discretion to rely on job applicants’ pay history to determine their salary, individuals can quickly become stuck in a cycle in which they become undervalued, and this system disproportionately affects women… When such discrepancy exists, it might seem like a small issue for some, but the multiplier effect can become great … and make no mistake about it, this is a real problem right here in Montgomery County.

While the bill is well intentioned, there is no evidence that the problem Glass identifies is pervasive in county government and contributes in a major way to the gender gap.

If Glass’s theory were true, new female hires would start at lower salaries than men and that gap would be perpetuated over their careers.  But that’s not happening in county government.  In Part 2 of my gender pay gap series, I studied the relationship between seniority, salary and the gender gap in the 2017 county payroll file.

Among employees who had been with the county less than five years, the average annual salary of women was 103 percent of the average annual salary of men.  The female salary percentage of men fell to 93 percent among employees with 5 to 20 years of seniority and 87 percent among employees who had been with the county for more than twenty years.  Gaps in gross pay received and overtime were larger and also grew with seniority.

But to more strictly evaluate Glass’s assertion, I looked at employees with less than one year of seniority – in other words, new hires.

In 2017, 259 women and 335 men had been with the county for less than a year.  Among that group, women had both slightly higher average salary and gross pay received than men.

So, on average, women actually earn greater salaries than men at the time of hire.  But over time, they fall behind men in salary, gross pay and overtime earnings.  This is a very different story than the one offered as a rationale for the pay equity bill.

Here’s another way to look at this.  In 2017, female full-time employees had a higher average salary than full-time men.  And female part-time employees had a higher average salary than part-time men.  That wouldn’t be happening if salary history were being used to suppress salaries earned by women.  The problem is that part-time employees make less money and women are way over-represented in part-time status.  Also, women make much less overtime than men.

That’s not to say that salary is never a contributor to the gender pay gap.  In Part 3 of my series, I looked at the 10 largest departments in county government.  Women were majorities of just two of those departments – health and human services and libraries – and both of them had lower gross pay received than the county average.  The table below shows the average current annual salary for full-time and part-time employees by department in 2017.

Six departments paid full-time women higher average salaries than full-time men.  In one (permitting services), the two were nearly equal.

The two most problematic departments were police and sheriff, each of whom paid salaries to full-time women that were 87 percent as much as full-time men.  Among part-time employees, only one department (health and human services) paid women lower average salaries than men.  There is no evidence that use of salary history is a cause of the gender salary gap in the police and sheriff departments, but those two have a problem that must be examined further.

I don’t question Glass’s intentions: the gender pay gap in county government is real.  But there is no academic consensus that banning questions about salary history actually helps female job applicants.  One study of more than 15,000 job seekers described in the Harvard Business Review found that female applicants who did not disclose their salary history were actually offered 1.8 percent less in pay than women who did disclose.  That’s just one study and not a lot of relevant research has been done.  As more jurisdictions adopt salary history bans, academic papers should appear over time evaluating whether they made a difference in gender equity.

But let’s get back to the focus of the bill: Montgomery County government.  The county’s payroll file makes clear that three factors are major contributors to the gender pay gap in county government: women are more likely to work in part-time positions, earn less overtime than men and are concentrated in departments that pay less.  None of those factors are addressed by the Pay Equity Act.  Much more work needs to be done.

Adam Pagnucco is a writer, researcher and consultant who is a former chief of staff at the County Council. He has worked in the labor movement and has had clients in labor, business and politics.

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