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  • Uncle Sam Wants a Seat at Your Salary Negotiation

    You find a job you want. After a great interview, the company is ready to make you offer. If one member of the House of Representatives has her way, your employer will be missing a key piece of information. Your salary history.

    Representative Eleanor Holmes Norton (D-DC) along with Representatives Rosa DeLauro (D-CT) and Jerrold Nadler (D-NY) will co-sponsor a bill prohibiting employers from asking for an applicant’s salary history. A similar bill has already passed Massachusetts and is under consideration the New York City Council.

    The purpose of the federal bill is to limit the impact of historical pay differences between men and women as well as various minority groups. Representative Norton asserts that

    “Despite years of progress, women are still paid 79 cents to a man’s dollar and we must do more in our fight for full equality.”

    The statistic cited by Representative Norton has been widely criticized, because the method used to calculate it does not take into account a number of items that influence pay.

    The legislation at the federal level is being put forward on the heels of a proposed change in EEOC regulation that will require employers with 100 employees or more report income as well as job data. Currently, most employers fill out an EEO-1 annually and report ethnicity, race and gender by job category.

    With the new rule, beginning in September of 2017, employers will add an employee’s W-2 earnings to the EEO-1 form using 12 pay bands determined by the federal government. The EEOC’s reasoning for this is to identify discriminatory wage practices based on the same disputed wage inequality statistic being used in support of federal legislation. The reporting does not control for the other variable identified through research that influence’s compensation.

    June E. O’Neill, former director of the Congressional Budget Office objected to the statistic that both Representative Norton and the EEOC are using to support their efforts. In 2012 she noted that in calculating the statistic, several key factors are not considered. Work experience, or the number of years in a profession, as well as, career choice are not considered. After taking these and other non-discriminatory factors into account, O’Neill found that in the year 2000, the un-adjusted hourly wage of women who had never had a child was actually 7.9% higher that their male counterparts.

    Another analysis by labor economists Claudia Golden and Lawrence Katz in 2010 also found that differences in income between men and women can be explained by factors other than discrimination. Their analysis showed that career interruptions had the biggest impact among MBA graduates from the University of Chicago between 1990 and 2006. Another study by Katz and Francine D. Blau noted controlling for occupation and industry accounted for a significant amount of the wage differential across the workforce.

    The new EEOC reporting does not collect information about variables identified through research that influence wages. The proposed legislation will affect individual salary negotiations between prospective employers and candidates. The often cited and refuted wage differential statistic of seventy-nine cents on the dollar is the primary rationale for both the legislation proposed by Representative Norton and the rule change by the EEOC. Based on well documented research, both may be a solution in search of a problem that puts additional burdens on employers and job seekers.


    Stacey Lennox

    Stacey Lennox

    Stacey Lennox spent 15 years in executive management for Fortune 500 companies before starting Buzz Strategies & focusing on small business success. And a bit of political activism. You can find her on Twitter at @Scotsfyre and hear her as an occasional guest on The Loftus Party podcast.

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