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- The Biden administration is taking new actions to cut down on federal wage gaps.
- Salary history will be banned from consideration in setting pay for new hires.
- A new proposed rule would do the same for federal contractors, and mandate pay transparency.
Across the economy and country, women — and especially women of color — are paid less than their peers. The Biden administration wants to change that.
On Monday, the administration announced that it's rolling out two new policies to try and level the playing field. In the federal government, the Office of Personnel Management will institute a new rule that will prohibit the use of an applicant's salary history in setting pay for a role in the federal government. In other words, applicants for federal jobs won't have their salary histories held against them.
"Relying on a candidate's salary history can exacerbate preexisting inequality in our pay structures, and disproportionately impact women and workers of color. As a matter of fact, this has happened to me earlier in my career," Director of the Office of Management and Budget Shalanda Young said in a call with reporters. "Prohibiting this practice will help federal agencies recruit high performing talent that not only fully represents the American people, but most effectively delivers for them."
Additionally, the Federal Acquisition Regulatory Council will propose a rule that would prohibit federal contractors from seeking and considering past compensation information when they make their employment decisions — along with requiring that contractors disclose their salary ranges in new job postings.
Salary history bans are one route that some advocates and states say can help chip away at pay inequities. Relying on a past salary — which may already be lower, in part, because the applicant is already on the wrong side of the gendered and racial pay gap — might mean that employers' salary negotiations are locked into a compensation number that's lower than they might otherwise be willing to offer.
And, as the National Women's Law Center chronicles, some employers use previous salaries as a benchmark for determining a new worker's salary — again essentially locking in some of the biases that could've kept that number lower.
Research on salary history bans suggests that they are effective in narrowing pay gaps; one study, which focused on California's statewide salary history ban alongside other localities that enacted bans, found that the gender earning ratios increased, with women over the age of 35 particularly benefiting.
The actions are pegged to the 15th anniversary of the Lilly Ledbetter Fair Pay Act of 2009, which, per the EEOC, is the first piece of legislation President Barack Obama signed into law.
That act overturned a previous SCOTUS decision and restored past law around reporting pay-based discrimination. The Biden administration's final regulation for federal workers will go into effect 60 days after January 30, while the proposed rule for contractors will go into public comment for 60 days.
The pay equity actions follow similar policies by the administration, which bumped minimum wages for federal contractors and mandated affordable and accessible childcare for workers at facilities funded by the CHIPS act.
However, all of that policy is constrained to workers under the administration's purview, and not workers nationwide; Congress hasn't been able to raise the minimum wage in nearly 15 years, or pass legislation to strengthen the Equal Pay Act of 1963. But the new actions are another area where the Biden administration hopes to again be a model employer.
"These policies promote pay equity by closing pay gaps, and we know closing pay gaps leads to increased worker satisfaction, better job performance, and overall increased worker productivity — all factors associated with promoting the economy as well as efficiency and effectiveness of our workforce," Young said. "This is common sense and the research proves it. When workers feel that they are valued and that their pay is fair, it is better for everyone."