Why Obama Is Ending Pay Secrecy For Federal Contractors

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President Obama will announce this week that he is directing all federal contractors to lift ‘gag rules’ that discourage or outright ban workers from discussing their salaries, the AP reported on Sunday. The move, which he will announce on April 8, is part of an effort to eliminate the pay gap between male and female employees who hold the same jobs or do the same work.

April 8 is 2014’s Pay Equity Day, which marks the number of extra days into 2014 that the average woman has to work to earn as much as her male counterpart did in 2013. Obama will also announce that he is directing all contractors to provide data on the pay of employees by race and gender.

Obama has long said that pay fairness by gender is one of his policy priorities, and these directives are consistent with his general approach of circumventing Congress where he can to make the changes for a fraction of the population that he’d like to see enacted in law for everyone.

While it looks, on first glance, logical to collect data on where discrimination is happening, though, pay secrecy may not immediately stick out as the most important issue for enacting fair pay. But the issue is actually a driving factor in women’s inability to earn as much as the men they work with.

Almost half (48.4 percent) of all workers in the United States are either banned from talking about their salaries by contract, or strongly discouraged from doing so by their employers, according to a 2011 survey from the Institute for Women’s Policy Research (IWPR). Just slightly more women than men are told they shouldn’t be discussing that information, the IWPR found, and 43 percent of African American workers and 45 percent of Hispanic workers are also formally banned or discouraged from discussing that information. (Unionization, it should be noted, largely decreased the chances that salary information was not allowed to be shared.)

Not having the ability to openly discuss your salary means that you’d have no idea if you were getting serially under-paid, and that’s exactly the case for Lilly Ledbetter, who will be joining the President when he makes the announcement of his executive actions. Ledbetter was a 19-year employee of Goodyear when someone slipped her a note that said she was earning thousands less than her male coworkers.

“I thought I was earning good pay, I thought they were treating me fairly, but to my shock later on, I found out they were not,” Ledbetter recalled in one interview.

But, because of the statute of limitations, the Supreme Court ruled that she was not allowed to sue the company for the full term of her employment. Then, in 2009, Obama signed the Lilly Ledbetter Fair Pay Act, the first law he approved as president, which expanded the amount of time people have to file a complaint if they’re experiencing wage discrimination.

While equal pay advocates celebrated the Ledbetter Act, they also acknowledge that it didn’t get to the heart of Ledbetter’s original problem: An inability to know what her compensation was like compared to her coworkers. Women earn, on average, 77 cents on a man’s dollar, and are paid less even for doing the exact same work. But they might not realize it, as Ledbetter didn’t. Other bill have been proposed to correct this by ending the ‘gag rule’ — the most notable is the Paycheck Fairness Act — but none have become law thanks largely to a Republican party that believes the laws are meant to help trial lawyers and not women.

Obama’s executive action, then, will test the waters of how eliminating this gag rule may actually help women’s pay.

There are serious limits, though, to Obama’s ability to effect change in this arena. While one in five Americans is a federal contractors, the IWPR survey also found that the problem is significantly more widespread in the private sector, since many public sector employees’ salary information is public.