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New law in Mass. attempts to raise IT pay for women

New law in Mass. attempts to raise IT pay for women

The commonwealth is trying to close a wage gap with a new state law

Women who work in information technology are paid less than men -- that much is clear. The problem is why, and whether IT managers can fix it.

The Census Bureau, in a report this week, found that women who work in IT were paid, at the median, $10,000 below men in 2014. Similarly, IEEE-USA found that women's salaries trailed men’s by an average of $13,635 in 2014. Although that deficit was down from $16,500 in 2013, the gap remains wide.

The gender wage gap is no secret, but employees are often prohibited from discussing their salaries and may have even signed confidentiality agreements. That’s one prohibition that ended with a new law Massachusetts Gov. Charlie Baker, a Republican, signed this month.

The law, which takes effect Jan. 1, 2018, “has a number of provisions that will provide new tools to help close the wage gap,” said Victoria Budson, executive director of the Women and Public Policy Program at Harvard Kennedy School and chair of the Massachusetts Commission on the Status of Women.

“The Act to Establish Pay Equity” is not specific to technology, but it may have a significant impact on people in the industry.

Sunlight on salaries

The law prohibits employers from asking prospective employees about their past salary. That’s important because it means that employers will need to benchmark compensation to the skills and experience an employee brings rather than previous salary history.

When employers benchmark salaries against earlier wages, it creates “a snowball effect, where you’d see a continuing gap throughout that person’s career,” said Budson in an interview.

The law also allows people to discuss their salary “without fear of retaliation or retribution” from their employer, said Budson.

“If we develop a culture where people are more open about wages, we will find the gaps begin to shrink,” said Budson, who pointed to Washington D.C., which has the lowest wage gap -- thanks to federal pay disclosures. “Some problems are solved when the light of day shines upon them, wage disparity is really one of them."

Wage audits can help

The third, and perhaps most important, provision provides an incentive for employers to conduct an internal wage review to see how pay varies on the basis of race, age and gender. Any company that conducts this audit and then “takes meaningful steps” to remedy any disparities will have an “affirmative defense” to use in any wage litigation. This is a defense that can protect a company from allegations of wrongdoing.

The U.S. passed the Equal Pay Act in 1963, and it was signed by then-President John F. Kennedy. While the law helped to close wage gaps, it didn’t eliminate them, leading to measures like the Massachusetts law.

The hope is that it will encourage businesses to conduct wage audits. “The most effective way to close the wage gap is for businesses to do these types of internal audits and to figure out where they have trends and where they need to place their attention,” said Budson.

Women typically start out at lower annual salaries, usually $5,000 to $7,000 below men, said Karen Panetta, editor-in-chief of the IEEE Women in Engineering Magazine, and a professor of electrical and computer engineering at Tufts University.

HR plays a role

Panetta said the problem is often in the human resources department, which gets rewarded when it saves money on hires. “Women don’t negotiate their starting offers are rigorously as men,” she said.

Women appear to be less valued. If a man comes in with an offer letter from a competing employers, the hiring company will usually match it, but “if a woman comes in with an offer letter, they will say goodbye,” said Panetta.

The problem for employers is keeping women, since pay disparities often cause them to leave STEM occupations. “They are going to go where the money is and they will go where they feel appreciated,” said Panetta.

Women make up about 25% of the IT labor force, according to government data.

Panetta’s message to employers is that if “you want to stop paying lip service to this, you need to address it head-on and be transparent with your employees. Everybody should know where they stand relative to everybody else,” she said. “I understand that companies don’t want that information out because it is costly to correct, but it’s the right thing to do."

IT managers need to fight for hires

IT managers should fight the HR department on salaries, said Panetta.

“The managers have to go back and say, ‘This is the best candidate and I want this candidate,'” said Panetta, who added that managers also need to make clear that they want to see equitable offers to all candidates.

This law has divided business groups. In January, prior to a vote on the legislation, the Massachusetts High Technology Council said in a letter to lawmakers that the measure would make it “exceedingly difficult and risky for employers to reward any employee, female or male, through commissions and other merit-based or performance-based compensation systems.”

The Greater Boston Chamber of Commerce, however, supported the bill, and told lawmakers that “fifty percent of the Greater Boston workforce is made up of women, yet studies show that even in 2016, women are earning significantly less on average than their male counterparts. And wage inequality not only affects businesses, it also has a negative impact on families and the overall Massachusetts economy.”

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