The Philadelphia Wage Gap Law and Why It Matters

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(Senate Democrats / Flickr CC)
February 8, 2017

Last month, Philadelphia became the first U.S. city to prohibit employers from asking potential hires about their salary history. Despite legitimate arguments that have been made around the potential effectiveness of the new law, its passage is a welcome progressive shift for Philadelphia and a sign that lawmakers are committed to equity for working women.

Purpose of Law

Introduced by Councilman William Greenlee, the bill in question amended Title 9 of The Philadelphia Code by adding a new chapter on wage equity. The objective of this legislation is to reduce discrimination during the hiring process, particularly for the women who are frequently underpaid in Philadelphia for performing the same jobs as men.

Arguments Around the Law

Proponents of the legislation argue that the law is one step forward in addressing Pennsylvania’s dramatic wage gap: if women aren’t required to report previous salary history, they will likely be able to ask for a better salary from the outset of the hiring process.

Opponents of the law (notably the Comcast Corporation, which threatened to sue the city if Mayor Kenney did not veto it) contend that the law will impose significant burdens on employers. According to Comcast spokespersons, this violates employers' First Amendment rights to ask about wage history and creates bureaucratic difficulties for businesses in a city that is already “anti-business” (referring to Philadelphia’s significant business tax rates, some of the highest in the nation).

Other opponents, such as Wharton professor Peter Cappelli, claim that lack of information about a potential hire’s wage history could actually hurt an applicant because it allows employers to make incorrect assumptions about prior earnings.

Why It Matters

The wage gap matters. It has tremendous impact on the city’s economy and the wellbeing of its residents. In two of every three Pennsylvania households, women with children are primary or co-breadwinners. Despite the crucial role women play in ensuring household livelihoods, Pennsylvania boasts a 76% gender wage gap, with women making an annual average of $38,000 and men making $50,000 (approximately $0.76 to every $1.00). This results in a stark annual income difference of approximately $12,000. To emphasize the significance of this number, consider that the median household income in Philadelphia is $36,836 and the impact that an additional $12,000 would have on household budgeting.

The wage gap is even larger for black women and Latina women in Pennsylvania: for every dollar that white men earn, these groups earn $0.74 and $0.55 respectively.

These disparities reflect poorly on Pennsylvania, which ranks 37th out of the 50 states’ annual pay gap measures.

Wage Gap

Philadelphia’s move to address this obvious pay inequity is likely an outcome of inaction in Harrisburg on the same topic. The state legislature has so far refused to raise the minimum wage above the federal minimum ($7.25 an hour) or to fix the state’s current equal pay law, which has proven ineffective. Without corrective policy interventions, Pennsylvania women are not on track to earn equal pay until 2072.

According to the Women’s Law Project of Pennsylvania, basing salary offers on a previous earnings, rather than an applicant’s qualifications and the job’s responsibilities, is one way pay discrimination is perpetuated throughout a woman’s working life. The gender wage gap often emerges early in a woman’s career, then increases. By removing prior wages from the hiring process, the Philadelphia law enables women to be paid based on objective criteria, like education and experience, and to avoid being penalized by lower earnings from a previous job.

Yes, this new policy could negatively affect hirers in Philadelphia, where businesses already experience significant red tape and financial burden. With the law in place, an employer’s assumption about past earnings may occasionally affect their final offer to a candidate. However, these arguments in no way undercut the positive effect of reducing the impact of past discrimination in prospective hires, both for women and minorities of all gender identities. Eliminating the gender pay gap is smart economics: as caregivers, breadwinners, and civic organizers, women are more likely to invest their earnings back into their families and communities.

The Philadelphia law won’t be a catch-all remedy to the income disparity between men and women, which is the consequence of an intricate set of factors. This policy is one of many needed to create comprehensive impact. Yet, as Ariane Hegewisch of the Institute for Women’s Policy Research aptly states, “enacting these kinds of [local] laws shows that the world doesn’t collapse when we create protections against gender discrimination in the workplace.”

Fels Institute of Government

The Fels Institute of Government
3814 Walnut St. 
Philadelphia, PA 19104

(215) 898-7326

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