Solutions

Is transparency the right path to equal pay?

Tempe campus

October 21, 2022

ASU business professor examines how a new law in the UK deals with gender pay gap, whether it can benefit the American workforce

A research team led by an Arizona State University professor has discovered that naming and shaming a company alone won’t close the gender pay gap.

Since 1963, the United States government has tried to narrow the discrepancy in wages between men and women, even instituting legislation to enforce the issue. For six decades they’ve chipped away at the inconsistency, as women now earn 82 cents for every dollar a man does, according to 2020 data from the Bureau of Labor Statistics.

They’re now hoping that more transparent legislation will help. But a new study by ASU’s Amanda Sharkey and co-authors Elizabeth Pontikes and Greta Hsu of the University of California-Davis demonstrates that naming and shaming is not enough, and more nuance is needed.

Sharkey, who is an associate professor in the Department of Management and Entrepreneurship at the W. P. Carey School of Business, has been working on this issue for years. Her new study, “The Impact of Mandated Pay Gap Transparency on Firms' Reputations as Employers,” looked at how employee reviews on the website Glassdoor changed in the wake of pay gap disclosures prompted by new regulations in the United Kingdom.

ASU News spoke to Sharkey about her findings and how they could potentially impact firms in the United States.

Amanda Sharkey

Question: Can you explain why you chose to study this issue, and why in the United Kingdom as opposed to the United States?

Answer: The gender wage gap is stubborn. Although the gap has gotten a lot smaller over the last century, there has been almost no change over the last 15 years. In fact, forecasters project that the pay gap won’t be eliminated until 2059, if we (keep) up at the same pace as we have since 1985. The slow pace of change, combined with public attention to the issue, has intensified the search for effective remedies. Transparency is one promising solution, and it is intuitively appealing in many ways. But, given the costs involved in disclosure and what’s at stake here, we’d ideally have hard evidence of transparency’s effects, rather than just intuitions.

We chose to study this in the U.K. for a couple of reasons. First, when we started working on this paper, a national initiative that would have required companies in the U.S. to disclose pay gap information had just fallen by the wayside. So the data simply did not exist in the U.S. At the same time, a lot of other countries were just starting to implement transparency regulations. These requirements have a different flavor in each country. The one in the U.K. was especially attractive to us because it is very far-reaching — all organizations with 250 employees or more had to disclose. Other studies have been done on pay disclosure, but they focus on specific industries or on companies that have voluntarily disclosed. It wasn’t clear whether the findings from those studies would hold more broadly across a wide range of organizations. Because the law in the U.K. affects such a broad swathe of organizations, it can help us get a sense of how transparency operates more generally.

Q: What were some interesting findings?

A: Well, when mandatory disclosure laws were being considered, most of the arguments in favor of them centered around “naming and shaming” firms with large pay gaps. The idea was that word would get out about the size of these pay gaps, people would complain either to their bosses or to one another, and these firms would take steps to narrow the gap in order to avoid these negative reputational consequences. But we actually did not find any evidence of reputational penalties on Glassdoor for these firms. In other words, when we looked at how ratings changed from before to after disclosure for firms with a large gender wage gap (more than 20%), as compared to firms that had a more modest gender pay gap (2 to 20%), the ratings for firms with a large pay gap didn’t show a decline.

Frankly, we were surprised by this. So we looked into several possible explanations. For example, we thought maybe employees just weren’t aware of the information. Or maybe there are industries, like tech or finance, where everyone kind of knows that there is a large pay gap, and employees only react to a large pay gap in other industries where this information is more surprising. But none of these seemed to account for our results. Our best intuition — and we have some suggestive evidence to support this — is that employees who stay at firms with large pay gaps have come to accept the disparity as part of their workplace.

On a more positive note, we also looked at what happened to firms that disclosed that they were paying men and women relatively equally. There is good news for these firms. We found that these firms got a reputational boost from disclosure. Their ratings improved, and people started talking more about gender in their reviews of the company, which helps us be more certain that the improvement was due to disclosure.

Q: How will firms in the U.S. potentially use your information and make it meaningful to them?

A: Many firms in the U.S. have looked at their own pay gap numbers, although not a lot have voluntarily disclosed them. Our research suggests that firms that have a low pay gap could benefit from making this information public. Since Glassdoor is widely used by job seekers, putting this information out there for people to discuss could potentially help them attract a bigger or better pool of job candidates. Our research shows that people do care about and react favorably to this information.

Q: Pay gap reporting is being considered or being implemented in some U.S. cities and states. How might these governments use your findings?

A: Well, collecting this information and making it public entails some costs, both for firms and for the government. Our findings suggest some ways that governments can get the most bang for their buck if they require reporting. For example, we find that the positive reaction to firms with a small pay gap is bigger during periods when people are paying more attention, such as when this issue is in the news a lot. This suggests that government efforts should not just be about collecting this information, but they also need to engage in heavy publicity efforts if they want it to have an impact. We also find that the positive reaction is bigger when it is easier for people to interpret this information, such as when the information is more comparable across people in different jobs. In the U.K., firms were required to report only an overall firm-level number, but our findings suggest reporting information at a more granular level makes the information more powerful — at least in the case of firms with only a small pay gap.

Q: Is transparency legislation the right path forward to close the gender pay gap?

A: You may be asking the wrong person. This is a tough question — especially for someone who chose a career that centers around analyzing data. I wouldn’t have been able to do this research if this data wasn’t publicly available, and I don’t want to put myself out of a job!

More seriously, transparency is logically an important starting point for taking steps toward closing the gap. But our research suggests that it isn’t a panacea. Information has the potential to empower people, but whether it ultimately impacts anyone depends on whether people can and do use it. In the case of the gender wage gap, understanding the size of the gap can certainly be useful for employees. For example, when this information is made public, job seekers can have a better sense of which firms are more egalitarian and they can incorporate that as a criteria in their search. Our research suggests that employees do pay attention to this information, at least in the case of firms with a small pay gap.

Although we didn’t find evidence of a negative effect on the reputations of firms with large pay gaps, it is possible that job seekers’ positive reactions to firms that are paying their employees equally will have an indirect effect on firms with a large pay gap, as job seekers look for those firms that report small wage gaps. But this could take a while. As a result, more direct interventions may be needed to prompt these firms to address the issue. There are examples of transparency policies that are more heavy-handed, such as the one in Iceland, where companies must conduct a pay gap audit and pay a daily fine if it reveals a disparity.

Q: Aside from transparency, what else can managers do to close the gap?

A: There is research indicating the power of changes to hiring and promotion processes, such as evaluating candidates simultaneously rather than sequentially, or formally posting jobs rather than filling them through word of mouth. We may be at the point where there is not a lot of low-hanging fruit in terms of ways to make big gains in closing the gap. But many of these seemingly smaller changes in organizational policies can really add up. And while my research here is focused on the gender wage gap, many of these interventions show promise for promoting greater equality for other underrepresented groups as well.

Top photo illustration courtesy iStock/Getty Images

Marshall Terrill

Reporter , ASU News

480-727-5176 marshall.terrill@asu.edu

The stories a passport tells

Open your passport and take a look. What do you see?Your picture. Stamps from countries you’ve traveled to. Perhaps the expiration date and the country of origin.Patrick Bixby sees all those things too. But he also thinks about the stories the passport reveals.“It’s a document that tells stories in a way that many other kinds of historical documents don’t,” said Bixby, an associate profe...

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The stories a passport tells

West Valley campus

October 21, 2022

ASU professor's book looks at the cultural history of the travel document

Open your passport and take a look. What do you see?

Your picture. Stamps from countries you’ve traveled to. Perhaps the expiration date and the country of origin.

Patrick Bixby sees all those things too. But he also thinks about the stories the passport reveals.

“It’s a document that tells stories in a way that many other kinds of historical documents don’t,” said Bixby, an associate professor of English in the New College of Interdisciplinary Arts and Sciences, “because it comes along with someone as they travel, and travel is generative of stories. It tells us where someone went often, it tells us why they went there, and it tells us where they weren’t able to go. Those things become very interesting if you look closely at them.”

Patrick Bixby's book on the cultural history of the passport will be published on Oct. 25

Bixby has written a book on the cultural history of passports titled “License to Travel: A Cultural History of the Passport” that will be released Oct. 25.

The book examines the passports/travel documents of artists, intellectuals, ancient messengers — as far back as pharaonic Egypt — and modern migrants to see how the document reflects larger issues such as citizenship, state authority and identity.

“It seems like a mundane object, this piece of paperwork,” Bixby said. “Most people don’t give it too much thought. So, I liked the idea of taking this more or less everyday object that people don’t think about too much … and looking more closely at it to unearth all of these stories.”

ASU News spoke with Bixby about his book.

Note: The interview has been edited for clarity and brevity.

Question: What made you interested in this topic in the first place?

Answer: I’ve had my own experience with passports, traveling international for 30 years. Some of those experiences have been pleasurable, seeing different parts of the world, meeting interesting people, all the things travel has to offer. But I’ve also had my fair share of certain anxieties associated with passports, like having them lost or stolen, or even that moment when you’re getting ready to go on a trip, you’re heading out the door to the airport, and you’re like, “Where is this thing?" Searching for it in your bag and having that moment of panic because everything depends on it, right? That little book really controls where we are, where we can go and where we can’t.

And then my day job, as it were, is a scholar of modernist literature. The modern passport regime that we live under now grew up out of the first World War. Most of the standards that are adhered to in the international community were first codified right after the war in a series of conferences. So, the first generation of people to travel under the modern passport regime included writers and artists and others who I study. I studied their work, and I began to see ways that the passport regime and their dependence on passports shaped their emotions, their imaginations and their work. And that’s where this idea of a cultural history came about.

Q: What’s the primary storyline of the book?

A: The main idea, which is a fairly obvious one, is that the passport is a place where the person and the political come together. They are our documents in a sense … but on the other hand they are a document that implicates us in international relations. This became very evident during the pandemic when all of a sudden there were all sorts of new visa requirements and parts of Europe were shut off to U.S. passport holders. So, these little books connect us as individuals to these larger structures and historical concerns.

Q: What is the cultural history of the passport?

A: One of the things that I was very surprised to find is that there were passport-like objects all the way back to pharaonic Egypt. These little clay tablets were carried by messengers that allowed them to pass through different territories. That’s more than 3,000 years ago. In the Han dynasty in China, they had a very intricate set of controls to regulate traffic on the Silk Road (a network of routes used by traders). So, you can go all the way back to deep history and find all sorts of precursors and the way that those documents gather significance for individuals and for these larger historical concerns about the nation-state and sovereignty and so forth.

Q: Are those some of the narratives explored in the book?

A: Yes. One of my favorite stories in the book involves Frederick Douglass, the formerly enslaved person who became a human rights advocate and an abolitionist hero. He made his flight from slavery by using some borrowed (freedom papers) that allowed him to board a train in disguise. He traveled without a passport for a number of years going to the United Kingdom to advocate for the abolitionist cause. But he was denied a U.S. passport when he requested one because of the Dred Scott decision, which denied citizenship to enslaved, formerly enslaved and free African Americans. So, that document became an emblem of the citizenship that he was being denied. After the repeal of the Dred Scott decision, Douglass got his very first passport, and that document is in the national archives. And then he goes off on his wonderful trip (with his second wife), which he had sort of dreamed about his entire life, even when he was enslaved. He writes of having this kind of wanderlust, of wanting to see the world. It’s very poignant because, of course, all that was closed off to him.

Q: Are there any other historical figures you researched that intrigued you?

A: One of the stories I tell at the very center of the books is about James Joyce, the Irish novelist who was kind of in self-exile. He left Ireland because he found the social mores and the artistic horizons just too limiting for him. So, he went off to Trieste in the Austro-Hungarian empire, taught English there and worked on his early works and tried to raise a family on little money. But then the first World War starts and he’s compelled to leave there because he’s what was then a British citizen and was no longer wanted in that part of the world. So, he has to go off to Switzerland, a neutral country, where he finds a new sort of haven where he can do his work. So, he gets a passport, and the passport sort of tracks his movements during that period from the war to the early 1920s when he relocates again in Paris. That’s the same period that he was writing "Ulysses," his iconic novel. So, that little piece of paper now provides a record of his movements while he’s writing one of the great works of literature in the 20th century.

Q: So, you’re using these individual stories to show how passports shape narratives of some of these issues.

A: Exactly. That’s what I think makes it a good read and certainly made it a lot of fun to write. I’m writing stories about individuals, their particular desires, their wants, their needs, their fears, but those are always tangled up in stories with these larger historical concerns.

Q: When you talk in the book about government authority and the rise of the nation-state, what is the passport’s place in that structure?

A: Well, passports were one of the forms for documenting citizenship. When nation-states became more clearly drawn in their borders, beginning in the late 18th century and increasingly through the 19th and up to the early 20th century and the first World War, keeping people in the right place was an important concern. You want to collect taxes, and there’s worries about sabotage, espionage and so forth. So, the passport was an important tool to track and register a population. It becomes one of a number of government methods to say, “OK, this person has a right to be here and they have a right to go there. That person doesn’t have a right to be here." This is mostly in the European context, so as the map of Europe evolves the passport plays an important role in regulating the populations across that map.

Q: I’m curious. After doing all the research for this book, do you look at your passport differently?

A: I do. If you look at the language of the U.S. passport and the kinds of demands that it makes of other governments, it basically says take good care of my citizen. Those kinds of demands or commands even are on clay tablets in ancient Greece. So, the language in the passport and the way it asserts the rights and privileges of the passport holder is rather remarkable because, after all, it’s just words, but they have a lot of power.

Top photo by Ekaterina Belinskaya via Pexels.com