“In Massachusetts, on average, women working full-time earn only 84.3% of what men earn. The gap is even larger for some women of color.” Massachusetts and the rest of the country suffer from a severe gendered and racialized wage gap, in large part due to occupational segregation. Earlier this year, the Massachusetts Legislature attempted to tackle this problem by passing H.4890 (effective January 1, 2025), which Governor Maura T. Healy signed into law this July. H.4890 requires employers with 25 or more employees to disclose pay range information on job postings. Such transparency could help shrink the pay gap: If women know an employer’s pay ranges, they have more power to negotiate wages or salaries and identify discrimination. H.4890 stumbles, though, due to a glaring omission: The Act does not require disclosure of benefits. This undermines the law’s effectiveness because a substantial amount of American compensation is delivered through benefits, an area where sex-based pay discrimination is especially egregious.
Sex-based pay discrimination has been federally illegal since 1963, and illegal in Massachusetts since 1945. Yet, the wage gap persists. The problem is that equal pay legislation has generally only applied if men and women are doing the same job “in the same workplace,” but occupational segregation is responsible for approximately 42% of the pay gap. Occupational segregation means that women often work in different workplaces than men. Even when men and women are in the same workplace, they often have different jobs. “Women’s jobs” are paid less, even if the jobs involve similar skills, effort, and education as “men’s jobs.” If legislation focuses exclusively on fixing pay discrimination within occupations, it misses the big picture problem.
Massachusetts is a pioneer for pay equality in many respects. It was the first state to ban sex-based pay discrimination, and the first state to ban employers from asking questions about a prospective employee’s previous pay. It is also one of only about a dozen states with a comparable worth requirement. Comparable worth, sometimes referred to as comparable work, is a broad concept of pay discrimination that begins to account for occupational segregation. The federal equal pay standard is generally understood to only require equal pay if men and women’s jobs are essentially the same. Comparable worth regimes do not require jobs to be the same; they require equal pay as long as the work is of equal value, with value often determined through standardized job evaluation studies. Though comparable worth statutes tackle the problem of underpaid, feminized labor, they still tend to limit recovery to cases where female workers have the same employer as their higher-paid, male counterparts. Again, this is a problem because men and women will often work in different workplaces because of occupational segregation.
An illustration of this problem may be helpful. If female software developers at ACME were paid less than male software developers, that would clearly violate the federal Equal Pay Act. If ACME’s female graphic designers were paid less than the company’s male software developers—despite both jobs requiring similar levels of skill, effort, and responsibility—that would violate a comparable worth regime, but potentially not the federal Equal Pay Act because the men and women at issue hold different jobs. But if ACME were a graphic design firm with female employees, and those women were paid less than the male employees at a nearby software company, AJAX, that pay disparity would likely not be remedied by either equal pay laws or a comparable worth regime because the employees work for different employers. Even “radical” comparable worth regimes leave a gap in pay equality because pay discrimination does not just happen within employers, it happens across the economy.
Pay transparency laws are one way to fill this gap. A study in Canada found that pay transparency requirements can close the pay gap by 20–40%. If women can see how much jobs pay, they have more power to negotiate for fairer wages. Pay transparency empowers women to make informed choices about which jobs to pursue, and it lets consumers and job-seekers hold companies accountable for unfair pay standards. Public sector and union jobs tend to have smaller pay gaps, at least in part because there is increased pay transparency. Note that transparency can be leveraged to remedy pay gaps across employers and sectors, not just within a single employer.
While H.4890 takes a step towards closing the pay gap by requiring pay transparency, its effectiveness is limited by its lack of benefit transparency requirements. Benefits make up a significant portion of compensation: In America, approximately a third of employer cost for compensation is in benefits. Employment benefits can include everything from health insurance to vacation time. If pay inequality is to be remedied, solutions cannot be limited to totals printed on pay stubs, ignoring a third of compensation. Benefits must also be equal.
As it is, women are disproportionately deprived of benefits. Sex-segregated labor means that women are overrepresented among low-wage workers, and low-wage workers are significantly less likely to receive employer benefits. Only about a third of low-income workers receive insurance or retirement benefits compared to three-quarters of high-income earners. And even among low wage employment, female-dominated jobs often come with less benefits. For example, women disproportionately work in food preparation and “[j]ust 14.4 percent of restaurant workers receive health insurance from their employer, compared with roughly half (48.7 percent) of other workers.”
Women also receive less employment benefits because they more often participate in unpaid caregiving. Many employment benefit plans depend on time worked or wages earned, but women disproportionately spend less time in the formal workforce because of caregiving responsibilities. As a result, women are more likely than men to work part-time, interrupt their careers, and work for fewer years overall. Under prevailing benefit schemes, less time in the workforce often means that women receive meager, if any, employment benefits compared to men.
The irony is that women’s caregiving burden makes benefits even more important. If women are socially expected to take charge of caregiving, they need benefits like childcare, paid family leave, or flexible work schedules even more than their male counterparts. In 2021, the Massachusetts Office of Economic Empowerment acknowledged that the availability of employment benefits impacts women’s participation in the workforce. It is not fair that women are expected to shoulder caregiving responsibilities. “Gendered stereotypes and cultural expectations concretize[]” women’s disproportionate caregiving burden. But at the very least, legislative approaches should consider these existing inequalities when crafting pay gap solutions. Women need improved salaries and wages, but they also need improved benefits. Benefit transparency can help close the benefit gap.
Benefit transparency must be mandated by law: Relying on voluntary benefit transparency is insufficient. Some might argue that compulsory benefit transparency is unnecessary because employers want to advertise benefit plans as a way to attract talent. Descriptively, that is not what happens: Approximately 40% of job postings do not include any benefit disclosures. Employers may prefer to not disclose benefits as a way to maintain their bargaining power, or to hide sub-par benefits packages. Hypothesizing that employers want to use benefits as a way to attract talent also assumes that employers need to attract talented applicants, which may not be true under certain economic conditions or in the age of digital job postings. Often, employers may have more applicants than they need. Expecting voluntary benefit transparency fails to consider these realities and incentives for employers.
Expecting job seekers to ask employers about benefit packages during the application process is similarly insufficient. There is less public accountability if employers only tell individual job seekers, upon request, about benefit packages. Additionally, if benefits are not disclosed on job posts, women cannot easily apply to positions with fairer benefit packages. If job seekers are only provided benefit information upon asking, women will be forced to waste valuable time during the already long job search process tracking down benefit information.
Requiring benefit transparency is possible. Illinois, Minnesota, Colorado, Washington, and the District of Columbia require employers to disclose benefits during the job application process. The European Union also requires benefit transparency. These existing benefit transparency laws may not go far enough — as Professor Samantha J. Prince notes, benefit transparency statutes often only require a cursory description of benefits — but they do show that statutorily mandated benefit transparency is possible.
H.4890 is a win for women workers in Massachusetts that will likely help close the gendered and racialized pay gap in the state, but Massachusetts can do better. If closing the pay gap is the goal, Massachusetts should require benefit transparency in addition to salary and wage transparency. Doing so will help support women, particularly women of color, achieve truly equal compensation and necessary benefits.
The post <strong>Effective Pay Transparency Requires Benefit Transparency</strong> appeared first on Harvard Law Review.