Iceland this week took its equal pay law to a new level, as a law took effect requiring employers to prove they don’t discriminate against women in monetary compensation.
Contrary to ecstatic exclamations from the likes of Hollywood actress Patricia Arquette, tennis great Billie Jean King, and Sen. Bernie Sanders, I-Vt., both Iceland and the United States—like most developed countries—already require equal pay for equal work. These equal pay laws are enforced by employee complaints and litigation.
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The small Nordic nation adopted the law in June 2017 in an effort to root out even the small, unexplained pay gap that remains after reasonable factors are taken into account to explain the so-called raw wage gap.
That’s a knee-jerk policy response to a rather complicated problem, with far-reaching implications for Iceland’s economy.
The raw wage gap is simply the median difference in pay for full-time, year-round workers by gender. For U.S. workers, this wage gap meant women made 80.5 cents to every dollar men made in 2016, according to the U.S. Census Bureau.
After accounting for factors such as occupation, hours worked, education, tenure, and so on, the wage gap shrinks substantially. What remains is the “unexplained” wage gap.
In the U.S. context, about 5 to 7 percent of the wage gap is unexplained. In Iceland, the gap was similar, at 5.7 percent.
The fact of an unexplained gap does not necessarily imply discrimination. It simply means that researchers have not been able to quantify certain explanatory factors.
Iceland’s Equal Pay Regime Will Hurt, Not Help, Women. We Don’t Need It.
Contrary to ecstatic exclamations from the likes of Hollywood actress Patricia Arquette, tennis great Billie Jean King, and Sen. Bernie Sanders, I-Vt., both Iceland and the United States—like most developed countries—already require equal pay for equal work. These equal pay laws are enforced by employee complaints and litigation.
[clip]
The small Nordic nation adopted the law in June 2017 in an effort to root out even the small, unexplained pay gap that remains after reasonable factors are taken into account to explain the so-called raw wage gap.
That’s a knee-jerk policy response to a rather complicated problem, with far-reaching implications for Iceland’s economy.
The raw wage gap is simply the median difference in pay for full-time, year-round workers by gender. For U.S. workers, this wage gap meant women made 80.5 cents to every dollar men made in 2016, according to the U.S. Census Bureau.
After accounting for factors such as occupation, hours worked, education, tenure, and so on, the wage gap shrinks substantially. What remains is the “unexplained” wage gap.
In the U.S. context, about 5 to 7 percent of the wage gap is unexplained. In Iceland, the gap was similar, at 5.7 percent.
The fact of an unexplained gap does not necessarily imply discrimination. It simply means that researchers have not been able to quantify certain explanatory factors.
Iceland’s Equal Pay Regime Will Hurt, Not Help, Women. We Don’t Need It.
