Pay Data Collection Key to Improving Pay Equity, Study Confirms

Author: Emily Scace, Brightmine Legal Editor

August 3, 2022

A study examining the Equal Employment Opportunity Commission's (EEOC) first-time collection of compensation data concluded that collecting pay data is an important tool for the EEOC to target its enforcement and investigation efforts and advance pay equity.

The study, conducted by the National Academies of Sciences, Engineering and Medicine (National Academies), examined the EEOC's EEO-1 Component 2 data collection, which required certain employers with 100 or more employees to submit data on the compensation of their employees, broken down into demographic and occupational groups. Pay data collection was halted during the Trump administration, then completed under court order in 2020. The Biden administration has not yet resumed collecting pay data but may do so at some point.

The National Academies found that the pay data the EEOC collected, which covered approximately 70,000 employers and over 100 million workers, was unique and not duplicated by any other federal data collection. By obtaining this data, the EEOC was able to identify a number of disparities along racial, gender and ethnic lines.

For example, the study found significant race and gender disparities in compensation at certain technology employers:

  • One employer had a -51.3% pay gap for Black men compared to white men in the professional job category;
  • Another employer had a -52.3% pay gap for Hispanic female professionals relative to white male professionals; and
  • A third employer had a -52.4% pay gap for Asian female technicians relative to white male technicians.

The study characterized the data as "a fundamental advance in EEOC's ability to identify whether pay disparities are a function of hiring, segregation, or direct pay disparities." However, the National Academies also identified a number of shortcomings in the EEOC's data that undermined its usefulness, such as incomplete coverage of eligible employers and concerns about reliability of some of the submitted information.

The National Academies recommended that the EEOC expand and strengthen its data collections and proposed some specific changes to achieve these goals, such as:

  • Combining the Component 1 (basic demographic data by job role) and Component 2 (pay data) into a single data collection instrument to reduce the reporting burden and reduce the chance for inconsistencies or errors;
  • Collecting data on total compensation from W-2 Box 5, rather than from W-2 box 1, to obtain a fuller understanding of employee compensation;
  • Adopting narrower pay bands or collecting individual-level wage data to better capture variation in pay; and
  • Exploring pay gaps for workers 40 years old and older, persons with disabilities and veterans.

"Pay discrimination is hard to fight, because it's hidden from view," noted EEOC Chair Charlotte Burrows in response to the study. "This study confirms that federal pay data collection could be a unique and critically important resource for helping the [EEOC] better identify and combat pay discrimination."