[co-author: Fred Satterwhite]
Over four years after collecting pay data from approximately 70,000 private employers and federal contractors via its controversial EEO-1 “Component 2” form, EEOC has released a public website featuring aggregated pay data by race/ethnicity, sex, industry, job category, pay band, and geography.
EEOC announced availability of the new site in a March 12 press release. The site includes an interactive data dashboard called “EEOC Explore” where visitors can create visualizations by applying filters to the data set, as well as downloadable public use files (PUFs) that can be used offline. The site also includes a user’s guide and FAQs for EEOC Explore.
History
The new site is the latest milestone in what has been a long and contentious lifecycle for the EEO-1 Component 2 pay data collection. EEOC introduced the new Component 2 requirement in 2016, but an Office of Management and Budget (OMB) review and stay in 2017 —followed by a D.C. district court decision in 2019 ordering that the collection be reinstated—delayed the actual collection of employers’ pay data for 2017 and 2018 until EEOC opened a filing period that began in July 2019 and did not end until February 2020. To date, EEOC has collected Component 2 pay data only once, as the Commission announced in July 2020 that it had commissioned a study by the National Academies of Sciences, Engineering, and Medicine’s Committee on National Statistics (CNSTAT) of “the quality and utility” of the pay data collected; EEOC paused further Component 2 pay data collections pending the findings of the study. The CNSTAT study concluded in 2022 with a report that recommended revisions to improve future pay data collections and stated that collecting pay data was useful for EEOC enforcement efforts in identifying pay discrimination.
The pay data collected by EEOC for 2017 and 2018 was based on the W-2 Box 1 earnings for employees. Employers did not report the actual W-2 earnings value in their submissions, but rather categorized employees into 1 of 12 pay bands specified by EEOC, depending on which range the earnings fell within. Employee counts by pay band were summarized within each of the ten EEO-1 job categories. The Component 2 data collection also required reporting of hours worked for employees, again reported by pay band within job category. The Component 2 reporting does not incorporate, or control for hours worked in a day, or the number of days worked in a year, so there is no way to determine average or median hourly wages. By extension, EEOC’s analysis and new dashboard cannot either.
As a reminder, W-2 Box 1 earnings are “wages, tips, other compensation” and do not reflect full wages earned. Exclusions include pre-tax contributions, pre-tax benefits (e.g., FSA), employer-paid educational benefits, and stock options. Further, if an employee does not work full time, or changes employers during the year, the value used to assign a Component 2 pay band would not be a full-time equivalent salary. This is an important context to keep in mind for any employer, organization, or government agency that uses the new Component 2 Dashboard or data to make comparisons or draw conclusions.
Insights and Implications
In the above mentioned press release, EEOC provided several findings based on the initial analysis of the 2017 and 2018 data, with their main takeaway clearly communicated in the press release headline: “Men Are More Likely to Be in Higher Pay Bands Than Women.”
In 2018, the national median pay band for men was one pay band higher than the median pay band for women ($39,000 to $49,900 compared to $30,600 to $38,900), and in 2017, it was two pay bands higher ($39,000 to $49,900 compared to $24,400 to $30,600). EEOC’s analyses focused on median pay bands; as acknowledged by EEOC in their FAQs, “a true median or average salary cannot be calculated” given that pay data values were not collected.
For comparison, the Bureau of Labor Statistics (BLS) reports the median usual weekly earnings of full-time wage and salary workers by sex, with the median salary for full-time employees in 2018 as $46,644, with the median salary for women being 80.14% of that for men. This may help to draw some comparison between pay data based on W-2 Box 1 earnings and pay data based on full-time wages. . Both the Component 2 data analysis and BLS data reflect notable differences by gender.
The press release goes on to summarize a few findings for gender by race/ethnicity, within industry or job categories, or general findings overall and by state. One noteworthy finding-- emphasized for women and employees overall-- was the proportion of the population in the lowest pay band ($19,239 and under). In 2018, Component 2 data indicates that 28% of employees are in the lowest pay band, with a disproportionate representation of women. It is important to remember the limitations of the data when drawing conclusions. As a reminder, for Component 2, many employees could be in lower pay bands than their actual wage rate, given job changes, part-time work, or other factors that impact W-2 earnings.
In the press release, EEOC reports that this dashboard is a tool that:
“allows industries, employers, and individuals to assess generally how their pay by sex and race compares to others in their industry, job category, or state.”
This is somewhat misleading without an explicit qualification that any comparison data would (or should) also be W-2 Box 1 earnings to compare “oranges to oranges.” If an employer is interested in comparing themselves to the EEOC dashboard, ideally they should use their own W-2 Box 1 earnings to do so (ideally they would compare their 2017 or 2018 companywide report to the national data). Comparing full-time equivalent salaries from their own workforce, or even other national sources like BLS, could lead to skewed perceptions, likely in the favor of the employer since Component 2 data will be impacted by job changes or part-time earnings.
How these Data Will be Used
As evident by the EEOC release, we know that EEOC will use these data to summarize the data and communicate insights to the public. We do not expect the dashboard to change; however, we do expect to see EEOC or other organizations complete additional analysis of the information and report out findings or insights. It is also possible that EEOC Commissioners would utilize this aggregate information to inform priorities. Additionally, we expect that EEOC will incorporate this report in active investigations. Currently investigators pull the EEO-1 Component 1 report when investigating a company; it’s expected they would also pull these 2017 and 2018 Component 2 reports, especially if pay data is relevant to the focus of the investigation. Although the data are more than five years old, a lag of several years is common for EEO-1 data, so that likely would not stop this practice for the immediate future.
Future of Pay Data Collection
While EEOC’s release of the 2017 and 2018 Pay Data Collection site has renewed anticipation (and, perhaps, anxiety) for the resurrection of EEO-1 Component 2, it is important to note that the 2023 EEO-1 data collection opening on April 30, 2024 (with a June 4, 2024 filing deadline) will not include Component 2. At a minimum, EEOC first would have to seek OMB approval for another pay data collection, in accordance with the Paperwork Reduction Act (PRA)--a process that includes a total of at least 90 days dedicated to receiving comments from the public, as well as accompanying time periods for reviewing and preparing written responses to comments received. EEOC acknowledged in the FAQs on the Pay Data Collection site that reintroducing a Component 2-type pay data collection would involve a deliberative process:
6. Does the EEOC plan to collect pay data again?
Advancing equal pay for all workers is a key priority for the EEOC, as memorialized in the agency’s Strategic Enforcement Plan for Fiscal Years 2024-2028. The National Academies of Sciences, Engineering, and Medicine (National Academies)...made recommendations for the EEOC to consider in any future pay data collections to enhance the value of the data to the EEOC and the public and reduce the potential burden on employers. Since the Consensus Study Report was issued, the EEOC has been rigorously examining its findings and recommendations and hearing from advocates, researchers, employers, and employees about next steps. Any new pay data collection would be preceded by additional and formal opportunities for public input, including public notice and a public hearing, and any such collection would be informed and guided by that public input. (emphasis added)
Further, the approval last week of revisions to OMB’s Statistical Policy Directive No. 15: Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity (SPD15) could delay EEOC’s efforts. Key changes to race and ethnicity categories were made, with changes effective immediately. Thus, any proposed changes to the EEO-1 data collection (both Component 1 and Component 2) would need to include the updated list of race categories.
Although it may not be imminent, the window for a reborn EEO-1 pay data collection currently seems to be open: barring any early resignations among the current EEOC members, Democrats on the Commission will hold a majority until at least 2026. EEOC has already stated in their Strategic Enforcement Plan for Fiscal Years 2024-2028 that “advancing equal pay for all workers” is one of the Commission’s subject matter priorities over the next few years, and their Fiscal Year 2025 Congressional Budget Justification describes their consideration of the National Academies’ recommendations for future pay data collections under the Commission’s FY 2025 priority of “advancing pay equity” (citing a call by the “Biden-Harris Administration”). Traditionally, presidential election years (like 2024) have been quiet periods for federal entities regarding new regulations or information collections that might garner too much negative attention during campaign season. However, there is precedent for a relevant exception to that unwritten political “rule”: the original EEO-1 Component 2 collection was announced in February 2016 and approved by OMB on September 29, 2016—less than six weeks before Election Day. As the 2024 election projects to be a very close and highly charged contest on both sides of the political aisle, traditional “politics-as-usual" in the Nation’s Capital may very well turn unusual, and an EEOC announcement sometime this year about a new pay data collection would not be a surprise.
DCI will continue to monitor further developments.
