February 17, 2006 -- By Carol Flaherty

Research shows that equal-pay laws increase women's pay, but only after six years.

Wendy Stock of Montana State University and David Neumark of the University of California at Irvine used census income and employment data to determine whether race and sex discrimination laws improved the employment and incomes of women and blacks compared to white males.

Initially, the laws decreased women's employment and earnings. That was followed by a slow, inflation-adjusted increase in their pay, but not their employment. At about six years after the law was enacted, women's income increased compared to their white male counterparts. Black men experienced a similar income increase, but without the initial employment and earnings decrease.

"It's true that there is strong evidence that sex discrimination and equal-pay laws reduced the relative employment of black women and white women, and also lowered their relative earnings in the short term," Stock said. "However, after about six years, the earnings loss appears to evaporate. When it comes to the employment of black men, their relative earnings increased without the employment decline we see with women."

Antidiscrimination laws have been on some state law books in the United States since the early 1900s, Stock said. By the time the federal government enacted race and sex antidiscrimination laws in the 1960s, 21 states already had laws that dictated equal pay for equal work.

The passage of the federal law, however, didn't end the debate over whether such laws are effective in equalizing employment or improving income. So why concern ourselves with whether the earlier equal-pay laws were effective? Stock said there are several reasons.

One reason, Stock said, is that there is little research on the effectiveness of antidiscrimination policy on sex differences in the labor market. Looking at employment information only after the federal laws pass misses the economic progress black people were making before those laws. Also, the ongoing debate over affirmative action could eventually weaken laws barring employment discrimination in hiring and firing. Third, she said, equal-pay laws are more easily enforced than antidiscrimination laws, so if they are effective, they may become a more important tool in the antidiscrimination arsenal.

In addition to race and sex discrimination laws, some states also passed "protective legislation" related to women's employment. These laws, generally passed in the late 1800s and early 1900s, tended to dictate a maximum number of hours that women could work and that women couldn't work at night, Stock said. That pushed women out of some jobs and squeezed them into others, which may have tended to reduce wages in those job categories.

Montana and Michigan were the first states to enact equal-pay laws. The researchers had to drop Montana data from the analysis, however, because it had too few people in the analysis categories. The census also had no income data for women working on farms and ranches, as was often the case in Montana's early years.

By the 1940s, a dozen states enacted equal pay laws. In the 1950s, another nine states adopted such laws. The Equal Pay Act of 1963 made it federal law that people should get equal pay for equal work, and the Civil Rights Act of 1964 made it illegal to discriminate in hiring due to race, color, religion, sex or national origin.

Data from states that put equal-pay and antidiscrimination laws on the books before the federal laws are fertile grounds for analysis of before-and-after effects, Stock said. The changes allowed the researchers to compare changes in women's relative labor market outcomes in states with equal-pay laws against changes in their relative outcomes in states without such laws.

Contact: Wendy Stock, (406) 994-7984 wstock@montana.edu