Thursday, July 28, 2022: National Academy of Sciences Released Its Anticipated Pay Data Study; EEOC Commissioners Respond With Notably Different Takes
Making five specific recommendations, the National Academies of Sciences, Engineering, and Medicine (NASEM) issued its much-anticipated report evaluating the quality of the limited run EEO-1 Survey Component 2 data collection for reporting years 2017-2018. In sum, the expert panel assigned to conduct the study found that the Component 2 “data as collected have value” as they are unique among federal surveys by providing employee pay, occupation, and demographic data at the employer level. However, the panel recommended that “the value be strengthened by both short-term and longer-term improvements in respondent coverage, data collection protocols, measurement implementation, and conceptual coverage.”
The 275-page report starts with a discussion of the panel’s conclusions regarding the value of Component 2 data as collected. It then presents the panel’s recommendations regarding the appropriate use of those data. Then it discusses future collections of pay data. It goes on to provide recommended improvements necessary in the short term. Next, it offers recommendations to broaden and strengthen data collected by EEOC to enforce pay equity. “The latter recommendations require more effort by EEOC than the short-term recommendations, but offer greater benefits,” the report observed. “If implemented, these recommendations could improve the breadth and strength of EEOC data for the purposes of monitoring and addressing pay equity, in some ways reduce employer burden, and respond to employer concerns about the precision of the Component 2 data collection instrument used for reporting years 2017–2018,” a summary page on the report noted.
How we got here
The “Joint Reporting Committee” (“JRC”) administers the EEO-1 Report. As we explained in earlier WIR reporting, the JRC does not actually exist as an entity. Rather, it is a legal fiction that operates as a line item in the EEOC’s and OFCCP’s respective budgets allowing for the administration, collection, and reporting of employer EEO-1 reports to the EEOC and OFCCP.
The Trump Administration discontinued the controversial Component 2 pay data reporting requirement which the Obama Administration had added to the annual EEO-1 Survey. The Obama-Era EEOC expanded EEO-1 data collection for reporting years 2017 to 2018 in an effort intended to improve its ability to investigate and address pay disparities between women and men and between different racial and ethnic groups. After the EEOC commissioned the study by a unanimous vote in 2020, the NASEM’s Committee on National Statistics (CNSTAT) assembled a panel of experts to conduct the assessment.
Meanwhile, in September 2021, the OFCCP published a notice in the Federal Register (86 FR 49354) announcing its intent to “devote further agency resources to evaluate the [EEO-1 Component 2] data’s utility because the joint collection [with the EEOC] and analysis of compensation data could improve OFCCP’s ability to efficiently and effectively investigate potential pay discrimination.”
See WIR for September 7, 2021, for more background. The EEOC also provided extensive background information in a “What You Should Know” webpage concerning the report.
The five recommendations: address sources of error, improve data quality, improve the ability to collect more data, test & development before implementation, and improve appropriate access to the data
The report provided the following five recommendations:
(1) Address Sources of Error in the Data
To address likely sources of error related to the significant lack of coverage of firms and establishments in the data, the panel recommended improving both the master frame and outreach to newly eligible firms. It suggested that the EEOC might use an interagency agreement with the Bureau of Labor Statistics as a tool to appropriately maintain business registers.
(2) Improve Data Quality and Ability to Examine Trends
The EEOC’s approach to assigning identification numbers made it difficult to match establishments filing 2017 and 2018 reports, the panel observed. Although the panel acknowledged that this action was intended to protect confidentiality, the panel stated there are several better ways to protect confidentiality that do not prevent authorized users from matching records and thereby assessing data quality and trends over time. To address this issue, EEOC should use consistent and unique firm and establishment identifiers, facilitating data merges and data checking.
(3) Improve Ability to Collect More Complete Data
The Commission should update its instructions to filers to conform to the federal standard on measuring race/ethnicity, which offers solutions for reporting race/ethnicity data in a combined format. The EEOC should also work with other federal agencies to develop and test ways to measure employees’ sex, gender identity, and sexual orientation in a manner appropriate for EEOC data collections. Data on the status of other protected groups might also be collected using established measures, after appropriate development work and taking into account employer burden. Collecting additional types of data, such as education, job experience, and tenure, would inform the agency’s initial investigation of pay disparities and also support employers’ self-assessments
(4) Test, Develop, and Implement the Collection of Individual Worker Data
Of particular note, the panel concluded that the EEOC’s summary approach used for aggregate pay and hours worked data in reporting years 2017–2018 severely limits the utility of the data collected, unnecessarily increases employer burden, and complicates the collection of additional key information. Collecting data from employers at the level of individual workers may be less burdensome and would markedly increase the utility of the pay data, the panel suggested. The Bureau of Labor Statistics’ Occupational Employee Wage Survey is a model. Other federal and state agencies routinely collect individual data for tax, social security, and unemployment insurance purposes. After appropriate field testing, if found suitable, the EEOC should transition to the collection of individual-level employee pay data.
(5) Improve Appropriate Access to Pay Data
The EEOC should strengthen consultation and data sharing with the public and with federal and state employment data collection agencies, which will require the implementation of appropriate privacy protections. Doing so would assist employers’ self-assessments. Federal interagency collaborations, such as the Federal Committee on Statistical Methodology’s Data Access and Confidentiality Committee, are resources that EEOC might consider. Similarly, improvements in data quality and appropriate access may be available by partnering with the U.S. Census Bureau and the Bureau of Labor Statistics. In addition, the Commission should provide employers with benchmark comparison data to industry and locality peers.
Webinar scheduled for Tuesday, August 2
The NASEM website’s landing page for the study states that the panel will hold a webinar regarding the public release of the document this coming Tuesday, August 2, 2022, from 1:00 PM – 3:00 PM (ET).
All five EEOC Commissioners posted their varied, individual takes with a common emphasis on the importance of the rulemaking process
On top of the official Commission press release, four of the five Commissioners, in addition to the EEOC’s Chief Data Officer, felt compelled to offer their individual observations about the NASEM Report. The agency’s press release took an optimistic tone, saying that the report confirmed that “pay data collection is a key tool to fight discrimination.” Although varied, each of the four Commissioners’ individual statements mentioned the importance of using stakeholder input and the rulemaking process going forward.
EEOC Chair Charlotte A. Burrows (D): “The study confirmed what we at the EEOC have long known – collecting and analyzing pay data can be a useful tool in preventing and combating pay discrimination in American workplaces,” said EEOC Chair Charlotte A. Burrows. “The National Academies’ rigorous examination of the Commission’s historic first pay data collection validates our efforts to collect and use compensation data to achieve pay equity in our nation.”
“[P]ay discrimination is hard to fight [because] it’s hidden from view,” noted Chair Burrows. “This study confirms that federal pay data collection could be a unique and critically important resource for helping the Commission better identify and combat pay discrimination. The report from the National Academies, together with input from employers, employees, unions, and the public, will help inform the Commission’s decision-making in this area going forward.”
Commissioner Samuels said pay data collection will help pinpoint where pay gaps occur
Commission Vice Chair Jocelyn Samuels (D): In a tweet with her full statement attached, Commission Vice Chair Jocelyn Samuels said that the report “shows that pay data can be a key tool in our fight to ensure equal pay for equal work. These data can help fulfill the promise of the Equal Pay Act and Title VII. We’ve waited 59 years. Let’s fix this issue together.”
“Although we have legal tools to fight pay discrimination […], it is hard to use them without first knowing where pay gaps occur,” her full statement noted. “Without that early warning system, all of us – the EEOC, workers, and employers who want to fix the problem – are fighting pay discrimination with one hand tied behind our backs.”
The NASEM report found that the 2017 and 2018 pay data collection “produced unique information that is not replicated by any other federal agency,” she continued. “[It] also concludes that the data EEOC collected could help prioritize charge investigations, identify systemic discrimination, and analyze geographic and industry-based pay gaps.”
“Of course, this data does alone prove that violations of the law have occurred,” she acknowledged. “But the data can enable the EEOC to sharpen and refine its investigations and target its outreach and technical assistance to help employers comply with the law.”
“I look forward to working with my fellow Commissioners and EEOC colleagues to seriously consider [the report’s] recommendations,” she stated. “I also want to hear from all stakeholders – employers and employees – as we determine whether and how to collect pay data again, and work to ensure that the information is reliable and as easy as possible for employers to produce.”
Commissioner Sonderling cautioned that the report was “not a carte blanche approval for the Commission to hastily conduct another pay data collection”
Commissioner Keith Sonderling (R): In his individual statement, Commissioner Keith Sonderling pointed out that the report “highlights the difficult task of the government attempting to extract pay data from private employers. It also exposes the flaws with the EEOC’s prior approach, including its flawed methodology, failure to conduct a proper pilot program, and data quality issues.”
“Now the Commission has the important task of determining the best way to proceed in preventing and remedying pay discrimination,” he continued. “Whether that is through another pay data collection, compliance assistance, or enforcement, it undoubtedly will pose challenging questions. The report, however, is not a carte blanche approval for the Commission to hastily conduct another pay data collection. Instead, it should be interpreted as a warning to the Commission to thoughtfully research the issue, engage and be transparent to the public, and address privacy concerns, and the financial burdens of conducting a pay data collection.”
“If the Commission believes a future pay data collection is warranted, which no Commissioner should prejudge, it must be done through a process that allows significant public input through formal rulemaking. If the Commission had engaged in rulemaking in 2016, many of the concerns raised by the public and substantiated in the report would have been avoided,” he pointed out.
Commissioner Dhillon cited the “tremendous cost” of the previous flawed collection to employers and urged caution going forward
Commissioner Janet Dhillon (R, and former Chair of the EEOC): Via Commissioner Janet Dhillon’s individual statement, she said she was “gratified” that the report “recognized the serious flaws in the design” of the pay data collection. Those flaws included “the wrong unit of pay measurement, outdated job categories that were insufficient for describing the modern workforce and pay bands that were so overly broad that it made it very difficult to detect pay disparity.” The report also “identified import data reliability and quality issues.”
“Unfortunately, this defective, Court-ordered data collection came at a tremendous cost,” she continued. The EEOC “calculated the burden to employers at over $750 million.”
The Commission “cannot repeat the mistakes of the past,” she admonished. “If the EEOC wants to engage in future pay data collections, it must engage in a notice-and-comment rulemaking to allow all stakeholders to weigh in, and to address the flaws described” in the report. The agency should also abide by the report’s recommendations and “engage in robust field testing” prior to conducting any additional pay data collections, she stated, noting that “the need for field testing was discussed over 20 times” in the report.
Asserting the recommendations were based on a “controversial premise,” Commissioner Lucas urged the full Commission to debate the report’s “presumptions”
Commissioner Andrea Lucas (R): Deeming the 2017 and 2018 employee pay data collection “a failure,” Commissioner Andrea Lucas observed in her statement that the flaws in the data identified by the report rendered it “practically useless.” Highly critical of the report, Ms. Lucas bemoaned its recommendations “that the Commission double down on its failed efforts by radically expanding the data collected, fixing previous missteps (and apparently new ones) on the fly.”
“Without viable data, these recommendations are ostensibly based on the report’s presumption that significant, unexplained pay disparities permeate virtually every industry and profession in our economy,” she observed. “That is a controversial premise that the Commission must debate. We should receive and consider public input on these important matters, rather than presume the result we sought to study and support with this failed data project.”
Like Commissioner Dhillon, Commissioner Lucas expressed concern over the costs involved in any possible future pay data collection. Arguing that the report recommended “an unpreceded mandatory government collection of a detailed, individual snapshot of almost every private sector employee’s professional and personal life,” Ms. Lucas feared that “[t]he tangible—and intangible—costs of such a revised and aggressively expanded data collection could be severe.”
“Before the EEOC gambles on a potentially billion-dollar burden on our nation’s private employers and incentivizes the intrusive collection of sensitive information from employees, at a minimum the agency must undertake a formal notice and comment rulemaking and a public hearing to ensure robust public comment and input,” she stated.
Moreover, Commissioner Lucas expressed concern about the scope of the data. “[T]he report recommends that the EEOC should combine an expanded version of its current employee diversity data collection with a revised and expanded employee pay data collection, resulting in an expansive and intrusive collection of data about almost every private sector employee in the United States,” she said. “That potential mandatory data collection by the EEOC could include: each individual employee’s race and ethnicity; sex, gender identity (including non-binary and transgender identification), and sexual orientation; age, disability status, and veteran status; occupation and individual-level job titles; individual-level pay data (including wages, tips, and non-taxable earnings, including earnings that contribute to medical insurance and retirement accounts, as well as hours worked, weeks worked, fulltime/part-time status, and overtime classification status); and other pay-affecting factors including education, job experience, and employment tenure. Not only could this lead to a significant invasion of privacy for individual employees by their employers, but in some instances it may be in violation of the laws that the EEOC is charged with enforcing—all for data that only may be more useful.”
Dr. Chris Haffer (career employee): The report “is a scientifically sound body of work,” said Dr. Chris Haffer, the EEOC’s Chief Data Officer. “Its comprehensive analysis and data driven recommendations provide strategic direction for how to improve collection of compensation data and align with many of the needs the EEOC has already identified and begun addressing as part of the agency’s modernization of its EEO data collections and data analytics.”
Editor’s Note: While the NASEM Report was obviously highly politicized with content that described an expensive and highly flawed and failed pay collection effort in 2017-2018 with a conclusion that said “Let’s fix it and do it again” (making all readers happy with some part of the report), the November Mid-term elections will form the answer as to whether there will be another Component 2 hours worked and pay data collection. If the Senate flips by one vote to Republican control (with savvy political insiders calling that result currently too close to call) and widespread cross-party agreement that the House will flip Republican), a Republican Congress can (and we predict) would intervene under the Congressional Review Act to set aside any EEOC Rulemaking requiring employers to file a new Component 2 Report. We described in a March 23, 2021 Week In Review story the Congress’ ability to swat down, within 60-days of Final enactment or any Rulemaking which went to Final in the last 60 days of a prior Legislative session, any federal agency Rulemaking with which a majority of both houses of Congress disagree.
With the new Congress to be seated in 2023 following the November 2022 mid-term elections, our calculation is that Friday, November 4, 2022 is the day the Biden federal Executive agencies are racing to beat as the LAST day they may publish a Final Rule which the new Congress could reach back and swat down (should both Houses flip Republican when the new Congress is seated on January 3, 2023).