Iceland’s gender pay gap law contrasts with US policy

Iceland just made the
gender pay gap a legal issue.

Livesey / Getty

  • Iceland recently became the first country to make the
    gender pay gap
  • A new law in Iceland requiring companies to prove they
    pay men and women equally went into effect on January 1,
  • President Donald Trump previously blocked an Obama-era rule
    designed to help close the pay gap that would have gone into
    effect in 2018.


Chalk up another win for women in Iceland.

The small Nordic country has long been considered a haven for
women, holding the top spot for gender equality
worldwide for nine years running, according to the World Economic

And now, Iceland has taken another step toward eliminating its gender pay gap
— a goal Iceland aims to complete by 2022 — by making it illegal
to pay men more than women.

The new law went into effect on January 1, 2018 and applies to
companies that employ 25 or more people. Employers will have to
prove men and women are paid equally, or pay a fine.

Iceland’s move paints a sharp contrast to how the US government
has approached the gender pay gap.

Early in his tenure, President Donald Trump blocked an Obama-era rule
slated to go into effect in 2018 that would have required
businesses to collect salary data sorted by employees’ gender,
race, and ethnicity.

Private companies in the US with 100 or more employees, as well
as federal contractors with 50 or more, already report
demographic data, including employees’ gender, race, and
ethnicity, to the Equal Employment Opportunity Commission. The
blocked initiative would have required employers to add
aggregated salary data as well.

According to the World Economic
, two thirds of OECD countries have introduced policies
on pay equality, including requiring some employers to publish
calculations every year showing the gender pay gap.

Women earn an average of 79 cents for every dollar a man makes in
the US, according to a 2016 report
published by the Joint Economic Committee Democratic Staff.

But the pay gap is not consistent across industries, companies,
and positions, making the discrepancy difficult to root out and
resolve. More data presumably would help achieve the goal of wage

Gender pay gap top 2 percent
The gender pay gap is
worse at the top.

Andy Kiersz/Business

Strikingly, the gender pay gap is even larger at the top — a
point underscored by the recent news that NBC “Today”
stars Hoda Kotb and Savannah Guthrie are
paid about 28%
of what Matt Lauer previously earned.

Across the US, the average income for the top 2% of all earners
is $206,000. But among women in the top 2%, the average salary is
$145,000, compared to $371,000 for men, according to an analysis
of the 2015 American Community Survey by labor economics research
firm Job Search

That means the average woman in the top 2% makes just 39 cents
for every dollar a man makes. More data would help explain the
massive difference in pay.

One possibility for the gap may be that
women are underrepresented at the highest levels of

In fact, in some states, so few women make it into the top 1% —
which requires an average annual salary of $389,436 or more,

based on calculations by

the Economic Policy Institute
— that, to protect anonymity,
salary data is not reported by gender, according to JSI.

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