OUR INSIGHTS
By Marie Konstance
Progress on pay parity has proved elusive. The pay gap between women and men is 82 cents on the dollar in the U.S. and has been in the 80-83 cent range for the last 16 years. The gap is especially wide for women of color. Black women were paid just 63% of what non-Hispanic white men were paid in 2019.
The pay gap in Asia is 19.3%, in Latin America 29.8%, and in Africa women continue to earn significantly less than men according to the UN.
Equal pay advocates are working to address this. In 2003, that over $8 billion have been spent on diversity efforts such as training, recruitment, eliminating biases in promotions and hiring, mentoring and sponsorship, and making work life more flexible and inclusive. These initiatives focus on moving more women up the corporate ladder into higher-paying jobs to reduce the pay gap.
But the disparity persists even when women have the same jobs as men. Researchers estimate that, on average, women are paid 2%-5% less than men. Public policy and company practices can move the needle. Here’s how:
- Publish pay ranges. New York City passed a law, effective in May, that all posted jobs must display the pay range for that position. Colorado, Connecticut, Nevada, and Rhode Island are among states with similar laws. These laws give job candidates more tools to negotiate salaries commensurate with their abilities. Studies indicate that women are more likely to negotiate when they know this is possible
- Prohibit asking job candidates about prior compensation history. Laws in 17 states restrict the use of compensation history in hiring. Employers base new compensation on previous compensation, so these new laws and corporate practices allow candidates to focus compensation conversations on what the job is worth and what the employee brings to the table. This is vital as being underpaid once can have a significant effect on a person’s life-long earnings.
- Prioritize pay equity.A Society of Human Resource Management study found that 58% of their companies have implemented a pay equity approach. Compensation managers find that pay equity audits help reduce, if not eliminate, discrepancies. When companies have a penny or less differential, many are displaying this on their website.
This process begins by evaluating similar roles and setting pay ranges; assessing why people should be paid differently (i.e. location, tenure, or performance); and creating model that reviews the employee’s compensation and these relevant factors against the set pay range for the role. If the model indicates some people are underpaid, the company often aligns their compensation closer to the higher rate.
- Empower employees.Employees are advocating for equal pay by being more transparent about their own pay. Although companies discourage sharing compensation, it is the employees’ right as specified under the National Labor Relations Act. Employees in a range of industries and nonprofits have shared their compensation and related factors about themselves in widely shared spreadsheets.
- Third-party services like Glassdoor provide some transparency in collecting and sharing salary information, as well. The collective effort gives employees more control in compensation negotiations.
Equal pay for equal work has been the law in the U.S. since 1963. Sadly, we are only inching toward equality. The laws and practices outlined above add more structure and fairness to compensation practices — a very welcome trend. These developments give us hope, but we know we must continue our in ensuring the vision of equal pay becomes a reality.
Marie Konstance is Director, Community Engagement at Catalyst, where she helped establish and manages the Gender and Diversity KPI Alliance (GDKA), which promotes the adoption of three key performance indicators to measure gender and diversity.