May 16, 2022
The longest journeys tend to beg the question: “Are we there yet?” Certainly, the quest for pay equity has been a long journey indeed – for women, people of color, and others in pursuit of a level playing field for compensation. It’s a worthy and necessary destination that officially began in 1963 with the federal Equal Pay Act. Mile markers of progress have been passed in the decades since. But “are we there yet?” The simple answer is “not quite,” but the encouraging truth is that we’re getting closer all the time. Here are some key research findings, data, and how you can achieve pay equity in your organization:
What Does the Data Say?
A survey by McKinsey & Company and LeanIn.org illustrates how women immediately fall behind in moving up the career ladder even though they come into the working world in roughly equal numbers.
Women’s share of jobs in the career ladder:
Entry Level 48.1%
Manager 38.4%
Sr Manager/Director 34.1%
Vice President 29.4%
Senior VP 22.7%
C-Suite Executive 22.4%
Clearly, the higher rungs of the corporate career ladder favor men. As further evidence of this, the survey also found that 1 in 5 women in the workplace reported noticing they are regularly the only woman in meetings. While that might not sound bad on its surface, that number climbs to 2 in 5 for women in senior management. In other words, it can still be lonely at the top for women. Why? Historical biases are almost certainly still in play here. Other factors are that the share of women in the workplace tends to diminish as workers age; and women end up with less tenure overall than their male counterparts in organizations. Both of these realities are connected to the fact that some women leave the workplace – at least temporarily – to raise families. Those that return to their careers have often lost momentum toward valuable continuous experience that could otherwise have kept pay nearly equal to that of men.
Nonetheless, additional research indicates encouraging progress:
Recent Pay Equity Research
According to a WorldAtWork study, most companies are now acting to balance compensation. The 2021 study found that 66% of organizations took action on pay equity, a whopping 60-point gain from the 6% reporting action toward the goal in 2020. What’s more, pay equity is “on the radar” for 31% of those survey respondents who have not yet taken action. Only 4% said they did not have pay equity on their radar (a positive downward trend from the 7% in 2020).
Of those who have not acted but have pay equity initiatives on their radar, 88% said the cost to fix inequities is a barrier to enacting a plan. However, 53% report being influenced to address pay equity because, ethically, it’s the right thing to do!
Progress Toward Pay Transparency
Regardless of the level of activity or the pace of achieving pay equity, regulations are also helping close the gap, primarily through efforts to enhance pay transparency. Several states have enacted – or are nearing enactment of – laws that require employers to provide job applicants, and in some cases, current employees, with wage range or rate information for their positions. Those states include California, Connecticut, Colorado, Maryland, Massachusetts, Nevada, New York City, Rhode Island, South Carolina, and Washington. Cities such as Cincinnati and Toledo, Ohio are increasingly taking similar actions in the absence of state efforts. A common goal of these laws is to ensure that women and people of color don’t get offered substantially lower salaries than white male counterparts.
More Signs of Progress Toward Pay Equity
Who is making the most progress? According to a Pew Research Center analysis reported in the Indianapolis Business Journal, women younger than 30, on average, earn as much or more than men in Washington DC, New York, Los Angeles, and 19 other major metro areas. These are strong job markets that tend to attract educated young people looking to build careers. The same IBJ article reported that, nationwide, women 30 and younger earn 93 cents for every dollar made by a comparable man. Still not quite equal but much closer than even recent past levels.
Experts say salary gains by those under 30 are driven by both education and awareness. Pay equity laws are also pressuring employers to justify their compensation decisions and making it easier for women to bargain for more. (In a recent meeting with a new undergraduate female student, I learned they are advised to ask for $10,000 more in salary than they want.) The apparent result of these pay equity gains is that both men and women may finally be starting out their careers with essentially the same wage.
How to Address Pay Equity in Your Company
Regardless of regulations, meaningful and lasting progress toward finally achieving pay equity must happen at the corporate level. Here are some best practices for driving pay equity initiatives in your organization:
- Ensure you have good benchmarking data that compares your organization to the appropriate industry, employer size, revenues or assets, and geographical location.
- Do your own analyses and studies to be confident that employees are placed appropriately in their pay range.
- Train your managers to understand the ranges and be able to explain and show their employees where they are paid in those ranges. Train your managers, also, to explain your organization’s compensation philosophy and why workers are paid where they are. Create and maintain a Manager’s Guide to Communicating Compensation with Employees.
- Share your salary range to help attract employees who value pay transparency. This can also lead to reduced attrition.
- Check pay transparency laws for states where you operate to ensure you know job posting requirements for including salary ranges.
- Fix pay inequities as quickly as you can.
- Continue to monitor and evaluate for pay inequities annually.
- Due to increased activity and pushes for unionization, evaluate, educate, and adjust where needed.
The Bottom Line:
When it comes to pay equity, “are we there yet?” Again, the answer is “not quite,” but after decades of seemingly little movement toward a level compensation playing field, we are now moving much more rapidly and true pay equity is in sight.
To learn more about pay equity and transparency, or to engage Total Reward Solutions to perform a Discrimination Analysis or an Equity Analysis, contact us today at 317.589.8529.
Cassandra Faurote
About Total Reward Solutions:
Total Reward Solutions is your trusted partner for compensation services. Led by Cassandra Faurote, professionally certified Compensation and Human Resources expert and author of the book Compensation Sense 101, Total Reward Solutions offers a broad range of compensation and total rewards consulting services to help your organization attract top talent, motivate employees, and retain top performers. We can partner with you on a project basis, on retainer, or as your total outsourced solutions provider for compensation services.