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It May Not Take 267 Years to Close the Gender Pay Gap
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On March 10, 2021, the Gender Pay Gap Bot began publicly responding to employers tweeting about International Women’s Day by retweeting their gender pay gap.
Using government data required in the U.K., @PayGapApp exposed organizations like Goldman Sachs (where women’s median hourly pay is a reported 36% lower than men’s), Virgin Atlantic (58.9% pay gap), and more to help people focus on the facts surrounding equitable pay.
Addressing your company’s median pay gap publicly may sound terrifying, but you may need to do it sooner than you think.
California is considering passing a pay transparency bill that would require employers with more than 100 employees to report publicly how much they pay their workers, even if the employer has just one employee in the state. Meanwhile, Colorado, New York City, and Washington now require employers to include compensation and benefits on job postings, with many more states like Massachusetts and South Carolina expected to join.
The World Economic Forum claims that it will take 267 years to close the gender pay gap. But it can probably happen sooner than that. Laws aside, investors, shareholders, and employees are powerful social forces that are already driving employers to take action.
Big investment firms are now incorporating ESG (environmental, social, and governance) considerations into their investment processes and decisions. As a result, employers must take on some new ESG considerations of their own.
While social issues are often less tangible the environmental and governance ones, there are areas organizations can focus on, including:
How investors define social considerations is important. For example, companies like Red Ventures issue a DE&I Annual Progress Report to help shape their company image and highlight annual progression on important issues. Additionally, PwC has issued its first-ever transparency report to show an up-to-date understanding and awareness of diversity and inclusion issues.
Shareholders are proposing equitable pay proposals. The big difference today versus previous proposals is that they’re actually passing.
The Walt Disney Company, for example, recently had 60% of stockholders vote to approve a shareholder proposal for greater transparency on pay data. The majority-supported shareholder proposal will report on median and adjusted pay gaps across race and gender.
Why take this big step? Because shareholders know pay equity is becoming more important in investor decisions, particularly around reputational risk of a brand.
“Employees are asking, ‘How do you value me?’ And then they are asking their employers to prove it,” says Maria Colacurcio, CEO of Syndio, a tech platform focused on workplace equity. It’s critical, therefore, that companies are able to detect and prevent pay disparities.
Indeed, pay disparities between new and current employees have been on the rise as the job market and tech salaries have gone into flux. Companies have needed to attract talent quickly, and as a way to fill open positions, employers have been offering employees salaries that have at times been larger than usual.
However, this has inadvertently created larger internal pay gaps, since most companies have failed to do side-by-side comparisons of new versus existing employees.
For instance, at Praisidio, an employee retention software company, one client noticed that men were being paid 40% more than their female counterparts. This wasn’t intentional; one group of male employees were hired in a different time period than the female employees, but nothing had been done to close the gap.
Within a week, the company rectified the gap and brought female employees to the same compensation levels as their male counterparts in the same role.
Ultimately, the opportunity to resolve pay gaps and create workplace equity is here. Given the insane momentum, social pressures, and regulatory environments, there’s good reason to believe that we’ll see the pay equity gap closed much sooner than the World Economic Forum’s prediction.