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Student Debt Hits Women Harder Because of the Pay Gap
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According to the US Department of Education and AAUW, women earn 57% of college degrees in America, but they hold nearly two-thirds of the country’s outstanding student debt. On average, women graduate with $2,700 more student debt than men, and since female graduates earn roughly 18% less than male graduates on average, women are also repaying their loans more slowly than men.
This debt affects more than our economy and women’s work lives across the country; 34% of women who are repaying student loans reported that they had been unable to meet essential expenses within the past year. With women’s basic needs at risk financially and student debt so intertwined with the gender pay gap, it’s critical we continue working toward pay equity as a society.
Companies can promote pay equity first through reevaluating pay gap metrics, committing to pay transparency, and adjusting the direction of compensation plans to better reflect the values of equal pay, all of which open the door for women to pay off their student loan debts more quickly.
The first step for organizations looking to understand pay gaps is to determine if they have one, and if so, what that gap looks like. While traditionally pay gaps have been measured by purely comparing salaries, that tactic is not a true representation of the gender pay gap and may actually hide real pay disparities that exist within the company. Instead, it’s important to compare similar peer groups and to look at each employee’s total rewards package, including bonuses, non-cash rewards, and paid time off, to paint a clear picture that allows for real compensation comparisons. In looking at these additional benefits companies may find that while two people with the same background and performance in a similar role make the same salary, there is a disparity in their bonus numbers or paid time off that creates an inequity between employees.
Although eliminating the gender pay gap is a process, there are actions that companies can take to ensure they’re fully supporting equal pay among their employees and within their industries. Leadership, from C-suite executives to managers, sets the tone for how the company runs and ultimately how employees feel about equality within their company. A leader can, for example, reveal his or her own salary to the company or provide dynamic total reward statements that give employees insight to their true value. By showing employees their total compensation in comparison to industry or company benchmarks, leaders can create a greater understanding of what fair pay really means at the company or within the industry.
Additionally, leaders can use their platform to take action outside of the company, within their own industry or through regulatory processes to fight for equal pay. Particularly at larger organizations, CEOs can guide an industry toward a specific standard of equality. Showing employees that their leader is fighting for a societal issue bigger than just their own organization will go a long way in proving wider company values as well.
Transparency is an essential tool for organizations looking to close their pay gap and show their employees they’re committed to gender pay parity. There is often a fear associated with compensation transparency, as businesses believe it may reveal a pay gap. However, research has shown that even with a gap, it’s the commitment and the communication that stands out to employees as important factors in trusting and staying with the company. While about two-thirds of enterprise employees said they would be more willing to work at a company that discloses their gender pay gap figures, 32% said they would be inclined to seek out a job that discloses a lower gender pay gap than their current company. For employees who value pay equality, showing the commitment to improving equal pay is a huge asset that can help with retaining and attracting employees.
Although we know that both solving the student debt crisis and achieving total gender pay equality will not happen overnight, HR and company leaders must commit and act now to take steps toward both goals.