Pay equity isn’t a topic that is going by the wayside. Instead, it’s only gaining steam. And as more legislation aimed at decreasing the gender pay gap is enacted in the United States, Canada and the United Kingdom, the more the conversation heats up.
Therefore, it’s important that proper statistics are applied to the discussion as it rages on into the future. Specifically, when it comes to organizations disclosing their pay gaps, said Linda Chen of Mercer’s Workforce Strategy and Analytics Group.
When organizations are requested to release raw pay gap numbers — the difference in average pay for women versus the average pay for men — it doesn’t adequately encapsulate the issue.
“It masks a lot of the reasons for why there is a big difference from a raw perspective and does not take into account very important factors that do impact pay,” Chen said. “As an example, if you have a very senior employee compared to a very junior employee, their pay is likely to be very different. And from a raw statistic perspective, you would not be able to account for differences in seniority.”
It leads to the next evolution of the pay equity conversation, which is really an issue of representation, Chen said. A key reason there is pay disparity between men and women is that men hold more senior-level roles. It’s a matter that organizations should address, Chen said, but the raw pay gap figures don’t accomplish this.
Chen advocates for organizations releasing adjusted pay gaps, or as she refers to it as the “all-else-equal pay gap,” because it normalizes all the important factors that drive pay differences.
“It accounts for things such as seniority or the level that you’re in, it’ll account for geographic differences, it’ll account for differences in roles,” Chen said. “What it does not take into account is your gender, your race or ethnicity, because those are not legitimate reasons why people should be paid differently.”
As more organizations are responding to concerns of pay equity, there’s been a shift in how they are approaching the matter. Chen said she’s seen companies tackle the issue less from a risk-mitigation perspective and more as a strategic initiative.
Part of that strategic initiative involves an honest assessment of female representation in leadership positions throughout the company. If fixed, it should in turn solve pay incongruencies, but it’s not going to happen overnight, she said.
“I think where a lot of organizations are now headed is that other side of the coin around representation. Because it’s one thing to fix pay equity, it’s a different thing to fix your representational issues,” Chen said. “That lies in the equity in promotion, retention and hiring. Those are more mid-to-long-term efforts. You can’t just throw a bunch of money at it and have it fix itself in a sustainable manner. So it does take longer-term strategies, programs, efforts and have the diligence around checking for equity in all of these other ways. I think organizations are often looking to their data to analyze these other factors as well.”
PAY EQUITY ROUNDUP
German Pay Equity
German’s gender pay gap is 21%, which is second worst in the European Union, but when using the adjusted gender pay gap, it whittles down to 6%; the biggest change in the EU. This DW article by Natalia Smolentceva examines whether the adjusted pay gap places Germany in a more respected light. The article points out that it is important to identify each measure in the adjusted pay gap and whether it is a valid delineation.
No Pay History in Cinci
Cincinnati recently passed an ordinance that will make it illegal for public and private employers in the city to ask potential employees about their pay history during the hiring process. The salary history ban, which goes into effect March 2020, could go a long way toward pay equity in the city, writes Lucy May in this WCPO piece.
The Australian Labor Party is pushing to restructure the Fair Work Commission through a series of changes that aim to make equal pay a priority of government, according to the Human Resources Director. The article reveals that the party is advocating to increase pay in industries that have historically been dominated by women.
A Deep Dive
In a feature for Workspan, John H. Davis, PH.D., CCP, Davis Consulting, challenges the statistic that women are paid 80 cents for every dollar paid to men. Davis writes that the 80% pay gap figure isn’t accurate and doesn’t take other factors into account. He advocates for focusing on gender pay differences within jobs
Closing the Gap
Courtney Connley writes about Glassdoor’s recent research which revealed the 10 industries that have shrunk gender pay gaps the most in this CNBC article. The research found that nonprofits and the health-care sector led the pack with pay gap decreases of 2.1% and 1.5%, respectively.
About the Author
Brett Christie is a staff writer at WorldatWork.
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