The gender gap in pay has remained relatively stable in the United States during the past 15 years, according to Pew Research Center findings.
In its latest analysis of median hourly earnings of both full- and part-time workers, women earned 84% of what men earned in 2020. Based on this estimate, it would take an extra 42 days of work for women to earn what men did that year, said the report.
“Pay equity issues persist because of decentralized decision making,” said Brian Levine, Ph.D., global and U.S. pay equity leader and partner, strategy and analytics at Mercer. “Bargaining works against women and people of color at the point of hire and at the point of promotion too. Behind pay equity adjustments, managers move to re-establish pay rankings in subsequent cycles. Managerial training and clear guideposts for decisions are critical.”
The COVID-19 pandemic also made a significant impact on the racial and gender pay gap. According to an article from the U.S. Department of Labor, the pandemic set women’s labor force participation back more than 30 years.
“In February 2021, women’s labor force participation rate was 55.8% — the same rate as April 1987,” wrote chief economist Janelle Jones. “And women of color and those working in low-wage occupations have been the most impacted.”
Levine said COVID-19 created more challenges for women and people of color because they disproportionately serve in industries and roles that faced reductions.
“From a pay equity perspective, we might now be seeing increasing gaps as companies are more aggressively hiring and we see new hire pay gaps. We also have seen cases where increasing success in diverse hiring at senior levels is, paradoxically, associated with reduced pay equity because the diverse hires are coming in at lower rates. Companies need to ensure equity in all efforts, simultaneously, and that is a tough challenge.”
The pandemic also altered conversations about pay equity in several different ways.
“We’ve seen companies constrained on pay budgets do more to address ‘overpaid’ men and whites, when the solution generally has been to increase pay for ‘underpaid’ women and minorities. This focus on both sides of the pay distribution, we believe, can serve to accelerate progress on pay equity,” Levine said.
Brad Hill, principal at Clearwater Human Capital, thinks the Black Lives Matter movement has also been a primary driver of productive conversations about pay inequities over the past two years.
“During this time frame, we have had a pandemic, but we have also had one of the biggest movements in U.S. history, Black Lives Matter, which also raised awareness of all minority challenges.”
Outside forces, such as the pandemic and the racial justice movement, have had a ripple effect internally at companies as more organizations do more to ensure they’re in compliance and their pay practices are legal.
According to Hill, compliance can come in two ways: doing what is necessary to comply with the law or believing that pay inequities are unfair and doing everything in their power to correct them.
“Complying in the first way is better than nothing, but it won’t fundamentally change the work culture that gave rise to and perpetuates inequities,” he said. “Companies need to fix the problem because it is the right thing to do, not because they need to comply with the law.”
Levine suggests companies conduct an annual pay equity review aligned to the compensation calendar.
“It supports disclosure and a uniform standard across the company, in all jurisdictions. Done right, it is consistent and supportive of equity laws across jurisdictions. Where issues are found, the analysis recommends individuals for further review and potential pay adjustments.”
Relevant WorldatWork Resources
· Certification: Certified Compensation Professional
· Course: Compensation Immersion Program
· Course: Understanding Pay Equity
About the Author
Nu Yang is a writer/editor for WorldatWork.