How Do We Close the Gender Pay Gap?

How Do We Close the Gender Pay Gap?

Equal Pay Day is a symbolic event that highlights the pay gap between men and women in the US. Equal Pay Day is held on a Tuesday, representing how far into the next week the average woman has to work to earn what the average man earned the week prior, and in early April to represent how much farther into this year she needs to work to earn as much as he did last year. While individual studies differ slightly, nearly all of them calculate the overall US gender pay gap at around 20 percent, meaning women earn roughly 80 cents to every man’s dollar. (It bears mentioning that these figures are significantly worse for women of color.)

To a significant extent, this gap reflects women being offered lower salaries than men for the same or similar work. Fast Company’s Lydia Dishman points to some recent research by Hired that suggests women are often being lowballed:

The majority (63%) of the time in the U.S., men are offered higher salaries than women for the same role at the same company, according to wage gap data and survey responses compiled by Hired. On average, these companies offer women 4% less than men for the same role, with some offering women up to 45% less. These numbers are likely due to unconscious bias, inconsistent pay practices, and paying new hires based on what they made in their previous role. “Our data found that 66% of the time, women are asking for less money–6% less on average–than men for the same role at the same company,” says Kelli Dragovich, senior vice president of people at Hired. Undervaluing themselves is part of the reason, she says, as 50% of female survey respondents said they experienced impostor syndrome most of the time.

However, even companies that pay men and women equally for equal work still have pay gaps, because women are often concentrated in professions with lower earning potential. Our recent research at CEB, now Gartner, finds that these group-to-group gaps account for most of the global gender pay gap of 27 percent, although 7.4 percentage points remain unexplained by factors like size, industry, geography, education, or experience.

The main cause of this larger pay gap is the sorting of women into lower-paying roles, or occupational segregation, Maggie Koerth-Baker explains at FiveThirtyEight. That doesn’t mean women are choosing to earn less money, however, and “the fact that certain industries are dominated by men or women — and that the men’s jobs pay more — has never just been about what qualifications an individual did or didn’t have, or how tough the job was to do”:

For example, back in the 1970s and early ’80s, Minnesota did an analysis of how much men and women who worked for the state were paid. Instead of comparing pay between people who did the same jobs — what a female and male snow plow driver were paid — the analysis was one of the first in the country to analyze how people were paid when they did comparable jobs which was determined by whether the jobs entailed a similar balance in four factors: skill levels, problem-solving abilities, accountability and pleasant working conditions. So even though a groundskeeper and an administrative secretary do very different tasks, they might have comparable jobs in part because the secretary needs more problem-solving skills, but the groundskeeper faces more unpleasant working conditions. This system allowed researchers to measure the pay gap more fairly by accounting for sex segregation among jobs, and they found that heavily female jobs were paid less than heavily male jobs, even if they were comparable. “You had librarians being paid less than the guy shoveling streets in the winter,” said Aviva Breen, who was the director for the state’s task force on women’s economic issues during that time.

Women across the country are still working under the unequal conditions identified in the ’80s by that Minnesota study — jobs that are largely done by women still frequently pay less than jobs that are largely done by men. “One of the most jarring statistics is that we pay men more to watch cars than we pay women to watch children,” said Kevin Miller, senior researcher with the American Association of University Women. “There’s no social reason why we’d pay more for our cars than our children, but men are doing one job and women are doing the other.”

That occupational segregation is entirely a product of employees’ free choices is one of the most persistent myths about the gender pay gap, some of which Time’s Olivia Waxman at Time addresses in a piece for Equal Pay Day. A related myth is that women are willing to be paid less in exchange for more flexibility:

Usage: TIME’s Dec. 8, 1989, cover story was devoted to women who were “burned out from ‘having it all’” and addressed the idea that women would rather work less, even if that meant less money. The story was partly sparked by the uproar over Felice Schwartz’s ”Management Women and the New Facts of Life,” which appeared in that year’s January-February issue of the Harvard Business Review. The article became known as the the “Mommy Track” essay, for proposing that “professional women who prefer not to sacrifice family to ambition be relegated to a slower career path that would top out at middle management,” as TIME summed it up. “They would get by with shorter hours and schedules flexible enough to permit the occasional trip to the pediatrician or school play.”

Reality: Women are paid less, but they don’t actually get more flexibility. “Men (particularly men in the highest paid jobs) are more likely [than women] to have flexible working hours [and] control over when and where they work,” says Hegewisch. In addition, law professor Joan C. Williams argues some subconscious bias can be at play, too, as her research suggest that people tend to assume single women or men who are not at their desk must be meeting with a client and that mothers who aren’t at their desk are dealing with childcare.

Even though these big-picture factors account for most of the gender pay gap, role-to-role inequities do still exist at many organizations. This is something HR should address directly—and urgently, as our research shows it will become more expensive to do so with each passing year. Closing these gaps is not a one-and-done process, however, but requires ongoing efforts to ensure the gap does not reopen. An example of the kind of continuous work this takes can be found in Hired’s own efforts to close its pay gap, which Megan Rose Dickey highlights at TechCrunch:

Hired … spent $2 million in 2016 to close its wage gap across gender, race and sexual identity. Since then, Hired says it reassessed pay six months later, and followed the same methodology in 2017. The company says it plans to do it again this year. … [Hired] employed only 200 people at the time, and had to give raises to 60 percent of its employees. Half of those employees were women.

“This is because we didn’t have a hiring and compensation model in place early on, not unlike many fast growing start ups,” Hired SVP of People Kelli Dragovich wrote in a blog post. “We tended to pay people based on what they asked for in the hiring process and what their previous salary was, instead of their objective market value. Now, we base our compensation decisions on third-party salary data that takes skillset, years of experience, geographic location, industry and company size into account.”

Another important way companies can contribute to closing the pay gap is to be more transparent about their pay gaps and what they are doing to address them. While many high-profile companies in tech and finance have released gender pay gap reports in the past year, often in response to pressure from activist investors, these reports typically identify gaps of less than 1 percent after correcting for various factors such as geography, seniority, experience, and performance. These small gaps left critics wondering whether these companies overcorrected for less objective factors like performance (for which women can be unfairly held to a double standard), or offering incomplete analyses.

Generally, companies that release these internal audits do not disclose the methodology they used to arrive at their findings. A noteworthy exception to this trend is Buffer, which released a remarkably detailed pay gap analysis in advance of Equal Pay Day, explaining in depth the adjustments they made and how their adjusted and unadjusted pay gaps differed, among other key pieces of context. Buffer also discusses how experience and performance factor into the analysis and how the company is working to make these measurements more objective:

For example, in 2016 when we initially started these pay analyses, we didn’t have explicit frameworks for experience levels. We’ve since developed specific career frameworks so that anyone at Buffer can easily understand the level they are currently at and what they need to do to get to the next level. Performance reviews are another element here. They aren’t included in our salary formula but they do influence promotions. We developed a consistent performancereview process that is specifically designed to reduce bias and is overseen by our People team.

When it comes to promotions that affect one’s salary, we are creating “calibration” periods for these promotions to make sure timing doesn’t factor into any decisions. We did the first calibration in January 2018 and have two more periods planned for this year. This is a period in which the executive team gathers all salary change proposals together and discusses them at one time instead of throughout the year. Calibrations are designed to put salary change decisions in context and remove the isolation of single-area decisions.

Employers can also promote pay equity by not restricting their employees from discussing their pay with each other, allowing gaps to come to light and be addressed. The Cut on Tuesday published a clever feature in which they asked some men and women who work the same jobs in the same places to share their salaries with each other and documented their reactions. Here is one example of two senior editors at a publishing company where the man makes just over ten percent more than the woman:

Him: “I think we all feel extremely awkward discussing it with each other; there’s a fear that either we don’t make as much as our colleagues or we make more, and having that out in the open will create an awkward or hostile work environment. We often feel siloed and closed off from one another already, so any additional tension is usually averted for the sake of the group as a whole. I am not surprised to hear that a female colleague with my title makes less than me, but I’m disappointed nonetheless.”

Her: “I’m not at all surprised, but perhaps it is my own fault for not advocating for myself more and not being pushier about my own salary. To me, any discrepancy of $10,000 or less doesn’t upset me. Perhaps this person has been at the company longer than me. I’d be disappointed though, if I asked for more and they said no.”

Read the rest and you’ll see that the conversations they captured were not as fraught as one might expect. Leaders who fear that talking about pay gaps will hurt employee morale might also consider how their employees will feel if instead they find out their employer was hiding those gaps from them.