In Australia, where the gender pay gap among full-time employees currently stands at a little under 15 percent, the opposition Labor Party wants to push this number downward by requiring large companies to publish their gender pay gaps, as the UK and some other European countries already do. In a statement issued on Sunday, deputy opposition leader Tanya Plibersek and Labor’s employment spokesman Brendan O’Connor noted that Australian women working full-time earn about $27,000 per year less than their male colleagues on average, the Guardian reported:
“We must do better,” it said, adding that a Labor government under Bill Shorten would “act to shine a light on the gender pay gap in Australian companies”. Labor would also change the Fair Work Act to prohibit pay secrecy clauses and require the Workplace Gender Equality Agency to publish a list showing whether large companies had undertaken and reported a gender pay gap audit.
Companies already report their gender pay data to the Workplace Gender Equality Agency but Labor would make it public, the statement said. “People will be able to search a gender pay equity portal to find out a company’s overall pay gap, and the pay gaps for managerial and non-managerial staff.”
The Australian Council of Trade Unions backed the proposal, saying it would improve employees’ bargaining power and prevent employers from retaliating against employees for discussing their pay with each other. Prime Minister Scott Morrison, however, pushed back on the proposal, arguing that it might generate problems in the workplace and not actually help close the pay gap.
“You’d want to be confident you’re not setting up conflict in the workplace,” he said. “I don’t want to set one set of employees against another set of employees.” Morrison also pointed out that the country’s gender pay gap had decreased from 17.2 percent to 14.5 percent under his Liberal Party–National Party coalition government, whereas it had grown the last time Labor was in power. Nonetheless, Morrison said in a press conference that he was “open-minded” about the proposal.
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The latest compensation data from the US Labor Department’s Bureau of Labor Statistics show that total compensation for US employees has increased modestly over the past year, from $35.28 per hour worked in June 2017 to $36.22 per hour worked in June 2018. Wages and salaries averaged $24.72 per hour worked and accounted for 68.3 percent of these costs, while benefits averaged $11.50 and accounted for 31.7 percent. For private sector employees, compensation has increased from $33.26 per hour worked to $34.19. Wages made up $23.78 or 69.6 percent of that figure, while the remaining $10.41 (30.4 percent) consisted of benefit costs, in which the BLS includes supplemental pay.
While the percentage ratio of wages to benefits was unchanged from June 2017, benefit costs grew at a slightly higher rate than wages year-over-year, nearly 3 percent compared to 2.7 percent. This reflects a nearly 12 percent increase in bonuses and other forms of supplemental pay, from $1.18 per hour to $1.32; supplemental pay made up 3.8 percent of the total compensation mix in June 2018, compared to 3.5 percent a year earlier. Paid leave, including vacation time, also increased slightly.
Taking a longer-term view, over the past five years, benefit costs for private-sector employees have increased by over 20 percent, from $8.64 per hour worked in June 2013; whereas wages and salaries have increased 16 percent, from $20.47 that month. Supplemental pay, by comparison, has increased 65 percent from 80¢ per hour worked in June 2013. This trajectory reflects the increasing tendency we’ve observed among employers in recent years toward variable pay schemes that reward employees for high performance with one-time bonuses rather than standard annual raises.
The US made no progress toward closing the gender pay gap between 2016 and 2017, with the ratio between women’s and men’s average earnings stalling at 80.5 cents to the dollar and the gaps between women of color and white men actually widening, the Institute for Women’s Policy Research reported last week:
If current trends continue, women will not receive equal pay until 2059, according to a related IWPR analysis of trends in earnings since 1960. This projection for equal pay remains unchanged for the last two years, indicating that the rate of progress has stalled.
Women of all major racial and ethnic groups saw the wage gap with White men widen in 2017, with especially large gaps facing Black and Hispanic women. Hispanic women made just 53 cents for every dollar earned by a White man (down from 54.4 cents in 2016) and Black women made just 60.8 cents (down from 62.5 cents in 2016). At $32,002 per year of full-time work, median earnings for Hispanic women are below the qualifying income threshold for eligibility for food stamps for a family of four.
“Closing the wage gap is not a zero-sum game—gains for one gender do not require losses for the other,” the IWPR points out in a fact sheet on the pay gap. While the gender gap has narrowed over the past several decades, wage stagnation in the US is an ongoing concern for men and women alike:
Employees today are more likely than ever to demand transparency about compensation practices at their organization. Total rewards leaders agree that pay transparency would benefit the organization in numerous ways. Yet even though everyone seems to be on board, organizations are slower to adopt this practice than you might expect. In our latest research at Gartner, 60 percent of the organizations we surveyed said they had not yet acted on pay transparency at all, while only 14 percent had fully realized it.
So why aren’t we making faster progress toward an outcome all stakeholders agree is the right thing to do? In a session at Gartner’s ReimagineHR event in London last Thursday, Advisory Leader Ania Krasniewska armed the total rewards leaders in attendance with strategies for surmounting obstacles to pay transparency and getting senior leaders and line managers at their organizations on board. Here are some of the most common reasons why organizations shy away from pay transparency, along with some counterarguments HR leaders can use to win over a skeptical CEO:
“It’s just a trend.”
The pressure organizations are facing today to be more transparent about their compensation practices comes from several directions: Millennial employees expect more transparency than previous generations did, employees have more access to (often inaccurate) pay information from outside sources like Glassdoor or PayScale, and governments and the media are advocating transparency as a means of driving pay equity. For an executive wary of pay transparency, it may be tempting to reason that these trends will eventually pass, but there is good reason to believe otherwise.
While Millennials and Gen Z are the employee cohorts most commonly associated with demands for pay transparency, they’re not the only employees who want it. Like other Millennial-driven trends in the workplace today, the younger generation of employees is simply more vocal in demanding things that in fact, employees of all ages would like. Their attitudes also influence their parents, neighbors, and older colleagues. Millennials aren’t the only ones using Glassdoor: Many of the employees who use these external sources to compare their salaries with those of their peers are in senior positions at their organizations. Furthermore, Millennials aren’t going away; they are already the largest segment of the workforce and Gen Z will eventually be even bigger. Gambling that these generations will stop caring about pay transparency later on is a very risky bet.
Over the coming year, Microsoft will implement a policy requiring its suppliers in the US to provide their employees a minimum of 12 weeks paid parental leave, paid at up to $1,000 per week, Dev Stahlkopf, Corporate Vice President and General Counsel at Microsoft, announced in a blog post on Thursday:
This change applies to all parents employed by our suppliers who take time off for the birth or adoption of a child. The new policy applies to suppliers with more than 50 employees and covers supplier employees who perform substantial work for Microsoft. This minimum threshold applies to all of our suppliers across the U.S. and is not intended to supplant a state law that is more generous. Many of our suppliers already offer strong benefits packages to their employees, and suppliers are of course welcome to offer more expansive leave benefits to their employees.
Our new supplier parental leave requirement is informed by important work on paid parental leave done in states, including Washington. In 2017, Washington state passed family leave legislation, including paid parental leave. This new law will take effect in 2020. As we looked at this legislation, however, we realized that while it will benefit the employees of our suppliers in Washington state, it will leave thousands of valued contributors outside of Washington behind. So, we made a decision to apply Washington’s parental leave requirement more broadly, and not to wait until 2020 to begin implementation.
Like other major US tech companies, Microsoft relies on an undisclosed number of workers employed by third-party contractors; this so-called “shadow workforce” of contract laborers, who typically do not enjoy the same generous benefit packages as those directly employed by these companies, has been the subject of growing scrutiny and recent labor disputes, as GeekWire’s Nat Levy points out. Microsoft has faced controversy over its contingent workforce in the past, most notably in a high-profile lawsuit by “permatemps” in the 1990s. The company began putting standards on labor conditions at its US suppliers in 2015, when it began requiring that those with 50 or more employees grant a minimum of 15 days of annual paid time off to eligible employees.
Microsoft’s latest move intersection of several broad trends shaping the benefits space in the US today.
Competitive total rewards packages are a key battleground in the scramble for talent today. Yet many organizations still rely on outdated approaches when communicating rewards through the hiring process, focusing too much on compensation while neglecting benefits. This is becoming more difficult as salary budgets continue to stagnate: Recent salary surveys suggest that cash wages in the US are unlikely to grow much faster in the coming year than they have in 2018, despite a strong economy and a tight labor market.
While compensation is consistently a top driver of candidate attraction anywhere in the world, we know that candidates are also attracted to tangible benefits like health insurance and paid leave, as well as intangible benefits like flexible scheduling and remote work options. Even as wage growth falls short of expectations, we have seen major US employers investing more in benefits like paid family and sick leave, health insurance, and education benefits like tuition assistance and help with paying off student loans.
To better understand how employers can use their benefit offerings as talent attractors, Gartner’s Total Rewards team worked with data from our talent market intelligence portal TalentNeuron, looking for a connection between how organizations pitch their benefits in job postings and how quickly they are able to fill posted roles. Organizations that don’t leverage their benefits offerings in this way, we found, may be missing out on an opportunity to meaningfully boost their appeal to candidates.
The Walt Disney Company announced this week that it is now offering to pay full tuition for its hourly workers to earn a college degree, complete a high school diploma, or learn a new skill. In a blog post on the company’s website, Jayne Parker, senior executive vice president & chief HR officer, called the “Disney Aspire” initiative “the most comprehensive program of its kind,” adding that it would cover 100 percent of tuition upfront and reimburse employees for application fees and required books and materials. The program covers a wide range of educational endeavors, she noted:
The program is designed for working adults and offers our Cast Members and employees maximum choice and flexibility with their studies, regardless of whether the program and classes they choose are tied to their current role at Disney. Disney Aspire includes a network of schools that offer a wide array of disciplines and diplomas—including college and master’s degrees, high school equivalency, English-language learning, vocational training and more.
More than 80,000 Disney employees are eligible to participate in the program, which the company is implementing in partnership with Guild Education, an online adult education platform that helps companies provide tuition assistance and other education benefits. Other US employers with large numbers of hourly workers have partnered with Guild to provide tuition benefits, including the fast food chains Chipotle and Taco Bell, the retail giant Walmart, and the home improvement retailer Lowe’s. McDonald’s expanded its education benefit, a partnership with Cengage Learning, earlier this year, while Chick-fil-A increased the number of scholarships it was awarding though its longstanding annual program.