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.
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:
In April, the Ninth US Circuit Court of Appeals ruled in an en banc rehearing of a case decided by a three-judge panel last year that differences in past salaries don’t justify disparities in pay between male and female employees in the same role. The unanimous ruling, authored by the late Judge Stephen Reinhardt, concluded that even though the Fresno, California, school district’s pay structure was not discriminatory in intent, it perpetuated gender-based wage disparities in a manner “contrary to the text and history of the Equal Pay Act.”
Because pay gender disparities in pay may have arisen from sex discrimination, the court reasoned, a system that allows these gaps to persist throughout an employee’s career effectively functions to “perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.” The Ninth Circuit’s judgment is in keeping with a trend that has been building up over the past few years in which employers are feeling greater pressure to stop basing pay structures on salary history, due to the potential for perpetuating unfair pay gaps. Appeals courts have divided on the question, however, with the 10th and 11th Circuits also finding that salary history-based pay systems are not exempt from Equal Pay Act claims, while the Seventh and Eighth Circuits have disagreed.
A circuit court split is often a prelude to Supreme Court review of a legal question. The Fresno school district had planned to appeal the Ninth Circuit’s ruling to the highest court, but had suspended that process while it attempted to reach a settlement with the plaintiff, Aileen Rizo. Now, however, the settlement talks have broken down and the district is preparing to petition the Supreme Court for review next month, Erin Mulvaney reports at the National Law Journal. That doesn’t mean the court will take the case, Mulvaney notes, but “any petition would likely fuel friend-of-the-court briefs”:
Today is Black Women’s Equal Pay day, a date marking the pay gap between black women and white men in the US by representing how far into the next year a typical black woman has to work to earn as much as a typical white man earned in one year. It comes considerably later in the calendar than Equal Pay Day, which is observed in early April and symbolizes the gender pay gap irrespective of race; this illustrates the greater degree to which black women are disadvantaged in the American workplace than their white peers. McKenna Moore at Fortune highlights the salient statistics:
Women earn 80 cents for every dollar that men make, but black women make 63 cents for every dollar white, non-Hispanic men make. This means that black women also make 38% less than white men and 21% less than white women, according to a study published by the Institute for Women’s Policy Research. And the gap is only widening for women, both black and white. Extended over a 40-year career, the wage gap has black women earning $850,000 less than men’s median annual earnings, according to the National Women’s Law Center.
Studies show that the pay gap starts early. An data analysis of BusyKid’s app’s 10,000 users shows that parents pay boys a weekly allowance twice the size that they pay girls. By 16, black women are earning less than white men and the gap only widens as they age. As black women have families of their own, the gap means less money for their families, which is particularly harmful because more than 80% of black mothers are the main breadwinners for their households, according to the National Partnership for Women & Families.
The disadvantage lying at the intersection of racial marginalization and gender inequality is not limited to black women, either: Native American women don’t get their Equal Pay Day until late September, earning only 57 cents for every dollar paid to white, non-Hispanic men. Latina women suffer the greatest pay disparity at 54 cents to the white, male dollar; their Equal Pay Day doesn’t arrive until November.
In April 2017, new regulations came into effect in the UK requiring all organizations with 250 or more employees to publish their gender pay gaps. One year later, the first round of mandatory reports showed that the median pay gap among those reporting stood at 9.7 percent, with 78 percent of firms paying men more than women. On a more granular level, the reports illustrated the great degree to which women’s underrepresentation in senior roles, especially those with high bonus potential, contributes to the pay gap in professional fields.
Now, a committee of MPs is urging the government to expand the reporting mandate to smaller firms, as well as to require companies to publish their plans for closing these gaps, the Guardian reported last week:
All companies with more than 50 employees should have to report their gender pay gap from 2020, said the business, energy and industrial strategy committee (BEIS). Currently only firms with more than 250 employees have to report their gender pay gap, leaving half of the UK workforce without knowledge of their workplace’s gap. The committee said the government had to take fresh action to close the gap, and should force companies to publish action plans and narrative reports about what they were doing to narrow it.
It also criticised the government for “failing to clarify the legal sanctions available to the EHRC [Equalities and Human Rights Commission] to pursue those failing to comply and we recommend that the government rectifies this error at the next opportunity”.
The committee called out those companies that excluded partner pay from their pay gap reports, including many of London’s major law firms, which its chair Rachel Reeves said “made a mockery of the system.”
Laura Hinton, chief people officer at PwC, told the committee that it was time for British businesses to start thinking about gender pay equity as more than just a compliance concern and couple their pay gap reporting with concrete action plans and accountability. The committee is proposing that boards of directors introduce key performance indicators for reducing pay gaps and that remuneration committees be required to explain how their pay policy decisions reflect their commitment to pay equity, according to Personnel Today.
Andy Dean Photography/Shutterstock
In an opinion piece published last weekend, Bloomberg columnist Anjani Trivedi made the economic case for paternity leave, arguing that organizations too often overestimate the costs and neglect the financial upsides of offering parental leave to both mothers and fathers. “The real question,” she points out, “is what the cost would be of replacing that employee,” and paid leave is usually cheaper, Professor Jody Heymann of UCLA’s Fielding School of Public Health and WORLD Policy Analysis Center, tells Trivedi. Considering that parental leave and other family benefits can have a major impact on employee retention, and that the costs of replacing an employee can rise to as much as twice their annual salary, universal parental leave policies may well save more than they cost.
The growing number of employers offering gender-neutral parental leave benefits in recent years reflects the fact that employees, whose opinions count more than ever in the tight labor markets of the US and other advanced economies today, are more sensitive to the availability of paternity leave: Our latest benefits perceptions research at CEB, now Gartner, finds that globally, an additional two weeks of paternity leave improves employee perceptions of rewards to a greater degree than the same amount of additional maternity leave.
In the US, which unlike most countries does not legally mandate paid maternity leave, employees are still more responsive to changes in leave for mothers, but even there, Millennial men who are now starting families are more interested than their fathers were in being actively involved in raising their children. However, many of these men don’t have access to paid parental leave or feel pressured by their peers, their managers, or their own financial concerns not to take advantage of this benefit even when they are entitled to it. The absence of family-friendly benefits like parental leave and flexible work arrangements already drives many working mothers out of the full-time workforce; if fathers do the same, the case for such policies becomes even stronger than it already is.
Following an internal review of its pay practices, Nike is raising wages for more than 7,000 of its employees worldwide, the New York Times reported on Monday, in order to equalize compensation among employees in the same roles:
Nike cast the pay changes as part of its effort to maintain a corporate culture “in which employees feel included and empowered,” according to an internal memo sent to staff on Monday. The New York Times reviewed a copy. The company, which is based in Beaverton, Ore., said the changes would affect about 10 percent of its 74,000 employees worldwide. … Nike also announced changes in how it will calculate employee bonuses, which were based on a combination of corporate, team and individual performance. They will now be determined mainly by the company’s results.
Nike reviews pay every year, the memo noted, but conducted what it called a “deeper analysis” this year as part of its investigation into alleged problems that were driving many women to quit. Addressing the discrepancies found in this audit will be expensive for Nike, but one thing most companies don’t realize about pay equity is that this cost of closing pay gaps increases each year, so it will never be cheaper for Nike (or any company) to correct this problem than it is today. Pay gaps don’t have a “one-and-done” solution, however, so it’s important for organizations to continue scrutinizing pay practices from year to year to spot the re-emergence of these gaps and take proactive steps to ensure that their pay practices remain equitable. (CEB Total Rewards Leadership Council members can read our entire landmark 2017 study on pay equity here.)
The change Nike is making to its bonus calculations is also notable, as it reflects the growing understanding of how variable compensation such as bonuses contributes to pay gaps. This “bonus gap” occurs when more men than women (or more white than non-white employees) are promoted to the high-level positions that make them eligible for bonuses, or when unconscious bias affects the performance judgments managers make in awarding them. The significance of the bonus gap was illustrated in the gender pay gap reports UK employers were required to publish earlier this year: Financial firms in particular found that their bonus gaps, in some cases amounting to over 60 percent, were bigger factors in their overall gender pay gaps than differences in base pay.