UK Employers Fear Reputation Risks of Gender Pay Gaps

UK Employers Fear Reputation Risks of Gender Pay Gaps

Earlier this year, the UK’s gender pay gap reporting mandate came into force, obligating organizations with 250 staff or more to publish gender discrepancies in their payrolls by April 4 of next year. Some employers oppose the mandate because they say it will paint an unfair picture of their pay practices by not differentiating between group-to-group and role-to-role gaps, or between legitimate and discriminatory pay differentiation.

Few employers have reported their pay gaps yet, but already, the few revelations that have come out have led to headlines like “Financial services suffer from widest gender pay gap in UK“—not good news, but also, not exactly news. As such, British employers are concerned about the impact of this reporting on their reputations, particularly among those that do have large gender pay gaps. Personnel Today’s Adam McCulloch flags a new survey of senior professionals finding that 84 percent believed the requirements would damage organizations’ reputations and that 73 percent thought companies with large gaps would have more trouble recruiting:

The new research from public relations firm Golin also found that just over three-quarters (76%) of professionals agreed that organisations should be named and shamed for their gender pay gap and 77% felt that companies were likely to lose staff once the pay data was published. More than a third of respondents said that the issue was more toxic for companies than corporate tax avoidance and, perhaps most seriously, 39% of female respondents said they would consider leaving if their company reported a significant pay gap.

These findings are no surprise to us at CEB (now Gartner), as our latest research into pay equity finds that perceptions of pay inequality can be just as harmful to employee retention as pay inequities in fact—and the perceptions tend to be even worse than the facts.

Read more

WEF: The World Is Backsliding on Gender Parity

WEF: The World Is Backsliding on Gender Parity

For the first time since it began keeping records in 2006, the World Economic Forum’s Global Gender Gap report registered a decline this year in gender parity around the globe. The report, which uses data from the WEF’s own surveys and from other major global organizations, measures parity along a series of metrics including political empowerment, economic participation, education, and health. Last year’s report warned that the economic gap between men and women was widening, even as overall parity was improving. This year, it finds, the economic gap is even worse, and at the current rate of progress is projected to persist for another two centuries:

At the current rate of progress, the global gender gap will take 100 years to close, compared to 83 last year. The workplace gender gap will now not be closed for 217 years, the report estimates. But with various studies linking gender parity to better economic performance, a number of countries are bucking the dismal global trend: over one-half of all 144 countries measured this year have seen their score improve in the past 12 months.

“We are moving from the era of capitalism into the era of talentism. Competitiveness on a national and on a business level will be decided more than ever before by the innovative capacity of a country or a company. Those will succeed best, who understand to integrate women as an important force into their talent pool,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.

The top-scoring countries for gender parity across all measures are Iceland, Norway, Finland, Rwanda, and Sweden. Canada is ranked at #16 and the US at #49, a four-place decline from last year. The WEF highlights Canada and France (#11 as among the countries that have made significant gains in gender parity in the past year. However, a high place on the list doesn’t mean that a country is closing all of its gender gaps, and the economic one is proving the most stubbornly difficult to close.

Read more

Study Highlights Gender Pay Gap Among Creative Freelancers

Study Highlights Gender Pay Gap Among Creative Freelancers

Fast Company’s Ben Paynter flags a study from HoneyBook, a business management and networking platform for creative entrepreneurs, which compared over 200,000 invoices submitted to clients through its platform and surveyed 3,100 users to find that women in this sector are earning about 32 percent less than their male colleagues:

The average male creative on HoneyBook makes $45,400 per year. Factor in that 32% reduction rate, and the average woman makes just $30,700 for similar services. Another issue is that many of those being underpaid may not be aware that a man doing the same job could get paid more by the vendor. Among those surveyed, the majority were sole proprietors who may be paying more attention to their business flow than standardized rates; 63% reported thinking that pay among genders was likely to be equal.

Read more

5 Things Most Companies Don’t Realize About Pay Equity

5 Things Most Companies Don’t Realize About Pay Equity

Pay equity and pay gaps, especially the gender pay gap, have been drawing greater and greater attention in recent years, both among corporate leaders and in the media. As organizations ramp up their diversity and inclusion strategies, they are feeling a need to close these gaps to demonstrate that the organization is serious about not only hiring for diversity, but also ensuring that compensation is fair for women and minority employees.

However, the coverage of pay gaps in the popular press often misses key details about the problem that compensation leaders need to understand to face this challenge effectively. Here are five things you might not know about pay equity that will make a real difference in your ability to achieve it:

1) Pay Equity Actually Refers to Two Things

Pay equity issues in companies can come from two sources: group-to-group gaps and role-to-role gaps. These terms are often used interchangeably in the media, glossing over an important distinction between gaps among different groups of employees, where pay differences are based on something other than gender or race, and role-to-role gaps, where two employees are paid differently for doing the same job. In the first case, you may have women concentrated in lower-paying roles than men (such as female nurses and male doctors, or male principals and female teachers), which may reflect an unfair distribution of expectations and opportunities, but compensation executives can’t directly and immediately control for those factors (although they can collaborate more broadly to influence them). A role-to-role gender pay gap, on the other hand—male nurses earning more than female nurses—is something compensation leaders can and should address.

Both group-to-group and role-to-role gaps contribute to the pay equity problem as a whole, but it is important to recognize that your compensation strategy alone can’t solve them both.

2) The Problem Is Bigger Than It Looks

In the US, the gender pay gap is often reported at around 20 percent, meaning women earn about 80 cents for every dollar men earn (and women of color earn substantially less). At a large-scale global organization, CEB (now Gartner) research has found, the average gap is even wider: 27 percent. However, that doesn’t all reflect pay discrimination: 9 percent is attributable to choice of occupation; 6 percent to organizational factors like size, industry, or geography; and 5 percent to human capital factors like differences in education and experience.

The gap that remains unexplained is 7.4 percent, and that is the discrepancy that can be ascribed to no other factor than gender. This is the role-to-role gap—and that’s the part that rewards professionals can actually fix. HR owns this gap has an obligation to close it before it becomes a serious problem for the organization.

Read more

California Bill Would Require Large Companies to Report Gender Pay Gaps

California Bill Would Require Large Companies to Report Gender Pay Gaps

Last month, the White House Office of Management and Budget announced that it was putting on hold a rule proposed by the Obama administration in 2016 that would have required organizations with more than 100 employees to submit summary pay data to the Equal Employment Opportunity Commission each year showing what employees of each gender, race, and ethnicity earn. This reversal relieves employers of what opponents say are overly burdensome and costly regulations that would do nothing to address pay gaps.

For large employers in California, however, that relief may be short-lived. At the firm’s blog about California employment law, Seyfarth Shaw attorneys point to a piece of legislation that went to Governor Jerry Brown’s desk this week that would “require companies with at least 500 employees to compute differences between the wages of male and female exempt employees and board members located in California and file the report with the California Secretary of State,” which would then publish this information for public view:

If the bill is signed by Gov. Brown, beginning on July 1, 2019, and biennially thereafter, impacted employers will have to collect and compute:

  • The difference between the wages of male and female exempt employees in California using both the mean and median wages in each job classification or title.
  • The difference between the mean and median wages of male board members and female board members located in California.
  • The number of employees used for these determinations.

This information would then be reported to the California SOS by January 1, 2020 (and biennially thereafter) on a form categorized consistent with Labor Code Section 1197.5—the California Fair Pay Act (“FPA”).

The bill, they add, does not establish that a gender wage gap in this information is a violation of the Fair Pay Act, but opponents claim it would not need to, as it “effectively forces employers to hand over to potential plaintiffs all information they might need to file a lawsuit, without any context that would explain permissible differentials.”

Read more

Fed Study: Discrimination Is Causing Growth in the US Racial Pay Gap

Fed Study: Discrimination Is Causing Growth in the US Racial Pay Gap

Last year, an alarming report from the left-leaning Economic Policy Institute found that the gap in income between black and white Americans had grown from 1979 to 2015, with black men earning 22.0 percent less, and black women making 34.2 percent less, than white men with the same education, experience, and geographical location. A new study by the Federal Reserve Bank of San Francisco confirms that finding, showing that the black-white wage gap has been growing and furthermore, that economic factors do not explain why.

The hourly wage ratio of the average black male to his white male counterpart shrank from 80 percent in 1979 to 70 percent in 2016, the San Francisco Fed finds. Black women earned 95 percent of what white women made in 1979, but that has gone down to 82 percent in 2016. While some of the gap can be explained by attributes such as location, education, working hours, job type, etc., the reason for its growth is less tied to those factors and economists are struggling to explain the increase. The Fed says this “implies that factors that are harder to measure—such as discrimination, differences in school quality, or differences in career opportunities—are likely to be playing a role in the persistence and widening of these gaps over time.” Eshe Nelson at Quartz adds:

In fact, additional research by the San Francisco Fed showed that black people with bachelor’s degrees saw the earnings gap with their white counterparts increase by more than for high-school graduates. … Ultimately, it seems that discrimination—whether in the “unexplained” category, or more structural racial bias that exists in educational systems and elsewhere—is widening the disparity in wages between black and white workers. Time alone will not close this gap, researchers conclude. … time seems to be making it worse.

One factor that may also account for the recent rise is that black workers are hit harder by recessions and recover more slowly than the rest of the labor market. It’s very likely that the cumulative effect of the recessions of 1987 and the late 2000s reversed, or even worsened, any progress made from the late 1960s to the early 80s. Bloomberg’s Jeanna Smialek and Jordyn Holman idenfity why this is such a problem:

Read more

Former Employees Sue Google, Alleging Gender Discrimination

Former Employees Sue Google, Alleging Gender Discrimination

Three women have filed a lawsuit against Google, their former employer, in which they accuse the tech giant of systematically discriminating against women in pay and career development, and their lawyer is seeking class action status for the claim, the Associated Press reported on Thursday:

The suit, led by lawyer James Finberg of Altshuler Berzon LLP, is on behalf of three women — Kelly Ellis, Holly Pease and Kelli Wisuri — who all quit after being put on career tracks that they claimed would pay them less than their male counterparts. The suit aims to represent thousands of Google employees in California and seeks lost wages and a slice of Google’s profits.

“I have come forward to correct a pervasive problem of gender bias at Google,” Ellis said in a statement. She says she quit Google in 2014 after male engineers with similar experience were hired to higher-paying job levels and she was denied a promotion despite excellent performance reviews. “It is time to stop ignoring these issues in tech.”

The lawsuit, which has been in the works since June, follows an investigation by the US Labor Department that claimed to find “systemic compensation disparities against women” throughout the company. Google has strongly disputed the department’s allegations, insisting that it has no gender pay gap and publishing its pay methodology in April in an effort to refute them, and a judge ruled that the company did not have to hand over all the detailed pay data the government had demanded. Nonetheless, Finberg has said the suit is based partly on the Labor Department’s analysis.

Read more