The National Committee on Pay Equity has set March 14, 2023 as Equal Pay Day. Equal Pay Day represents how far into this year women have had to work to catch up to what their male colleagues earned the previous year. In other words, women have to work nearly 15 months to earn what men make in 12 months. In the U.S., women earn about 82 cents for every dollar a man earns. When you take other factors into account such as race or age, the gap is even larger. Black women earn only 65 cents per dollar. Latina women earn approximately 60 cents per dollar. For women over 50 it's about 75 cents. These numbers have not budged in 20 years even though compared to 20 years ago, more women now graduate from college than men.
What are some factors that contribute to this gender pay gap?
The childcare problem
Lack of accessible and affordable childcare is a major problem. Many women are forced to exclude some opportunity from consideration or work only part time because they need time and flexibility to care for their kids. Some women leave the workforce entirely. For every woman at a senior management level who gets promoted, two women leave their jobs, most citing childcare as a major reason.
Salary history and Lack of Pay Transparency
When employers base starting salary on an applicant’s salary history it compounds the gender pay gap. If a woman was earning less at her last job compared to a man with equal training and education, that wage gap can follow her into a new job if the employer uses her prior salary as a benchmark when she is hired. Eliminating the use of salary history can break this cycle.
An employer’s lack of transparency about wages and a company culture that punishes employees for discussing wages among themselves also works to keep wage gaps in place. It can be hard for women to know how much their male colleagues make and, therefore, what to ask for when negotiating salary or wage increases.
Equal Pay Has Benefits for Both Business and Workers
A lack of equal pay measures can create an unmotivated workforce, a negative bias towards management, and lead to a workplace that is weighed down by low morale. When businesses offer equal pay, they create a more competitive workforce that can provide their company with a wide range of benefits. A pay system that rewards employees equally for the same amount of work:
- Demonstrates a company’s values to its employees;
- Increases efficiency and motivation;
- Attracts and retains top talent;
- Avoids costly penalties that can be associated with unlawful pay practices.
Finding Solutions to Close the Gap
States and cities have passed laws over the last few years prohibiting employers from asking about prior salary in the hiring process. A number of states now require salary ranges be included in job postings. Research shows that being able to see how much you could get paid for a job because employers include the pay range in the job announcement helps close the pay gap. Pay range transparency also helps hold employers accountable by incentivizing them to proactively review their compensation policies to ensure they’re fairly setting their pay. Other strategies to close the Pay Gap include:
- Strengthening equal pay laws so that women are better able to discover and fight back against pay discrimination.
- Prohibiting setting pay based on salary history and increase pay transparency.
- Removing barriers to entry into male-dominated fields of work
- Raising wages for women in low-paid jobs by raising the minimum wage and ensuring that tipped workers receive at least the regular minimum wage before tips.
- Increase the availability of high-quality, affordable childcare.
- Establish fair scheduling practices that allow employees to meet their caregiving responsibilities and other obligations.
- Provide paid family and medical leave.