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Gender Pay Gap: How Wide Is it, and How to Close It

Jen Dewar
Mar 24, 2021 6:23:00 AM

Every year, Equal Pay Day serves as stark reminder of the gender pay gap. Women would have to work all of last year, until today, to earn what a man earned last year alone. To put it another way, a woman would have to work for nearly 49 years to earn what a man could earn in only 40.

We’re making progress, albeit slowly. At the current rate of progress, the gender wage gap isn’t expected to close until the year 2059

It’s high time we speed things up, and every company has a role to play. By ensuring internal pay equity, we can work together to close the gender pay gap once and for all.

The state of the gender pay gap

Women earn 82 cents for every dollar men earn. This results in an average loss of $10,157 over the course of a year, and more than $400,000 over a 40-year career.

This varies by:

  • Race. Asian women earn 87 cents for every dollar White men earn, while Black women earn 63 cents, Native American women earn 60 cents, and Latinas earn 55 cents.
  • Age. Women between the ages of 45 to 64 earn 76 cents for every dollar their male counterparts earn.
  • Occupation and industry. Women in the legal profession earn 64 cents for every dollar earned by men, while women in the Finance and Insurance industry earn 76 cents.
  • Motherhood. Mothers earn 69 cents for every dollar fathers earn, which also varies by race. Asian and Pacific Islander mothers earn 92 cents, White mothers earn 72 cents, Black mothers earn 54 cents, Native mothers earn 48 cents, and Latina mothers earn 46 cents.
  • Job level. Executive-level women earn 69 cents for every dollar men earn.
  • Disability. Women with disabilities earn 80 cents for every dollar earned by men with disabilities. 

When data is adjusted for factors like job title, years of experience, industry, and location, the controlled gender pay gap is still 98 cents. Men are offered higher salaries than women for the same job, at the same company, 63 percent of the time. And, of course, the controlled wage gap can vary. Women in executive roles earn 95 cents for every dollar a man earns. Black executive-level women earn 93 cents for every dollar White executive-level men earn. And LGBTQ+ women earn 90 cents for every dollar earned by non-LGBTQ+ men.

The pay gap widens further once stock grants are factored in. Women own just 47 cents in equity for every dollar men own. While women represent 35 percent of equity holders, they only own 23 percent of the equity. 

How to close the gender pay gap

The gender pay gap is a longstanding problem, and it will require some concerted effort to close it. Here are five areas to focus on as you get started:

    1. Don’t ask for a candidate’s salary history—or salary expectations. Knowing a candidate’s salary history before you make a job offer can perpetuate existing wage gaps. In jurisdictions where asking about salary history has been banned, women have seen an eight percent increase in pay—offering proof that this is an effective way to reduce the gender wage gap. Asking for salary expectations should be avoided as well, as women ask for lower salaries than men 65 percent of the time—for the same job at the same company. 
    2. Limit salary negotiations. Men and women negotiate their initial salary offers equally, but 7 percent more men are successful. Women of color are 19 percent less likely than a White man to receive a raise when they ask for one. Salary negotiations don’t benefit all groups equally, but can sometimes be necessary to close a candidate or retain an employee. Use them sparingly, and always keep pay equity in mind. 
    3. Build salary ranges. Create a compensation strategy with salary ranges and job grades. Use that to guide you toward more equitable, strategic compensation decisions during recruitment, review cycles, and promotions. When you present an offer or a raise, explain why you’ve assigned that particular salary, and what the team member can do to earn more in the future. 
    4. Ensure diversity in every job level. Occupational segregation and the opportunity gap are tremendous drivers of the gender pay gap. Men tend to be employed in more high-paying roles, while women tend to be employed in lower-paying roles. For example, women hold 21 percent of C-suite roles and women of color hold 3 percent, while White men hold 66 percent. Track representation by job level to understand the state of diversity at your organization—and take steps to correct inequities. Tracking Internal mobility and promotion rates by demographic group may also help you find opportunities for improvement.
    5. Measure and adjust for pay equity regularly. Even with the best intentions, pay equity can get off track. Measure pay equity at least once a year to find and address discrepancies, rather than allowing them to perpetuate. Look at salary, bonus, and stock for a comprehensive view of pay equity, and slice your data in different ways to look for pay gaps by gender, race, and intersectionality. Make corrections during your regular compensation cycles to ensure pay equity is a focus. Then communicate the changes with team members so they understand why they earn what they earn, and when they will see the changes in their paychecks.

Final thoughts on the gender pay gap

The gender pay gap has persisted for far too long, and we simply cannot allow it to continue for another 38 years. Unfortunately, there’s not a simple solution. Compensation is complex, and pay equity will require an ongoing commitment to achieve and maintain it. 

This is the right thing to do, for your team members—and your business. Focusing on pay equity can help improve morale, retain employees, and reduce legal risk. Consider your pay equity practice an investment in your company’s future and give it the resources it requires to create change.

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