As we round out 2020, wage gap statistics tell us we still have a lot of work to do. Women earn 82 cents for every dollar earned by men. Black women earn 62 cents for every dollar a White, non-Hispanic man earns. Latino men earn 69 cents for every dollar a White man earns. LGBTQ+ men earn 96 cents for every dollar non-LGBTQ+ men earn. We’ve been making some progress over the years, but many believe the COVID-19 pandemic will lead to a widening gender pay gap and income inequality.
Going beyond cash compensation, we find the pay gap widens further in companies that offer stock grants to employees. Women own just47 cents in equity for every dollar men own. And, While women represent 35 percent of equity holders, they only own 23 percent of the equity. Black and Latinx employees make up a very small proportion of employee stakeholders, and hold a disproportionately low percentage of total equity wealth.
We need to pay close attention to pay equity in 2021 to keep making forward progress —and to mitigate the risk of sliding back.
Achieving pay equity requires an intentional, ongoing commitment to fair compensation. Some best practices to help ensure pay equity include:
When you spot pay inequities, it’s important to address them as soon as you’re able. The most common approach is to run pay equity analyses during compensation cycles. Make strategic adjustments first, then layer on merit-based adjustments and cost-of-living increases, as applicable. This will ensure that further adjustments are fewer and smaller.
But, with many companies facing economic uncertainty due to the pandemic, a normal compensation cycle may not be feasible. Here’s how you can make fair pay adjustments when you need to conserve cash:
With slow progress toward pay equity, many state governments are enacting legislation to address some of the root issues leading to pay inequities. Here are three new laws to be aware of in 2021:
As a reminder, wage discrimination is illegal at the federal level, and it has been for quite some time. The Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act prohibit compensation discrimination on the basis of gender, race, color, religion, sex, national origin, age, or disability. Additionally, the Lilly Ledbetter Fair Pay Act allows your employees to file wage discrimination lawsuits within 180 days of their last discriminatory paycheck.
The gender and ethnic wage gap persists, despite federal, state, and local legislation that aims to close it—and may even widen as a result of the COVID-19 pandemic. It’s time to get serious about pay equity so we can right these wrongs—and comply with the law.