It’s illegal to pay people differently based on things like sex, race, or national origin, and it has been for some time. And yet, the wage gap persists—and has even widened for some. It’s often justified by experience, education, seniority, and other allowed exceptions to ease minds and avoid litigation.
But progressive organizations are going beyond compliance and focusing on pay equity because it’s the right thing to do—and they’re seeing strong business outcomes as a result. This includes a stronger employer brand, improved employee engagement and productivity, and increased retention.
Whether you’re in the camp that wants to improve to pay gap, or the camp that isn’t convinced it exists, these wage gap statistics will open your eyes to pay inequities at play, and provide some insight on how to address them.
Equal Rights Advocates reports that the median salary for men is significantly higher than the median salary for women working full-time, year-round. Earning only 82 cents for every dollar a man earns, a woman must work 15 months to earn what a man earned in just 12 months. This number doesn’t factor in job type or seniority, drawing attention to the fact that women tend to work in lower-paying roles and industries. In fact, a Hired survey found that companies interview only men for a given role 41 percent of the time in the tech industry—which tends to be among the best paid. Companies interviewed only women for a given role just 4 percent of the time.
Equal Rights Advocates also found that the wage gap is even greater for Black women, Native American women, and Latinas. Black women earn 62 cents for every dollar a white, non-Hispanic man earns, while Native American women earn 60 cents and Latinas earn 55 cents. Their wage gap is perpetuated by the fact that people from these groups are less likely to be promoted into senior-level positions. While 6 percent of white men and 4 percent of white women make it to the C-suite, only 3 percent of Black and Native American women and 2 percent of Asian and Latinx women do.
It’s no surprise that one in five women feel discriminated against in the workplace due to their racial identity and that 64 percent believe a racial wage gap exists due to racial identity.
Pew research found that Latino men earn 69 percent of what white men earn. Even more notable, perhaps, is that this figure has actually decreased since 1980, when it was 71 percent. Black men’s earnings have remained unchanged at 73 percent of a white man’s earnings, while Asian men have surpassed their white, male colleagues in earnings. While they earned 97 percent of what white men earned in 1980, they now earn 117 percent. Women’s earnings lag behind those of men’s within each racial and ethnic group.
Again, a lack of opportunity for advancement appears to play a large role in the ethnic pay gap. Latinx executives are underrepresented in Fortune 500 companies by nine percentage points, and Black executives by 13 percentage points. And, although Asian men and women outearn their peers, the difference is due to higher paying individual contributor roles rather than advancement. Asian American white-collar professionals across the country are the least likely group to be promoted from individual contributor roles into management.
Payscale reports that the controlled gender pay gap, which takes into account things like role, experience, industry, and location, still persists. Women earn 98 percent of what a man earns when they have the same job and qualifications, and the only difference is their gender. Again, women from underrepresented groups face a wider pay gap. Black, Native American, and Latinx women only earn 75 percent of what their white, male colleagues earn in the same role.
Hired data shows a similar trend in the tech industry. In fact, they found that men are offered higher salaries than women for the same job, at the same company, 63 percent of the time.
It can also be noted that performance doesn’t appear to factor in to the gender wage gap. A data analysis from Xactly found that female salespeople earn lower salaries and commissions than male salespeople, even when performing three to four percentage points higher.
While the pay gap is often referenced against gender and ethnic lines, unfair compensation biases are also found in the LGBTQ+ community.
Hired data reveals that LGBTQ+ (lesbian, gay, bisexual, transgender, and queer) workers earn less than their non-LGBTQ+ counterparts. LGBTQ+ men earn 96 percent of what non-LGBTQ+ men earn, and women earn 90 percent. There isn’t much data available to understand the underlying causes for the LGBTQ+ wage gap. However, it may be assumed that bias leads to lower starting salaries and raises and fewer opportunities for advancement, as with other underrepresented groups.
Twenty one states, the District of Columbia, Guam, and Puerto Rico have statutes that protect against both sexual orientation and gender identity discrimination in employment in the public and private sector. Overlooking the wage gap for this underrepresented group is not only unfair, it may land your organization in legal trouble.
Some argue that women earn lower salaries because they don’t negotiate. But recent research shows that’s not the case. Hired reports that 69 percent of women and 71 percent of men ask for an increase from their initial salary offer. However, 7 percent more men than women are successful. Over time, that starting wage gap perpetuates and deepens.
Payscale reports similar discrimination among underrepresented groups when it comes to raises. Women of color are 19 percent less likely than a white man to receive a raise when they ask for one, and men of color are 25 percent less likely—even when controlled for tenure and job level.
Payscale reports that top-performing organizations are more likely to address workplace inequities than typical organizations. Thirty five percent are addressing inequities around gender, 28 percent around race and ethnicity, and 27 percent around other protected classes. Furthermore, 28 percent plan to conduct a racial or gender pay equity analysis.
However, that means that most organizations aren’t doing much, if anything, to change these wage gap statistics.
Employers may be overlooking their organization’s wage gap, but employees are not. Sixty percent of women have discovered they’re being paid less than a male peer in the same role. They’re learning of the pay difference through discussions with colleagues, company alumni, and members of the HR team as well as through online forums and transparent salary bands. And 16 percent of those women have found the difference to be in excess of $20,000.
As it stands, 28 percent of people have disclosed how much they earn with coworkers, and laws like CA AB-168 require employers to provide pay ranges if requested. Organizations that do not address their wage gaps are increasingly likely to be called out by their employees—or lose them altogether.
Thirty two percent of women began looking for a new job when they learned of a wage gap. This is an expensive problem to have, as the cost of turnover is an estimated 90 to 200 percent of the employee’s base pay. Addressing your organization’s wage gap can be a quite economical solution to a high employee turnover rate.
Further, disgruntled employees may leave a negative employer review, damaging your employer and consumer brand. A full 97 percent of women and 82 percent of men said negative attention for having a gender wage gap may impact their interest in working for that organization. And 63 percent of consumers refuse to buy products and services from a company they do not trust, impacting your top line.
Given these statistics, it’s no surprise that only 21 percent of employees feel they are paid fairly. But there’s good news, too. The wage gap provides your organization an opportunity to right these wrongs and stand out to top talent in the process.
Build a strategic compensation strategy, with job grades and salary bands that help you make fair compensation decisions. Utilize your annual compensation cycles to make strategic adjustments, and guide your managers to help them make data-driven annual raise recommendations. Be transparent about how compensation decisions are made, and how they’re reviewed, so employees know they’re being looked after. Doing so could help you attract and retain the talent your organization needs.
Check out our eBook to learn more about how to make pay equity adjustments during your next cycle: How to Run a Strategic and Efficient Compensation Cycle