Often, we only consider the wage gap between men and women. In reality, the wage gap is more intricate and biased toward how an employee identifies. Companies working for a more inclusive workforce must evaluate every aspect contributing to salaries. Below, we will dive into the current state of the wage gap and the ten steps any company can take to close it.
The Current Wage Gap
Individuals, specifically BIPOC, who live in communities that struggle to obtain resources for professional development see a greater wage disparity. Educational resources are one example that directly contribute to an individual’s possible salary in the future. But, despite education, corporate and state policies also contribute to the wage gap.
Below are some recent statistics summarizing the extent to which identifiers impact wage:
Gender & Race
In the United States, women of any race or ethnicity working full time, year-round on average earn 84 cents for every dollar men of any race or ethnicity working the same time.
Yet, depending on the state, that amount can significantly increase or decrease. Women, despite race, living in Vermont, on average, make 93 cents to every dollar a man of any racial identity earns. Conversely, women living in Wyoming, on average, make 68 cents to every dollar a man of any racial identity earns. Companies need to be aware of the wage gap in the state they reside to compensate the women in their workforce fairly.
Plus, these statistics do not include the intersection of race and gender.
For every dollar a white individual earns,
- Black Americans earn 76 cents
- Native American/American Indians earn 77 cents
- Asian-Pacific Islanders earn $1.12
- Hispanic/Lantix earn 73 cents
- Multiracial Americans earn 81 cents
Many women of color have flexible jobs that are not considered full-time wage. For every dollar a white, non-Hispanic male in the United States makes:
- Hispanic/Latinia women earn 54 cents
- Black women earn 64 cents
- Native American women earn 51 cents
- Asian American, Native Hawaiian, and Pacific Islander women earn 80 cents
Similarly, for non-binary, genderqueer, genderfluid, or two-spirited workers nationally they earn 70 cents for every dollar. Trans men earn 70 cents to the dollar and trans women 60 cents to the dollar. Many companies do not even consider measuring LGBTQ+ metrics in their diversity initiatives and completely miss an implicit barrier to fair wages.
Besides race and gender, age can be another factor contributing to the wage gap. Nationally, the average weekly earnings were highest among men ages 55 to 64 at $1,393. Whereas the average weekly earnings for women in the same age group was $1,044. The wage gap for age was the smallest in younger age ranges. Women ages 16 to 24 earned 91% as much as men the same age.
10 Steps to Close the Wage Gap
Step 1 Pay Equity Audit
The first thing any company should do is audit their current salaires. You can not fix a problem if you do not understand what is contributing to it. We encourage companies to audit not only for gender, but for race, ethnicity, sexual orientation, disability, age, and more. The more diversity metrics an organization measures, the more information they will have to address inclusive barriers.
A recent survey from SHRM found that only 3 in 5 U.S organizations (58%) voluntarily conduct pay equity audits.
Step 2 Tracking Compensation
The next step is understanding the effect of unconscious bias upon how benefits, promotions, negotiations, and bonuses are received. While every organization aims to fairly compensate employees for their effort, there could be fewer resources for particular individuals trying to accelerate their careers or a lack of diverse representation in leadership positions.
Compensation tracking can provide a more in depth evaluation of the problems furthering the wage gap.
Step 3 Turnover rate
The Great Resignation saw a massive increase in turnover rate as many employees found higher salaries by shifting to a new company. If your company experienced this, then analyzing your turnover rate is a must. Pay equity should never be the reason a talented individual leaves your organization.
Consider asking the following questions:
- What rate does newly hired talent leave? Long-tenured employees?
- What department has the highest relative turnover?
- What level of leadership has the highest relative turnover?
- Do women employees leave at higher rates? Why?
- Do minority employees leave at higher rates? Why?
Step 4 Evaluate Workforce Demographics
44% of corporations lack diversity metrics. To fully close the wage gap, companies must measure as many aspects of an individual’s background as possible. Pay equity is most commonly an inclusive workforce issue.
If women are not represented on the c-suite level, then how can women employees be sure they can be compensated fairly? If there are no people of color employees, how can diverse talent ensure they are paid fairly to their peers?
Step 5 Transparency
If you hide the information you collected, you risk losing your current employees. 51% of employees would consider switching jobs if another company had more pay transparency. Transparency proves to every individual that your organization is committed to finding DEI issues and addressing them.
Moreover, once your organization closes the wage gap, acknowledging where you started can be a great way to market your success story.
Step 6 Addressing Maternity Leave
Women are commonly punished through payment for choosing to become a mother. It is called the Motherhood Penalty. It’s due to years of antiquated social norms in which a man is considered the breadwinner, and the woman the caregiver.
While the PDA, Pregnancy Discrimination Act, protects mothers against most workplace discrimination, some companies still pay less. Addressing the equity of your maternity leave and other policies that target specific individuals is the first action step to closing the wage gap.
Step 7 Disregarding Salary History
The wage gap can begin as early as the hiring process. Asking the candidate questions about salary history can import pay inequities from previous employers. Additionally, using the salary history of the position within your organization also dismisses their unique skill set, experience, and any inflation or recession.
Starbucks disregarded salary history back in 2009 and, a decade later, reached equal pay. Closing the wage gap is an extensive process, but with consistent effort, your company can achieve the same success.
Step 8 Establish Top Down Equality
At every level, an organization needs to be committed to DEI through a mission statement or goal. HR leaders can help drive the team toward closing the wage gap and achieving DEI goals through offering training, establishing ERGs, advocating for biased policy change, and dismantling barriers to professional development.
Step 9 Provide Resources for Professional Development
Besides contributing to DEI goals, HR leaders also have the power to increase the resources available to every employee. They can help find mentorship opportunities, offer space to negotiate salaries, initiate department trips to conferences or certifications.
The list of possibilities are endless and every action can bridge the wage gap just a bit more.
Step 10 Develop Belonging
You may have heard of the acronym DEIB. Belonging is about establishing a work environment that allows every employee to come as their authentic self. Feeling comfortable and accepted with your coworkers can dictate employee retention.
The final step in closing the wage gap is ensuring every employee, regardless of their background, is heard, respected, and fairly treated in the workplace. Some action steps to active belonging include team building exercises, gratitude, sponsorship, and celebrating religious holidays or month appreciations.
Interested in creating a more diverse, equitable, and inclusive workforce at your company? The Professional Diversity Network has been helping employers build productive and diverse workforces since 2003. Contact us today to find out how we can help with your unique needs.