As societies deal with a global pandemic and issues of economic and social equality, leaders are looking for areas where they can address issues employees care about within their organizations. Despite long-standing equal pay laws and recent advances in regulations, pay inequities still exist within many organizations. It’s time for every company to commit to achieving pay fairness and transparency. Fairness is a theme that is not likely to go away, and research shows that if not addressed now, pay equity will be more costly to address in the future.
In 2020, equal pay for equal work is still not a reality around the world. Pay equity is still heatedly debated, even as societies deal with a global pandemic and issues of economic and social justice. Democratic societies were founded on ideals of fairness and equality, and so pay equity is core to our value system. As long as these ideals exist, the issue will not go away.
Citizens of democracies expect and will fight for fairness and transparency in government and their institutions. To maintain the goodwill of their employees and other stakeholders, and to continue to attract talent in the workforce of the future, corporations would do well to offer that same fairness and transparency in regards to remuneration.
While it may take some effort to achieve, delaying will likely be a poor strategy. Research shows that if not addressed now, pay equity will be more costly to address in the future.
Pay Equity a Key Concern for Employees
Pay equity is important to employees, especially among the emerging younger workforce. In 2019, beqom surveyed 1,600 enterprise workers in the U.S. and UK to measure to what extent employees care about pay equity issues, uncover perceptions about pay equity, and assess their perception on progress to improve the gender pay gap. We found that three in four employees are aware of a pay gap disparity between men and women, increasing to 82% among women and 84% among Gen Z (those born after 1996). In a similar survey in 2018, we found that close to one-third (31%) of workers believe employees in their workplaces are paid less due to age or race.
Pay equity plays a key role in employee satisfaction and retention. According to Gartner, when employees perceive a pay gap, regardless of whether their perceptions are correct, it has a direct, negative effect on employee retention resulting in a 16% decrease in intent to stay. That’s 50% worse than the typical impact of a pay freeze. Conversely, when you give employees clear confirmation that their comp is fair, engagement and retention increase.
Not only must pay equity be addressed, but the efforts should be transparent to employees. As of now, they clearly are not. While 93% of companies reported to the CBI that they were taking measures to close pay gaps in 2019, a third (29%) of our survey participants reported that their employer was not taking any visible steps to close or prevent gender pay gaps
The Time is Now, Even Amid a Pandemic
The time to address pay equity is now. According to Gartner, the pay gap attributable solely to gender stands at 7.4% and is increasing, meaning that there will likely never come a time when it will cost less for companies to address pay equity than it does today. For a typical large company, that cost is growing by as much as half a million dollars a year.
Beyond economic reasons, the basic desire for fairness in society suggests that there is no time like the present to address fair pay. But does pay equity matter when there is a global pandemic going on? According to our research, yes. In March we surveyed 1,000 U.S. adults to ask: “When it comes to total compensation, which of the following do you think companies should prioritize most during the COVID-19 pandemic?” Among those who had a preference, equal pay was the topic of most concern; nearly one in four (23%) Americans chose equal pay.
Perhaps the issue retains such urgency because COVID-19 has highlighted and exacerbated some of the inequities that exist in the workplace, and by extension, in society. Women and people of color have been hit hardest by the economic effects of the pandemic. As we noted in a recent blog on prioritizing equal pay during COVID-19, not only do women hold 70% of healthcare jobs globally, they are also more likely to hold jobs in hard-hit industries like retail, childcare, and hospitality, while being less likely to work in highly paid sectors like technology or science. Women and people of color also make up the majority of part-time workers.
There is evidence that some of the disparity is actually tied to race. In a study published in the American Journal of Public Health, Black and Latina women were found to earn less than White women in identical positions. In health care, 34.9% of female workers earned less than $15 per hour, but for Black and Latina female health care workers, that number is 50% (and, ironically, more than 10% lacked health insurance). As a sad corollary, a total of 1.7 million female health care workers and their children live in poverty.
Whether your motivation is social justice or maintaining a top notch workforce, employers have the opportunity to create a competitive recruiting and retention advantage by becoming outspoken advocates for pay equity, in messaging and in actions.
A Playbook to Achieve Pay Equity
Our guide gives you a game plan for identifying and closing pay gaps. It is not as simple as comparing salaries. It requires looking at the right metrics so you are truly comparing like with like. It’s important to be asking the right questions and knowing what to look for in your data.
Now is the time to download The Pay Equity Actions That Matter Most to Your Workforce and show your employees you are committed to taking action to pay your workforce fairly and transparently.
