Women in the workforce are unlikely to see pay equity achieved in their working lifetime. You read that right. Efforts to close the gender pay gap have stalled.
Pew Research Center analysis found that in 2022, American women earned an average of 82 percent of what men earned. That’s up only 2 percent since 2002.
Based on historical rates of progress, PWC’s Women In Work Index 2023 estimates it will take half a century to close the gender pay gap. Moody’s Analytics data is more pessimistic, predicting 132 years at the current rate of progress.
Luxembourg claims the top spot in the OECD’s rankings for women in the workforce. The US ranks 25th out of 33 countries. Let’s explore why.
The figures quoted above relate to white women. When we examine the racial pay gap, the picture is bleaker:
The gender pay gap arises from multiple, complex causes, including:
Women are treated differently: Half of American adults believe that “women being treated differently by employers” is a major reason for the gender pay gap, according to Pew Research. PWC says the most significant driver is the “motherhood penalty” – the loss in lifetime earnings experienced by women raising children.
Managerial bias: By the time women reach director level, their level of trust in their employer is 30 percent less than men in equivalent positions. One of the key causes is managerial bias, according to Deloitte research in the Harvard Business Review. Women in the same job, working for the same manager, with the same performance evaluation scores as their male counterparts received lower pay increases.
Lower wage employment: A report from the American Association of University Women (AAUW) found that Latina women comprise almost one-third of the service industry, which is typically dominated by lower paid roles. A NWLC report also provides more context on the barriers that all women face, especially women of color.
LGBTQIA+ workers: LGBTQIA+ employees earn 89 cents for every dollar earned in a week by the typical US worker. For transgender women, this falls to 60 cents for every dollar. Wage disparities for LGBTQIA+ women, transgender men and women, and people of color are greater. Pay data is only available for full-time workers.
We must do better.
US states are embracing pay transparency, some more proactively than others. Recent updates to legislation include:
Gender pay gaps vary widely between states. Vermont has the smallest gender pay gap at 7 percent, while Wyoming’s stands at the highest at 31.5 percent.
Staying a step ahead of the rest of the world is the EU Pay Transparency Directive, which must be transposed into law by 2026. The Directive includes the following legislation:
It is feasible that the Directive could form a blueprint for future US pay equity. Pay transparency legislation in the EU and US shares several similarities.
Reducing the 50 year wait to close the gender pay gap needs a universal commitment to pay equity. Here’s how to get started:
Analyze your compensation: Trusaic PayParity conducts a pay equity audit across your workforce at the intersection of gender, race/ethnicity, age, disability, and more in a single statistical regression analysis. The results help you to understand where risks exist and identify areas for remediation. We also identify the root causes of pay disparities, not just the symptoms, including systemic issues such as unconscious bias.
Ensure accurate data: While headline data for Luxembourg is encouraging, the numbers may be misleading. 2021 data shows that women working full-time earned 0.2 percent more per hour on average compared to men. That’s not the whole story. Readjusted figures suggest that women earn 13 percent less than men, as nearly every third woman works part-time. Ensuring accurate data is the only way to gain a true insight into your gender pay gap.
Commit to pay equity: Conducting a pay equity audit is only the beginning. Workplace equality requires consistency and delivers tangible benefits. Pay transparency offers real advantages for employers, from motivating employees to work harder, to boosting retention and attracting more talent to job listings. Pay equity builds trust, empowers women in the workforce and creates a more inclusive culture. 6 in 10 job seekers state that including salary range on a job listing is the #1 criteria in deciding whether to apply.
At Trusaic, we are committed to empowering employers to create inclusive cultures, closing the gender pay gap and achieving true pay equity. Speak to one of our pay equity experts today.
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