May 19, 2020Read More
Pay parity is one of spring’s biggest diversity topics. And there’s a good reason. Every April, women’s earnings catch up to men’s from the last year. On average, women must work an extra 103 days to earn the same amount of money as their male colleagues. That’s why, in 1996, the National Committee on Pay Equity originated Equal Pay Day, an honorary observance of the ongoing wage gap between men and women. Since its inception, the symbolic holiday has raised public awareness of discrepancies in pay, based on gender, and helped generate visibility for the wider challenges that persist in diversity and inclusion efforts. However, all that changed this year. A U.S. court and a sitting president just shattered egalitarian policies that have been in place since 1963. Now, more than ever, is the time for staffing professionals to shine. Promoting gender equality plays a vital role in retaining top talent, boosting bottom line profits, attracting consumers to your brand, and embodying a conscientious, fully human work culture. It isn’t just good for business, however. As McKinsey Global Institute demonstrated, pay parity will dramatically improve the economy.
Spring may be the season when we set our clocks forward, yet civil protections seem to have been turned back a few decades. On April 27, the 9th U.S. Circuit Court of Appeals overturned a lower court’s ruling that said pay differences predicated exclusively on prior salaries were discriminatory under the Equal Pay Act. What does that mean in terms of pay parity? Employers can legally pay women less than men for the same work based on previous salary histories. As Inc. and the Associated Press explained:
That’s because women’s earlier salaries are likely to be lower than men’s because of gender bias, U.S. Magistrate Judge Michael Seng said in a 2015 decision.
A three-judge panel of the 9th Circuit cited a 1982 ruling by the court that said employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it.
“This decision is a step in the wrong direction if we're trying to really ensure that women have work opportunities of equal pay,” said Deborah Rhode, who teaches gender equity law at Stanford Law School. “You can’t allow prior discriminatory salary setting to justify future ones or you perpetuate the discrimination.”
President John F. Kennedy signed the Equal Pay Act into law in 1963. The federal legislation prohibits employers from paying women less than men for equal work performed under similar working conditions. However, it creates exemptions when pay is based on other factors such as seniority, merit, quantity or quality of work. This is the loophole that has allowed some employers to offering lower wages to women professionals.
Pay parity suffered another blow earlier in April when President Trump revoked Obama’s Fair Pay and Safe Workplace executive order. As Mother Jones reported, “It required companies with federal contracts to heed 14 different labor and civil rights laws, including ones aimed at protecting parental leave, weeding out discrimination against women and minorities, and ensuring equal pay for women and fair processes surrounding workplace sexual harassment allegations.”
In a stroke of ill-timed irony, the president repealed this order during the same week on which Equal Pay Day falls, unraveling protections intended to foster equitable workplaces for women.
“We have an executive order that essentially forces women to pay to keep companies in business that discriminate against them—with their own tax dollars,” Noreen Farrell, the director of Equal Rights Advocates, told NBC. “It’s an outrage.”
There are deeper concerns beyond wage inequalities. Census data show that the most predominant jobs for women involve lower-paying positions such as food servers, cashiers or secretaries. Meanwhile, men outnumber women in lucrative fields: programmers, lawyers, physicians and others. When women do break down the barriers and enter those ranks, they find substantially less pay for the same work. As a result, the World Economic Forum drew the dire conclusion that, in the absence of change, it would take the world 118 years to finally close the economic gender divide.
The Forum’s 2015 Gender Gap Report, the most recent published, also painted an unflattering portrait of the United States as a champion of pay parity. America ranked 28 on a list of 145 countries for pay parity. That was the lowest position it has ever occupied. Surpassing it were some surprising nations, such as Rwanda, Slovenia and the Philippines.
Whenever regulations are removed, threatened or voted down, the prevailing rationale is usually that “it’s good for business.” Yet as we’ve seen time and again, hobbling diversity and inclusion do not cultivate innovation, competitive advantages, growth or economic power.
In the tech space alone, as Erin Carson illustrated in her article on CNET, there’s a hefty price tag on diversity failures. On the same day that the 9th Circuit Court made its controversial ruling, the Kapor Center for Social Impact released a study showing how discrimination and sexism are costing the technology industry billions. The study surveyed more than 2,000 people who had quit tech jobs in the past three years. Researchers discovered that 78 percent of respondents admitted to experiencing some form of mistreatment or unfair behavior. Close to 40 percent of underrepresented talent cited discrimination as their primary reason for leaving.
“Replacing those employees is what lands tech with a $16 billion bill every year,” Carson pointed out. And the study’s authors concluded that “there is a high cost to bad culture, and this is a self-inflicted wound.”
Women make up more than half the talent pool. Beyond that, they’re responsible for over 80 percent of the buying decisions in this country. That’s an overwhelming amount of consumer power. By failing to promote women as equal leaders in the workplace, businesses effectively stifle their own profit potential. The data revealed by McKinsey showed that the issue is much more sweeping: “Every state and city in the United States has the opportunity to further gender parity, which could add $4.3 trillion to the country’s economy in 2025.”
In other words, over the next decade every city and state could add at least five percent to their Gross Domestic Product (GDP) by championing the economic opportunities of women. The report also found that half of U.S. states have the potential to add more than 10 percent, and the country’s 50 largest cities could increase GDP by six to 13 percent.
Echoing the research of the World Economic Forum, McKinsey acknowledged that realizing these goals by 2025 remains an unlikely scenario; too many barriers persist that hinder women from fully participating in the labor market. However, McKinsey proposed an attainable best-in-case model. If each U.S. state matched the state exhibiting the fastest rate of gender parity growth, we could add “$2.1 trillion of incremental GDP” by 2025. That’s 10 percent higher than running with the status quo.
To examine the impressive benefits on a smaller scale, a state like Illinois could generate an increase in its GDP of nearly $60 billion -- a jump of seven percent for simply narrowing the gender income gap.
As staffing professionals, we have an obligation and the expertise to help the nation build a truly egalitarian workforce -- where skills, not gender, determine compensation.
Top performing companies have long realized the benefits of diversity as a profit center, employment brand, business culture and innovation machine. Though women today have attained historic highs in terms of career progression and leadership opportunities, there are still significant pay gaps and prejudices. And the situation defies reason.
Leading the charge for gender parity doesn’t end with a healthier bottom line -- it ends with a more productive, fulfilling and economically powerful nation for this generation and the next. Last June, we discussed how staffing and recruiting professionals still find themselves called upon to “make the business case” for diversity. Economists have made it to an exhaustive extent. Business analysts have made it. The staffing industry, itself born from diversity, has made it for decades. There’s a vast difference between trying to understand inclusion methodologies and seeking justification for the practice.
Yet, we may be called upon to make that business case once again. And we can. We have a storied history of helping organizations identify and conquer their biases to hire exceptional professionals -- regardless of who they are or where they came from. Right now, we must continue to champion an inclusive workforce regardless of politics, policies or accommodations. To compete and grow, we as diversity heroes must push to help clients develop the most innovative, progressive, thoughtful and insightful business cultures possible. I truly believe this is critical chapter in the future of our talent – one we must help author.