Equal Pay Policies Improve Business Results

By Association for Diversity in Financial Talent

Is compensation really all that different for men and women doing the same work?

The National Committee on Pay Equity Day was launched in 1996 to measure how long in the year women must work to catch up to white men’s pay from the previous year. 

In 2021, they found that women needed to work until March 15, 2022, or an extra 74 days of work, to earn the same pay as white men. Even more alarming, black women needed to keep working until Sept 21, 2022, or an extra 263 days, to achieve the same annual pay as white men doing the same work. 

On top of that, a 2020 report from the Lean In organization found that the gender pay gap is most significant for black women with bachelor’s degrees. “Black women are ambitious — they’re more likely than white men (35%) and white women (26%) to say they want to become top executives,” the report stated. “But even in the same job, black women are paid less than white men.” As a result, black women lose an estimated $964,400 to the wage gap over a 40-year career.

The “Concrete Ceiling” Is Real

Professional black women enter corporate America fiercely determined to prove themselves through their job performance and through perseverance when times are tough, but their contribution is chronically undervalued. It’s demoralizing to receive employee recognition awards instead of bonuses, promotions, or salary increases, or getting “dry promotions” with increased responsibility and status without additional compensation. 

Three factors converge to create the “concrete ceiling,” limiting professional growth for black women:

  1. Gender bias
  2. Racial bias
  3. Isolation from informal office networks

Essentially, all women face gender discrimination, but it is amplified for women of color with racial discrimination and compounded by the isolation one feels without a natural peer group. The “because without inclusion in informal office networks, it’s hard to identify professional growth and development opportunities. 

Covid-19 Worsened The Problem

Covid-19 is making extreme pay disparities even worse for women of color, who tend to carry more caregiving burdens and have more occupational segregation. “The wage gap proves that the pandemic and inflation have disparately impacted black women,” said In Our Own Voice: National Black Women’s Reproductive Justice Agenda President and CEO Marcela Howell. “Black women workers shouldered the burden of the pandemic; black women were more likely to be essential workers, risking their lives while many others worked from the safety of their homes, yet black women’s wages suffered too.”

Black women who are over-represented in low-paying professions and under-represented in high-paying jobs like in the technology sector face unique obstacles in the workplace that influence their pay. Professional black women lack significant access to leadership development opportunities and exposure to sponsors willing to spend their political capital to support them. This makes it extremely difficult to be considered equitably for opportunities based on merit, values, capabilities, and performance.

Why Pay Equity Improves Company Performance

The pay gap has a wider impact than only on those who suffer the direct consequences. Unequal pay policies cause expensive-to-repair brand damage, lead to excessive employee turnover, and exacerbate the “quiet quitting” trend. It is not only expensive to rehire and train; high turnover is disruptive and morale-crushing, which diminishes productivity and hurts overall company performance. On the other hand, equitable pay policies reduce turnover, improve productivity and enhance your brand.

Four Action Steps for Business Leaders and HR Professionals

To ensure companies are responsibly practicing equal and fair pay for all:

  1. Stay abreast of the latest employment and compensation laws news.
  2. Educate yourself on the plight of black women in the workforce, including pay discrepancies.
  3. Afford black women opportunities for advancement through training programs.
  4. Use a data-driven approach to employee compensation packages to ensure fair pay for all.

“Employers have a role to play in terms of making sure there is pay equity and making sure that women across the board earn what they’re worth for the skills and talents they bring to the table,” Nicole Mason, President, and CEO of the Institute for Women’s Policy Research previously told ABC News. “And as a culture and a society, we have much work to do to break gender stereotypes around women in the workplace, their value, and how much women should be paid for their work.”

Contact ADFT to learn more about establishing equitable compensation policies and procedures. 

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