How to Close Your Wage Gap and Open Equity at Work Wage gaps aren't just a pay discrimination issue; they're an inclusive workforce issue.
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The wage gap might seem like old news, but things aren't improving. For some populations, the wage gap has even widened since the pandemic.
Women and people of color were disproportionately impacted by unemployment and more likely to experience an "earnings penalty" when returning to work. According to Payscale's 2023 State of the Gender Pay Gap Report, women of color in particular experience the widest pay gap. For every dollar white men earn, American Indian women make 72 cents, Hispanic women make 79 cents, and Black women make 80 cents.
This means that women of color are more likely to occupy lower-paying jobs or be paid less, even if their experience levels are identical. They're also more likely to face hiring biases and become targets of discrimination, racially driven prejudice and reduced advancement opportunities. Is it any wonder that women have been exiting the workforce so much more than men?
Pay equity is a key approach in combating how people are treated differently at work. You must first address any wage gaps to progress your diversity, equity and inclusion goals. Without pay equity, DEI goals are unreachable because old systems will limit the people you're trying to help. That's why 63% of organizations surveyed by Payscale are planning a pay equity analysis in 2023.
By identifying and solving unfair salary distribution, your organization will become a more welcoming place with fewer barriers to attracting and retaining diverse talent. Here's how you can close your wage gap:
Related: 5 Ways Women Can Fight the Gender Pay Gap (Besides Asking for More Money)
1. Acknowledge the reality of conscious and unconscious bias
Even today, a lot of bias exists. This is especially true in recruitment. Many women and people of color are still overlooked for jobs and promotions. Case in point, from the Payscale report: Women are systematically penalized for résumé gaps (a common phenomenon among working mothers). They're also less likely to get the chance to climb the corporate ladder as they age.
Any kind of bias will present a roadblock to pay equity. Therefore, talking about bias and pinpointing instances of concern is essential. Listening to your employees is the first step in discovering where biases and inequities exist.
Give employees a platform to provide anonymous feedback and ask questions to determine if and where they see growth opportunities. What is the company doing to support and uplift employees seeking upward mobility? Does everyone have equal access to those resources? Some biases may not be as clear depending on your position within the company. A good first step is asking the right questions.
2. Undergo an annual pay equity analysis
A pay equity audit compares how benefits and salary packages line up with outside industries across similar job roles and expectations. It's impossible to have any pay equity impact if you don't know your pay gap numbers. That's why organizations conducting a yearly pay equity analysis are better positioned to measure and close their pay gaps.
Unfortunately, only 47% of companies that conduct gender wage gap analyses release information about their performance, according to JUST Capital. Microsoft, for example, recently announced that it added to its pay equity analyses to review pay for women in its five biggest markets outside the United States. The company now reports salary ratios of 1.001 (with 1.00 being perfect parity).
Remember that wage gaps aren't just a pay discrimination issue; they're an inclusive workforce issue. Being transparent about and resolving pay equity concerns enables your company to level out the playing field.
Related: From Meta to McDonald's, Here's How Major Companies are Working to Close the Gender Pay Gap
3. Encourage pay transparency to close existing pay gaps
After noting where pay gaps and other barriers exist, you'll want to address them. Not only does this take an investment of resources, but it also requires dedication. Shifting long-standing workforce cultures can be daunting. However, leaning into your DEI initiatives can help break the workplace biases stemming from long-held beliefs that no longer fit the current climate.
You can better align yourself with the changing marketplace by encouraging people to talk about their pay. Although salary has long been treated as a taboo subject, being open about salaries can break down pay gaps by exposing pay inequity. It can also make your company more appealing to Gen Z.
According to Beqom, seven of 10 Gen Zers say pay transparency is important enough to consider switching jobs. It's nearly impossible for companies to ignore a glaring pay gap if everyone speaks up, which is one of the benefits of pay transparency.
4. Normalize talking about pay gaps and pay equity
When interviewing potential candidates, don't shy away from talking about salary expectations. It's only fair for candidates to advocate for a salary based on their years of experience, job function, broader market conditions and the regional cost of living. Embracing these early conversations will help you improve pay equity. And if you can't meet a candidate's expectations, you can explain why and develop a plan to reach their goal through measurable milestones.
If you have direct reports, examine their salaries regularly, and alert your HR department if there's a wage gap. The more motivated you are to be a champion for your team, the more you'll influence others to follow your lead. Ultimately, you'll help foster a diverse culture where no one fears retaliation or criticism when discussing wages.
The wage gap is a real issue today, presenting roadblocks to achieving DEI success. However, if you work to achieve pay equity, you can make your organization a better place for all.
Related: How to Drive Concrete Change in a World Where Unequal Pay Is Still the Norm