Compliments of Gerd Altmann via Pixabay

According to the Bureau of Labor Statistics, pay inequity is not a thing of the past. In 2019, women 35 and older earned 76 to 80 percent of what men took home. Inequities exist for racial minorities as well: Black men earned 74.6 percent of the median for White men, while Hispanic men earned 70.5 of a White man’s earnings.

Organizations create the very conditions that reinforce and encourage pay inequity. Disparities are in the works even before an applicant starts work. Companies reward negotiating prowess with higher salaries and justify these decisions by explaining that the receiving party negotiated better. That logic would of course be fine if jobs relied heavily on the ability to negotiate–but most do not. In their book, “Women Don’t Ask: Negotiation and the Gender Divide” authors Babcock and Laschever explain that women (on the whole) are more reluctant to negotiate for a salary increase, or to augment an initial starting amount. About twenty percent indicated they would never negotiate at all (and twenty percent of the adult female working population equates to approximately 15M women). Managers of both genders indicated they were less likely to negotiate with women–and even when they did, the pay bump for women was less than what men who had negotiated received.

The problem arises because women are perceived as less likeable when they display “masculine” behaviors of assertiveness, self-interest, and direct honesty, rather than ones that are nurturing, self-effacing, modest, and unassuming. People may feel that a woman’s grab for the “brass ring” violates established norms for societal gender roles: “As a result, many people don’t consider being preoccupied by money (or attaching a value to their work and time) to be proper or attractive for a woman” (2019 Cooperative Learning Handbook). “If the benefits from negotiating are likely to be small and the process promises to be difficult, many women feel less inclined to ask in the first place” (Babcock & Laschever, p. 11).

Employers continue to rely on a candidate’s negotiating ability to set salaries, despite legal precedent. In the case of Draves versus Hudson Group Retail LLC 2013, Hudson was sued because it paid a man thousands of dollars more than a woman (in a comparable job) when he need to relocate his family. The court expressed the following opinion: “Permitting an employer to defend itself simply by showing that a disparity was the product of one negotiation with a male employee would lead to a marketplace that values the work of men and women differently.” Reddit has gone so far as to ban salary negotiations altogether. Interim CEO Ellen Paas’ goal is to “eliminate the persistent disadvantage that women have at the bargaining table.” According to professor Laura Kray, Sheryl Sandberg suggests that women behave “appropriately female” in negotiations by smiling, making empathic comments, and appearing sufficiently agreeable. Research also suggests that flirting, laughter, flattery, and playfulness were successful negotiating tactics for women.

The onus for creating pay equity (in the United States) seems to be on the employee, when making workplaces equitable should be an employer’s responsibility. Some states have banned inquiry into past salary—a practice that has historically hurt disadvantaged groups when employers pegged new salaries to an existing one. San Francisco’s “Parity in Pay Ordinance” prohibits the investigation of past salary as a consideration for job candidates. In addition, employers cannot provide salary information to prospective employers unless they have a written release from a job candidate. The law also states that employers may only consider salary information if an interviewee volunteers it. California law mandates that upon inquiry, an employer must provide the salary range for an open position to any prospective employee.

Decades ago Whole Foods made the decision to implement full pay transparency, a policy that encourages employers to justify pay disparities. In conjunction with a yearly statistical pay analysis (where salaries of people in similar positions with comparable years of experience and performance are analyzed), jobs should be compared to similar ones on the open market so that respective adjustments can be made. Merely publishing existing pay data, absent company actions to eliminate inequity, may spur anger, resentment, and a possible exodus of the best personnel—people who because of their experience, skill set, or education (or a combination) can easily move elsewhere. The company Buffer, which reported a 94 percent retention rate, has found that full pay transparency is a terrific retention tool.

Employers with a federal contract must provide compensation data to the EEOC upon request. By law, employees at these same companies are permitted to discuss their pay without fear of employer retaliation. If retaliation did occur, those employers could lose their federal contracts.

The proposed Paycheck Fairness Act would provide pan company policy regarding employee sharing of pay data, and would prohibit retaliation in both public and private employers regardless of their federal contract status. It would also require the EEOC to collect compensation data for analysis from these same companies.

For most employees, the approach to any type of problem is push-back. If workers feel they have been treated unfairly, they are the ones who hire an attorney, contact the EEOC, or file a complaint with their Human Resources Department. Consequently, inequities persist and disparities go unreported.

Iceland has taken a different approach. Starting in 2018, employers with twenty-five or more employees were required to “prove that they pay men and women equally for a job of equal value” to the Icelandic government. Violators incur a daily fine until they rectify the problems within their pay structure. Employees and managers have appreciated the nation-wide system because it promotes fairness among employees and it assures that managers are paying a fair wage.

Absent federal legislation, pay equity will require the curiosity and subsequent action of CEOs like Marc Benioff at Salesforce and Susan Wojcicki at YouTube–who made investigation and subsequent adjustments to reduce pay inequity a priority. Not surprisingly, employees are more likely to see organizations that engage in proactivity as employers of choice, and to work harder for those same managers.

“Relying on employers to negotiate their own salaries is not a plan! Organization need a proactive, comprehensive, sustainable compensation plan spearheaded by the CEO” (2019 Cooperative Learning Handbook).