COVID-19 has impacted workers around the globe, especially those who are in lower-paid essential roles and women. We know over the course of the pandemic many women chose to leave their jobs in order to take on caregiving responsibilities because their occupations or roles paid less than men. Then there is a gender wage gap that is much wider for women of color. If we let it persist we risk setting back gender equality and the progress we have made so far.
How to evaluate pay equity
Equal pay for equal work has been U.S. law under the Equal Pay Act (EPA) since 1963. Yet, new Indeed research finds that inequities remain. Although 66% of workers say they are fairly paid for their work, only 15% of women strongly agree they are paid fairly and 18% of Black workers strongly disagree that their pay is fair. These differences show the ongoing role that race and gender play in pay equality and shed light on how the wage gap that hits women, especially women of color, continues to persist.
In order to create truly inclusive workplaces where people feel valued for their contributions, employers should take a hard look at their current employees’ salaries to identify if there are groups that are being disproportionately affected by pay gaps. They should take the steps to understand why they exist and how they can close the current gaps while also putting in place policies that will ensure those gaps in pay do not return amongst those groups or others as they add new talent.
Employers can take the first step by being transparent about pay. Ensuring that salary information is included in job postings is critical. In a 2018 Indeed study, 57% of job seekers in the U.S. said pay transparency was a top consideration when deciding to accept a new job.
It’s also important to check for biases both in hiring and in evaluating current employees’ performance and pay. Racial, gender, and other biases should be addressed when training managers on compensation and other decision-making. When it comes to researching and negotiating pay and asking for a raise, be aware of gender differences among job seekers and employees.
While nearly a quarter (22%) of job seekers research salaries to ensure jobs pay fairly, men are much more likely (27%) than women (18%) to do this. A similar gap exists with salary negotiation. Fifteen percent of men say they always negotiate a new salary as compared to only 9% of women. Tellingly, 41% of women say salary negotiations make them somewhat or very uncomfortable, while only 21% of men say the same.
Erase taboos around talking about salaries
Here’s one way to increase transparency and reduce concerns around negotiating salaries: Allow employees to discuss their pay. Despite a desire to be more informed on pay, 66% of workers have never shared salary information on a job site. What’s more, only half share this information with family and friends.
If we know certain communities are being paid less than others, and their friends and family have also experienced the same wage gaps, this can only exacerbate the problem. And even though the National Labor Relations Act (NLRA) allows workers to discuss compensation, a fifth of workers surveyed (21%) say it feels taboo to discuss pay.
Employers must be more open about pay and include salaries in job listings, so we can break down this taboo and empower those communities most affected to be paid equally from the time they enter the workforce until they leave it. Otherwise, the resulting lost wages caused by salary inequalities will add up over time and result in those groups having less money to support themselves and their families over the course of their lifetimes.
Why it pays to pay fairly
Equal pay affects corporate reputation. Besides being more inclined to apply for jobs at companies that are transparent about salaries, we found that job seekers are 75% more likely to apply for a job if a company has a reputation for paying fairly.
Fair pay is also a strategic way for firms to retain talent and maintain output because it sets all employees up for success, a necessary driver for equity as Diversity, Inclusion and Belonging are increasingly prioritized as core business values. A vast majority (82%) of workers feel more engaged and fulfilled by their work when they are paid fairly. An equal number (81%) say they are more productive and feel more loyal to their employers.
By contrast, unfair pay is bad for retention and morale. Fifty-six percent of respondents say unfair pay makes them feel undervalued. Over half (54%) of employees who found out they were earning less than colleagues with the same experience or title reported a subsequent drop in motivation. Within a year, 59% of this group were seeking a new job.
With COVID-19, employees and employers alike have more reason to focus on pay. Communities historically having the widest pay gaps have been hit the hardest during the pandemic, many losing their jobs or being in essential roles where they have had to put their lives on the line every time they come into work. Looking back, the extra money that could have been made if wage gaps had already been closed could have been the difference between shelter or food for their families.
We must create more equitable workplaces now or else we risk erasing the progress we have made so far, which is why as employers prepare for what lies ahead and hiring picks back up, they must prioritize fair pay and salary transparency. The work we do now will pave the way for a more equitable future for all.
LaFawn Davis is group vice president of Environmental, Social, and Governance at Indeed.