Closing The Gender Wage Gap: Workplace Success Depends On It

Equal pay, diversity and inclusiveness will continue to be vital factors

A gender pay gap still exists across almost all industries and occupations but can vary greatly, especially by occupation. 
 

Women make up 47% of the U.S. workforce, yet there is still a sizable difference in pay between men and women. This discrepancy is known as the gender wage gap. Not only does this gap affect current take-home pay, the long-term effect of lower Social Security payments impacts women throughout their lives.

While the gap may differ by state or region, there are clear and consistent trends. Industries dominated by men tend to earn higher wages than those dominated by women. Interestingly, women make up approximately:

•  15% of the architectural and engineering fields;
•  18% of software development;
•  38% in law practice; and 
•  nearly 40% in management. 

In addition, 60% of accountants are women, 62% of pharmacists are women, and careers involving social services, education and human resources are dominated by women.

A study by the U.S. Census reports that among full-time, year-round workers, women earn approximately 18% to 20% less than men in median pay across occupations. Women would have to work many extra days into the New Year to make the same annual income as men. As a matter of fact, National Pay Day was created to bring attention to this issue. 

Factors such as education, occupational segregation, and work experience have contributed to the gap and helped to close it as conditions have improved over the decades. The gender pay gap does not measure bias based on ethnicity, which is known to correlate with lower income, making the gap even larger. The difference in wages is also substantial for older workers.
Bias and discrimination can be challenging to measure, but many studies suggest they are still significant elements. 

According to Forbes, there are several additional factors that contribute to the gender wage gap. 

•  Statistically, women are more likely to accept lower-paying jobs or work fewer hours.
•  The necessity for non-wage benefits may be more important for women workers.
•  Women are more likely to face conscious and unconscious bias.
•  Women tend to have less time outside the work week due to child care and household responsibilities.

Parenting can have a substantial impact on career paths. Mothers are twice as likely to take time off for maternity leave or long-term child-rearing, with some leaving the workforce for several years. A multi-year break from the workforce can negatively impact future earning potential or career advancement because of missed opportunities to build experience.

Examining median income (the income level in the middle of a list of ranked incomes) by education level from two cities, Los Angeles and Dallas, the gender pay gap ranged from a high of 36% to a low of 24%. These figures from LaborIQ^® blend all occupations and aggregate by education level, which varies from the national average-by-occupation 18% to 20% gap.  

The median income in Los Angeles-Anaheim-Long Beach ranged from $20,901 for women with less than a high school education to $103,023 for men with a post-graduate education. The population in this metro skews heavily younger, with 16% in the age group 18- 24. 
The median income in Dallas-Fort Worth-Arlington in 2020 ranged from $20,754 for women with less than a high school education to $102,577 for men with a post-graduate education. The population over age 18 in this metro is relatively even across age groups. 

When hiring new employees, there are several solutions for narrowing the gap in pay between men and women. The first and most effective is to offer the same rate of pay to all qualified candidates. This will not only help to resolve the gender wage gap, but it will also help to create equity across other discriminatory classes, putting your organization on higher moral and legal ground. Offering fair and competitive compensation for all jobs should attract an array of applicants, which will also help contribute to fulfilling diversity initiatives.
 
Your organization’s dedication to diversity, equity, and inclusion, as well as opportunities for training and career advancement will continually demonstrate a commitment to equitable pay.
 
For employees already on your payroll, it is never too late to benchmark team salaries to get a fact-based understanding of how your current salaries compare to market rates and compare who may be under or overpaid. Proactively identifying pay gaps can help get ahead of retention risks and reduce employee turnover.
 
Additionally, workplaces can level the playing field by ending policies that prevent employees from sharing wage and benefit data and being more transparent about salaries. Eliminating the use of salary history in the hiring process, pay negotiations and regularly reviewing internal compensation trends with third-party, non-biased auditors can provide equitable pay for all roles, no matter the gender, ethnicity, or age. 
 
Offering education assistance and student loan payment benefits can help all employees, including women, more easily afford a higher education, which generally leads to better pay. Although women are currently outpacing men in obtaining higher education, they also have a more challenging time paying off student loans due to the difference in annual income.
 
Pay inequality is not unique to the U.S. Most countries have similar challenges with a significant difference between the salaries of men and women, although the difference has decreased globally in recent decades.
 
Equal pay, diversity and inclusiveness will continue to be vital factors in the success of workplaces in the coming years. According to a 2020 survey by Pew Research, 45% of respondents believe equal pay is crucial to obtaining gender equality in the workplace. The gender pay gap has only narrowed slightly in the past decade. Companies must begin implementing reform in pay and hiring practices to achieve these goals. 

Jay Denton is Chief Analyst at ThinkWhy Connect Jay Denton