To Get Serious About The Pay Gap, Start Talking About Opportunity

The time to start is now

With little fanfare or press coverage, the California Senate just introduced a bill that could forever alter the way America assesses pay.

California’s bill (SB1162) would require public median and mean pay gap disclosure for the first time in U.S. history. What does that mean? In short, businesses with more than 100 employees, regardless of where they’re based so long as one is in California, would be required to publicly disclose the average pay of California employees among categories, including gender, race, and ethnicity breakouts. The California bill requires reporting within groups of jobs, for example, managers, or professionals or sales workers. So, taking a gender example, a California employer would need to file a public report that shows how much it pays women, on average, and the same for men within these broad categories of jobs. 

If passed, the effects would be felt nationwide. 
 

California’s bill represents the crescendo of a recent wave of bills aimed at pay transparency and poses a unique challenge to companies because the bill itself is only marginally about pay. It is really about opportunity. 

Median Pay Gap Marks Fundamental Shift Towards Assessing Opportunity

How can a pay equity bill not really be about equal pay?

The oft-cited statistic that the average U.S. women in 2021 are paid .83¢ relative to the average male (or the even more shocking statistic that Black and Latina women, are paid on average .64¢ and .57¢, respectively) is only marginally about paying people equally for doing similar work. This is because this statistic assesses the average gaps across all jobs and all levels. 

Entry-level roles will be paid less than leadership roles so if an organization has fewer women or BIPOC leaders, this will drag down the average pay gap. So, too, will functional segregation. According to the Census Bureau, while women have a growing presence in higher-paying industries like Information or Professional, Scientific, and Technical Services, they are still over-represented in lower-paying industries. This, too, impacts the average pay gap. There are some employee-driven factors that contribute to the pay gap (so called “labor supply effects”) — and while these aren’t fully within a company’s control, there are things you can do to address the problem.

It Might Not Be Illegal, But It Won’t Meet the Workplace Equity Moment

The lawyers amongst us – and I say this in kinship – will decry that the average pay gap is a blunt instrument. It is about pay but not purely about pay equity, that it assesses opportunities but it does not pinpoint with specificity where the gap exists, and that having a pay gap is not legally actionable. To that I say, true, true, and true. 

But just because it is not illegal to have a wide pay gap, does not mean it is good for the company or equitable for its employees. Just because it is not illegal, does not mean you will be able to retain and motivate your talent if you deliver statistics that show a large pay gap, especially during the Great Resignation. And, more importantly, it does not mean that there is nothing an employer can do to get closer to closing the gap. 

So, if we really want to get serious about closing the pay gap, for all women we really need to move to talking about pay and opportunity and functional gaps. 

What to Do Right Now: Move Beyond Pay and Assess Opportunity

Today, employers are already under immense pressure from employees, investors and stakeholders to close pay gaps and provide real DEI&B commitments.

Forward-thinking companies often start by getting pay equity right. Paying employees equally for equal work is, for sure, a critically important first step. Without getting that foundation right, you cannot ever close the pay gap. 

But in an average pay gap world, this is not enough.

Employers need to start assessing whether they’re creating diverse representation throughout all levels of their company, assessing how opportunities are made available and whether women and BIPOC employees are concentrated in lower-paid segments of the business. This is not possible without a solution that assesses all your data instantly to help you see your diversity gaps. Gaps cannot be closed overnight, it takes dedication and consistent work to achieve and maintain pay and opportunity equity. 
 
If this legislation passes, equal pay for equal work will just be the floor in the U.S. Companies will need to show tangible progress to parity and diversity across their entire organization. The time to start is now. 

Christine Hendrickson is the Vice President of Strategic Initiatives at Syndio, which provides advanced technology solutions and expert advisers to assist employers with real-time pay and workplace equity. Before joining Syndio, she was a partner and co-chair of the pay equity group at Seyfarth Shaw LLP. Visit https://synd.io/  Connect Christine Hendrickson