Gender Pay Gap Is NOT The Same As Pay Equity

Why the USA chose not to mandate pay reporting

The news headlines after UK companies reported their “gender pay gap” were highly sensationalized. Here are a few examples.
 

Mathematically, we are dealing with averages and medians. If you’re not a math person, the median is just the “middle value” of a set of values. Let’s see how mandating these values can make excellent companies look horrible.
 
Reporting averages does not take into account factors such as job specialization and gender variation among specializations. For example, a company that is highly engineering or science-based will likely have a much greater percentage of men in its workforce. Certain STEM-based professions (Science, Technology, Engineering and Math) are naturally male-dominated because the graduating classes are male-dominated. That’s the hiring pool, so through no fault of any company, these STEM companies will be “more male” in the specialized jobs.
 
As a personal example, when I attended the University of Waterloo to study applied math and mechanical engineering, most of my math classes were 10 men for every woman. When I walked into my first engineering class, it was 200 men and me. So, since we know that these types of specializations are chosen by men more often than women, we can’t penalize STEM-based companies for choices that men and women made years before joining anyone’s workforce.
 
As another example, it is not unusual in STEM-based companies for there to be a higher percentage of men in the upper levels. Since the UK mandated the reporting of the average value, having more men in the upper levels instantly puts a company in an unfavorable light by the larger impact they have over the average.
 
Having a larger percentage of men in the upper levels is NOT necessarily an indication that the company has a bias against women. For example, I have examined data across gender for several STEM-based companies who have gone to great lengths in trying to balance the gender in the management levels. However, sometimes what the data shows is that while the company has made these upper-level jobs available for anyone to apply to, women are choosing not to apply to positions in the management ranks. For example, if the pool of people that could apply was 50% female, we saw that the candidate pool of those that chose to apply was only 30% female. I’ll leave the WHY up to the audience, but since the gaps in multiple countries tends to be greatest between the ages of 32 and 40…
 
So, by the math of the defined average that must be reported, merely having more men in the upper levels of your company will skew your average and widen your gender pay gap. But remember, this isn’t pay equity. "Pay equity is ensuring that men and women at the same levels and performing similar jobs are being paid the same. It’s not reporting the average pay across the entire company".                             

The USA was heading down the path of mandating the reporting of pay on a company’s annual EEO-1 form. The deadline for reporting was March 2018. In August 2017, the OMB (Office of Management and Budget) halted this requirement. Here is a brief quote from the official memo.
 
“Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility are unnecessarily burdensome, and does not adequately address privacy and confidentiality issues.”
 
Lacking practical utility means that the testimony provided to the EEOC from a corporate Vice President of Diversity of Inclusion proved that the proposed reporting requirement would not accurately report on what the EEOC was trying to measure. In short, measuring the pay gap would not be an indicator of pay equity. Reporting the proposed values then became an unnecessary burden since it didn’t serve the purpose that was originally intended when the reporting requirement was first conceived.

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