Is pay equity getting a fair shake at your business?
By Rieva Lesonsky
Last Tuesday, April 2, was Equal Pay Day—the day chosen by the National Committee on Pay Equity to highlight the fact that women in the U.S. workforce have to work until April 2 in 2019 to earn as much as men earned in 2018.
In 2017, female full-time, year-round workers made only 80.5 cents for every dollar earned by men, a gender wage gap of 20 percent, according to the Institute for Women’s Policy Research. If progress toward pay equity continues at the current snail’s pace, IWPR estimates it will take until 2059 for women to reach pay parity. For women of color, the news is even worse: Hispanic women will have to wait until 2224 and African American women will wait until 2119 for equal pay.
How well are small and midsize business owners (SMBs) doing at creating equal pay in the workplace? A QuickBooks survey of both employees and business owners has some insights.
Different Views of Pay Disparity
Not only is there a disparity between men’s and women’s pay, there’s also a gap in how employees and employers view the issue. Only 22% of employees in the survey (15% of women and 28% of men) believe employers are doing enough to promote equal pay in the workplace. But 71% of business owners believe they are doing enough to address this issue.
Should men and women always receive equal pay? One in five business owners say they do not believe men and women should always be paid equally. Nearly three-fourths (72%) of women business owners believe men and women should always receive equal pay, compared to 60% of men business owners.
Of course, women and men don’t always do the same jobs, which is one reason for pay disparity. Women are more likely to take time off to raise children or care for parents, leading to less time in the workforce. Pay equity seeks to take into account these gaps by compensating men and women equally for comparable (not just identical) jobs.
Some 92% of the business owners who took part in the survey say they are taking steps to improve pay equity at their companies. Almost two-thirds (64%) have a formal pay scale and 55% have an equal pay policy. But in spite of these claims, 23% of business owners surveyed admit they have never analyzed pay rates by gender, and just 32% have done so in the past 12 months.
The risks of unequal pay are real. More than one-fourth (26%) of business owners in the survey say an employee has filed a lawsuit against them over equal pay.
Taking Steps Towards Pay Equity
How can you change things at your business and make progress toward equal pay? The
National Committee on Pay Equity recommends taking these 10 basic steps:
- Conduct a recruitment self-audit: Do you actively look for diversity when hiring?
- Evaluate your compensation system for internal equity: Do you have a consistent system for determining wages and benefits, such as creating written job descriptions and developing pay grades or scores?
- Evaluate your compensation system for industry competitiveness: Do you have a system for evaluating a job’s market rate? Do you ensure that all workers are receiving a fair market rate?
- Create a new job evaluation system if needed: Make sure you have up-to-date position descriptions for all occupations in your company.
- Examine your compensation system and compare job grades or scores: How does pay compare for positions at your company that have similar grades or scores? Are women and minorities paid similarly to men and non-minorities with the same grade or job score?
- Review data for personnel entering your company: Are new hires treated consistently in terms of pay, or do men, women and minorities enter at different wage levels? Do new hires get higher pay than those who already have the same position in the company?
- Assess opportunity for employees to win commissions and bonuses: If your company offers commissions or bonuses, are men, women and minorities assigned projects or clients with high commission or bonus potential on a fair basis, or do men get more of these opportunities?
- Assess how raises are awarded: Do you have a consistent method of evaluating performance for all workers? Do men, women and minorities receive consistent raises based on similar performance standards?
- Evaluate employee training, development and promotion opportunities: How are workers chosen to participate in training opportunities or special projects that are likely to lead to advancement? If women and minorities aren’t given equal opportunity, how can you change this?
- Implement changes as needed, maintain equity and share your success: Once you have made changes to ensure pay equity, regularly evaluate your compensation system to make sure it continues to meet your goals. Be open with your employees about compensation and your commitment to pay equity, and expect them to be open with you about concerns.
Pay equity isn’t just a matter of fairness; it also makes good business sense. Giving your employees equal pay makes them feel valued and helps your business attract and retain the most qualified workers.
Woman hand hold a money bag stock photo from Watchara Ritjan/Shutterstock