Let’s Talk Pay Equity
Every worker has the right to expect equal pay for equal work regardless of their gender, race, religion, national origin, age or physical/mental abilities – whether they work full time or are part time workers. A lot of attention has been given to the concept of paying equitably for people doing the same job. Legislation has been passed to prevent wage discrimination (e.g. The Equal Pay Act of 1963, Title VII of The Civil Rights Act of 1964,The Lilly Ledbetter Fair Pay Act of 2009). Employers engage in pay equity analyses by gender, race or both to ensure internal pay equity between employees in similar roles (38 percent plan to conduct some type of pay equity analysis in 2009, according to the PayScale Compensation Best Practices Report.) The media and advocates for closing the gender pay gap acknowledge Equal Pay Day every year — the day to which all working women have to work into the current year to receive the same compensation as men received the previous year.
Even with all this activity, including progress with discrimination laws, the wage gaps persist — gender wage gaps, racial wage gaps, etc. Part of the issue is that pay equity itself is complicated and often misunderstood. Additionally, the solutions are many, varied and necessarily ongoing. No organization can do one thing — say a pay equity analysis — and expect that the work is done. It’s, unfortunately, not that simple.
The Numbers: A Tale of Two Gaps
Let’s start with the numbers that get thrown around when we talk about pay gaps. At PayScale, we’ve been fortunate over the years to be able to get a high-level view of pay equity due to the compensation data we see from both employees via our free salary survey and employers via our compensation platform for businesses. We have published research on the gender pay gap for years and just recently have been able to dig into race as well. What we know is that there are two important gaps to talk about, not just one, no matter what demographics you’re examining. Those two gaps are an uncontrolled wage gap (not controlling for any factors) and a controlled wage gap (controlling for as many factors as possible, including job title, industry, location, years of experience, education, etc.). For example, the uncontrolled gender wage gap is typically cited as ~80 cents on the dollar, depending on the data source, but that’s comparing all women working to all men working no matter what jobs, industries, cities, etc. they may be working in. The controlled gender wage gap is much more narrow. PayScale’s latest numbers place it at 98 cents on the dollar, and it is controlling for a number of factors so that the only differentiation between workers is their gender. That’s what is meant when the term “equal pay for equal work” is used. If men and women (or any two groups of workers) are doing the same job, they should be paid equitably.
Even pay equity advocates conflate these two gaps. They’ll use the larger wage gap of 80 cents on the dollar when comparing men and women but then say “equal pay for equal work” in the same breath. As we just determined above, those aren’t synonymous. However, that larger gap is critically important but requires different solutions. None of us will solve large wage gaps by focusing solely on pay equity analyses that concentrate on pay inequities between workers doing the same jobs.
There are two important gaps to talk about; an uncontrolled wage gap (not controlling for any factors) and a controlled wage gap (controlling for as many factors as possible, including job title, industry, experience, etc).