Improving Pay Equity — One Hire At A Time

It is no secret that we have a compensation challenge specific to gender. In the US, the Equal Employment Opportunity Commission is tasked with enforcing several federal laws that prohibit discrimination in compensation, including the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and Title I of the Americans with Disabilities Act of 1990. Yet inequalities persist.

According to USA Today, women experience an average of $513 billion (with a b) in lost wages every year. The gender wage gap currently sits at 80 cents to the dollar, with it becoming increasingly worse later in female careers. Sure, there are extenuating circumstances contributing to America’s wage gap — family roles, traditional values, sexism, structural factors, etc.

But a few studies have shown one of the contributors to compensation inequality occurs at the beginning of the process: the job offer. And that’s where hiring leaders can make a difference.

Behind the Numbers

Mary Rigdon, a professor in the departments of psychology and economics at Rutgers University, examines whether women ask for less in a controlled bargaining setting when negotiating a starting salary in her report,An Experimental Investigation of Gender Differences in Wage Negotiations.”

Speaking up. Rigdon discussed an experiment that exemplifies the root problem of compensation discrimination: the likelihood of bargaining. It was conducted by Linda Babock, James M. Walton Professor of Economics and the former acting dean at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy. In the experiment, subjects were asked to perform a simple task, for which they could earn between $3 to $10. Upon completion of said task, the experimenter handed each subject $3 and said, “Here’s three dollars, is three dollars okay?” Only if the subject inquired about more money would they be given $10. An increase of compensation would not be given to those who merely complained. Nine times as many men as women asked for a higher wage.

The initial low-ball. And when it comes to the offer itself, hiring managers are offering women less upfront. Using The Baseline, a one-shot demand-ultimatum game, Rigdon reveals an astonishing amount of discrimination: The $8.40 amount proposed to women is dramatically less than the $9.43 starting wage offer to men.

When women are at an immediate disadvantage in compensation being offered and are less likely to negotiate upward, the disparity will only compound over time, thus increasing the wage gap as age increases.

What Program Leaders Can Do

So, where do we go from here? Businesses are required by law to specifically avoid pay discrimination.  The overarching challenge for hiring leaders is having data and policies to review and monitor hiring behaviors within their organization. If each buyer organization has a strategy in place to monitor and review pay equality, the challenge can be addressed one hire at a time. It is our obligation within CW programs to try to get ahead of what is inevitable, with enforcement of government policies to ensure pay equality exist. In the UK, companies are required to publicly air their salary information. This gives the government options to affect organizations that do not adhere to pay equality standards. There are some rumblings the US will soon follow suit, even if only on a state level.

CW programs have an amazing opportunity to leverage our existing data to help drive our organizations in a direction we can all be proud of. As contingent labor becomes more and more valuable to buyer organizations, CW professionals can start to make an impact today by leveraging data to bring awareness to the issue.

Frank Enriquez

Frank Enriquez
Frank Enriquez, CCWP, is senior manager of contingent workforce strategies and research, sales, with Staffing Industry Analysts. He can be reached at fenriquez (at) staffingindustry (dot) com

Frank Enriquez

Derek Kimmerle

Derek Kimmerle
Derek Kimmerle is a customer success manager with Populus Group. He can be reached at dkimmerle (at) populusgroup (dot) com.

Frank Enriquez

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