Equal Pay for Work of Equal Value

September 18, 2021
International Equal Pay Day Poster

 

WAPPP commemorates International Equal Pay Day

International Equal Pay Day highlights the global efforts to achieve equal pay for work of equal value. Despite progress made to close the gender pay gap, women earn on average 80 cents for every dollar that is earned by a man. The gap is even greater for women of color, immigrant women, front-line workers, and mothers The COVID-19 pandemic and resulting economic crisis have threatened to deepen these inequalities even further.
 
Recognizing the slow progress in addressing pay inequality and the undervaluing of women’s paid and unpaid labor, the UN General Assembly estrablished International Equal Pay Day, to be commemorated on September 18 annually. On the second occasion of International Equal Pay Day, WAPPP faculty and thought leaders share insights on why the gender pay gap persists and how we can close it.
 

Q: According to the World Economic Forum Global Gender Gap report, we are 257.2 years away from closing the gender gap in "economic participation" and "opportunity." Why do you think the gender pay gap is still such an issue for many organizations?

 
Headshot of Anne BoringAnne Boring, WAPPP fellow and Assistant Professor at the Department of Economics at Erasmus University Rotterdam
 
Although many organizations publicly support gender equality, the implementation of measures aimed at reducing gender gaps (in wages or access to leadership positions) remains costly for firms, at least in the short run. These measures often require firms to change their management practices; for instance, how they evaluate employees, how they organize work time, or how inclusive is their work culture. Firms are not always willing to dedicate resources to generate these changes or do not always know what changes would actually work. Also, a significant share of the gender pay gap is caused by gender differences at the top of the income distribution and the persistent under-representation of women in leadership positions and high-paying industries. Some factors that explain the gender gaps in labor markets are related to supply-side factors that are arguably outside the direct control of firms. For instance, while more women obtain higher educational degrees than men, men more often choose to major in the Science, Technology, Engineering, and Math fields, which leads to higher wages. Research conducted in France shows that the gender pay gap starts right after graduation. And there is overwhelming evidence that organizations and public policies can do better in terms of reducing the ‘child penalty.’
 
Headshot of Deepa PurushothamanDeepa Purushothaman, WAPPP Leader in Practice; U.S. Board Member, Avasara Leadership Institute
 
The challenge is bigger than just equal pay, which many people and organizations will say they are upholding or agree with. The bigger issues that surround the pay gap have to do with the myth of meritocracy that exists within organizations and the way organizations reward the “ideal worker.” The system doesn't treat people the same way no matter how hard they work. The system was set up for white male, heterosexual workers with stay-at-home wives. The system didn’t evolve as more workers and different types of workers entered organizations. There are conscious and unconscious penalties related to patriarchy and racism that exacerbate pay equity. There are financial penalties for the roles that women (still often) take on at home that can impact the roles they play at work. The tax at work for women, and especially women of color, is burdensome and unfair. To close the wage gap, we need to look at how we evaluate and reward workers. Organizations need to look at the inherent biases that exist, and the underpinnings in the business in very new and different ways if they want to effect real change. The question cannot just be about parity. We need to be asking bigger questions about who the workplace is designed by, and for whom.
 

Q: Despite advancements in equal pay legislation, there has been little progress in closing the gender pay gap domestically and abroad. Do you think these laws are effective, and what other solutions do you think are necessary to effect change?

 
Headshot of Iris BohnetIris Bohnet, Albert Pratt Professor of Business and Government and WAPPP co-director
 
A popular tool these days is pay transparency. But understanding its impact is actually more complicated than one would think. At this point, at least twenty-two U.S. states, ten European countries, and some provinces in Canada have passed laws to increase pay transparency. In the US, policies have focused on requiring employers to inform prospective employees of the salary range and introducing penalties for employers that keep employees from disclosing their pay. Policies in European countries include required disclosures of full pay (e.g., in Germany), breakdowns by gender (e.g., in Denmark) and gender pay gaps (e.g., in the United Kingdom). A number of research papers recently evaluated the impact of pay transparency legislation. Generally, the laws seem to serve their intended purpose and decrease the pay gap between men and women. At the same time, and more surprisingly for many of the advocates of pay transparency, the laws also appear to lower overall pay in some circumstances. The intuition for this is straightforward: while pay transparency helps those less able to assertively negotiate for higher pay, e.g., because of fear of social backlash, it hurts those able to do so as it allows the employers to use the publicly disclosed wage as a ceiling, in effect reducing prospective employees’ bargaining power. These are interesting trade-offs for society to grapple with. Is it ok to decrease overall average pay to decrease pay inequity? Some of us would say yes; others would say no. But as you can see, this can become political pretty quickly.
 
Anne Boring: In research I conducted with Ghazala Azmat, we find that laws such as binding gender quotas for boards of directors are effective in creating gender diversity in boards, but only if they include some type of binding mechanism. These mechanisms make inaction costly for firms and create clear incentives for change. But we also find that many legislations across the world still do not include real sanctions for firms that do not comply. Also, the set of binding laws that exist to reduce gender gaps in the labor market often concern the top of the top of large organizations—not necessarily most employees or firms. A few countries (such as France and Germany) are now considering applying binding quotas on executive boards or are targeting incentives to smaller-size firms. These policies are likely to create more change. Finally, many firms and governments do not necessarily know what types of policies to implement to create effective change. For instance, many firms have implemented unconscious bias or diversity training programs to reduce gender gaps, but the evidence regarding their effectiveness is mixed at best. Recent research helps to understand what are the real best practices for firms. Governments also need to know whether the laws they implement are effective. Recent research has studied the effectiveness of pay transparency policies. This is where research becomes important: to help organizations implement solutions that have been tested in the field and understand ways to improve practices.
 

Q: Many skeptics fail to appreciate the role of occupational segregation in determining the wages of men and women. What does the evidence say about women's occupational choices? Can you speak to the more nuanced ways gender plays a role in pay inequity?

 
Headshot of Tania Del RioTania Del Rio, MPP/Oval Office ’16, Executive Director of YWCA Cambridge, MA
 
There is an enduring gender divide in the types of occupations people occupy. Rather than being based on talent or capacity, which are equally distributed among the population, occupational segregation can result from employer and employee assumptions about who is best suited to perform a job. Furthermore, male-dominated occupations tend to maintain higher pay levels, while female-dominated ones, regardless of their important contributions, are often undervalued. For example, care occupations and food preparation, where women are overrepresented, are crucial for society but tragically underpaid. There are many worthwhile efforts in place to attract and retain women into high-paying occupations, but more attention needs to be paid to the need for improvement in work conditions and pay for those at the lower end of the pay scale. Unionization, advocacy, and a society-wide recognition of the value of these occupations is urgent.
 

Q: While COVID-19 has and continues to exacerbate inequity on many fronts, it does provide leaders with a vital opportunity to end the gender pay gap as part of recovery plans from the pandemic. How can we achieve the goal of "Build Back Better," and close gender pay gaps?

 
Iris Bohnet: This has been an important focus of this year’s G7 Gender Equality Advisory Council on which I serve. To build back better, we need to address many issues, including occupational segregation, gender bias in organizations contributing to an underrepresentation of women at the top, and work-life policies. It is increasingly clear that mothers of small children are among those hurt most by the pandemic—without an intense focus on how, how much, and where we work going forward, these women will either not return to the labor force or have to accept low-paying jobs. Time spent working is one of the important predictors of the gender pay gap. The other two important contributing factors are gender differences in seniority and in occupation. There are many more female than male nurses, and many more male than female computer scientists. Both health and technology are growth sectors. For our workforce to be ready for these future jobs, we have to dismantle the stereotypes that hold men back from choosing careers in caregiving and women from specializing in STEM fields (science, technology, engineering, and mathematics). Similarly, we have to address systemic bias in our talent management too often leading to gender gaps in career advancement. In order to be successful, we have to take an intersectional perspective as in many countries, and most certainly in the United States, women of color fare even less well than white women.
 
Deepa Purushothaman: We are in a liminal time, when the veil has been pulled back, and there is an almost universal questioning of how we work, where we work, and maybe even what we do. There were questions about what qualified as essential work and how caretakers, who were most often moms, could make their jobs and their families work together. For those who had the luxury and privilege to ask, working from home caused many people to question if they were living to work and what it meant to be exhausted and burnt out, and to set boundaries. Organizations and leaders need to ask new questions about how to make work work for everyone. They need to be making space for different kinds of workers with differing wants and needs. How can people work differently, have more choice in how and where they work, and also be successful? How can we not penalize people who opt into a remote working model or need more flexibility at certain times in their lives, like when they are raising children or taking care of elderly parents? Part of what happens next should be about asking bigger questions about work itself. Can we listen to new and different voices, not to simply shore up the models of the past but use this pivotal time to listen to the needs and experiences of more groups? My work, for example, is heavily focused on listening to women and women of color to understand the ways the system has not served them and using that as a source of wisdom for how we can redefine workplaces to work for all of us.