Imagine this: You’re at a meeting, and your boss is asking for ideas about how to improve the company’s performance. You raise your hand and say, “I think we should look into pay equity.”
Your boss looks confused. “Pay equity?” “What’s that?”
You explain that pay equity means making sure that women, people of color, and other groups who have historically been discriminated against get paid the same amount as their white male colleagues.
Pay equity can be a great way to boost engagement, and efficiency, reduce turnover, and of course increase revenue.
Let’s look at pay equity in greater detail below:
What is Pay Equity?
Pay equity is the term used to describe the fair and equal treatment of people in similar jobs, who have similar skills and experience, and are doing work that has the same value. In other words, pay equity is about being paid what a worker deserves rather than what society expects. Pay equity matters because it’s a way to make sure everyone who works hard gets treated fairly.
According to BLS, the ratio of Black web developers is only 4.6%. White, on the other hand, is 85%.
Similarly, the ratio of women that are office and administrative support professionals is 72%, while of those who are chief executives is only 29%.
The Importance of Pay Equity
Pay equity is important because it helps to close the wage gap between men and women and between white people and people of color.
Roughly one-third of full-time employees in the U.S. are paid less than $12 per hour, according to a 2018 study from Georgetown University Center on Education and Workforce (CEW.
The benefits of pay equity are many.
Closes the Wage Gap
First, it helps to close the gender wage gap. As of 2016, women made 80% of what men made in the United States. This means that women were paid 20% less than men for doing the same job. Similarly, Black women earn 58 cents for every dollar white men earn.
If we could close the gender wage gap and ensure that women are paid as much as men, it would make a huge difference in their lives and give them more opportunities to save money and invest in themselves. It would also help to lift families out of poverty because women typically earn less than men and have lower salaries than their male counterparts.
Helps People with Low Income
Second, pay equity allows people with lower incomes to make more money. This can help them afford things like childcare or healthcare services that they need but may not be able to afford otherwise. People who are paid less tend to spend more money on things like these because they cannot afford them outright or do not want to spend their savings on them. Paying these workers more will allow them to save money instead of spending it all on these types of expenses.
Helps Retain Employees
Retaining employees is one of the most important parts of running a business.
After all, if you don’t have the right people on your team, you’re not going to be able to stay competitive in the market. And that means you won’t be able to keep up with demand and make a profit.
When you offer pay equity, you’re helping your employees feel valued and appreciated—which makes them more likely to stick around.
Helps Maintain Compliance
Pay equity helps maintain compliance by reducing the risk of discrimination claims. If employees feel that they are being paid unfairly, they may file a complaint with the Equal Employment Opportunity Commission (EEOC), which could lead to a lawsuit if the EEOC finds that there is sufficient evidence for one.
By ensuring that all employees are paid fairly, you can reduce the likelihood of complaints about pay equity, which will make it easier for you to stay in compliance with labor laws and avoid costly litigation.
Finally, pay equity will also help reduce discrimination against certain groups within our society by ensuring that everyone receives equal treatment when it comes time for raises or bonuses (which is often based on seniority).
What is the Difference between Pay Equality and Pay Equity?
Pay equality and pay equity are two different things. They’re both about fair pay, but they have different definitions and goals.
Pay equality means that everyone who does the same work should be paid the same amount. This is a common goal for women because women tend to make less than men for doing the same job.
On the other hand, pay equity is about fairness. It’s about justice. It’s about the right thing to do. Pay equity is about the value of your work and how it contributes to society, which should be reflected in your paycheck.
It’s not just about equal pay for equal work, but rather equal pay for work of equal value to society.
Pay equity means that an employer must pay all employees according to the value of their contributions to the company, regardless of gender or other factors like race or sexual orientation.
For example, if your company hires a new employee who brings in more revenue than any other employee in your company, you would have to pay that new employee more than anyone else on staff—regardless of whether they’re male or female, black or white, straight or gay.
What are the Laws that Govern Pay Equity?
In the United States, there are a number of laws that govern pay equity. These laws include the Equal Pay Act, The Americans with Disabilities Act, The Age Discrimination in Employment Act, The 1964 Civil Rights Act, and The Lilly Ledbetter Fair Pay Act of 2007.
The Equal Pay Act of 1963
The Equal Pay Act of 1963 prohibits discrimination on the basis of gender in pay. This was the first federal law that prohibited sex discrimination in wages. It also created a more formal process for addressing complaints about pay inequality.
President John F Kennedy signed the Equal Pay Act into law on June 10, 1963, a week after its passage by Congress.
The Americans with Disabilities Act (ADA)
The Americans with Disabilities Act (ADA) prohibits discrimination against qualified individuals with disabilities in all aspects of employment including compensation practices such as hiring practices and compensation decisions such as promotions and demotions.
The Age Discrimination in Employment Act
The Age Discrimination in Employment Act (ADEA) is a federal law that prohibits discrimination against employees and job applicants who are 40 years of age or older. It applies to employers with 20 or more employees, and to state and local government employers.
The ADEA was created to promote fairness in the workplace and protect individuals from being unfairly excluded from employment opportunities because of their age. The ADEA also promotes equal employment opportunities for older workers by encouraging the continuation of their careers, thereby advancing the interests of businesses and our economy as a whole.
The 1964 Civil Rights Act
In 1964, the Civil Rights Act banned discrimination based on race, color, religion, sex, or national origin. The act was passed after a long struggle for equality by African Americans, who had been discriminated against for centuries in America.
The Lilly Ledbetter Fair Pay Act of 2009
The Lilly Ledbetter Fair Pay Act of 2009 act allows individuals who face pay discrimination to seek rectification under federal anti-discrimination laws. The act is named after Lilly Ledbetter, an employee who experienced pay discrimination at Goodyear Tire and Rubber Company for 19 years before she was able to bring her case to court because of limitations in the statute of limitations for filing such claims.
What are Minimum Wage Laws?
Minimum wage laws are laws that set the lowest hourly wage a worker can be paid.
The Fair Labor Standards Act (FLSA) is a federal law that sets the minimum wage for most employees, but there are some exceptions. The FLSA does not apply to people who work for tips or certain farm workers. In addition, some states have passed their own minimum wage laws that are higher than the federal rate. If you work in one of those states, your employer must follow both state and federal laws.
Minimum wage laws are a vital component of any society that aspires to be fair and just. They protect workers from exploitation, provide a safety net for those who need it most, and help ensure that the middle class does not disappear altogether. In other words: minimum wage laws are important because they protect families and working poor people from being taken advantage of by greedy corporations.
That’s why it’s so important to implement and follow federal minimum wage laws across all states.
The Equal Pay Act prevented gender-based wage discrimination. However, it did not address the issue of comparable worth. In other words, if two people do the same job but one is a woman and one is a man, they should be paid equally. Comparable worth became an important topic in the 1980s and 1990s when women earned less than men for doing similar work.
What is a Pay Gap Analysis?
A pay gap analysis is a tool used by companies to determine whether there is a difference in pay between different demographics of workers. The data collected during a pay gap analysis can help companies understand the role that gender, race, and other factors play in employees’ wages, allowing employers to make informed decisions about how best to address any disparities they find.
The analysis can be conducted at any time and does not require an employer to have a diversity policy in place. However, some companies choose to conduct their analyses as part of their diversity efforts.
Conducting a Pay Equity Audit
Conducting a pay equity audit is a great way to ensure that you’re adhering to the laws in your state, industry, company, and position. While there are many factors that can lead to paying inequity, it’s important to understand the laws surrounding gender-based discrimination in both the public and private sectors before conducting an audit.
The first step of any audit is understanding where you stand in relation to your state’s gender-based wage discrimination laws. Some states have enacted more expansive policies than others with regard to equal pay; if you conduct business in one of these areas, then you’ll need to take that into account when conducting an audit.
Next, comes looking at industry standards pertaining to gender discrimination between genders at various levels within organizations or companies—things like what types of positions get paid more than others based on gender alone? While some roles may require specialized skill sets that come with higher salaries as compensation (think doctors working on a heart transplant team versus nurses working as bedside helpers), this won’t always be true for every position within an organization—and thus cannot serve as justification for paying some employees more than others based solely on their sex or gender identity.
A pay audit is an internal review of your company’s compensation practices. It can be used to determine whether or not your employees are being paid fairly and correctly, as well as to find ways to improve your company’s compensation practices.
There are many reasons why companies should conduct pay audits, including:
- Ensuring that employees are paid in accordance with the law
- To make sure that employees are paid in accordance with the terms of their contracts
- Ensuring that employees are not being discriminated against based on gender, race, or other factors
- To uncover instances of wage theft
- To determine whether or not there are any gaps in pay between different groups of employees (for example, between men and women)
In order to conduct a successful audit, you must first decide what exactly you want to learn from it. Do you want to know if there are any discrepancies in pay between different employee groups? Do you want to see if there are any problems with how people were hired? Do you want to see if there are issues with overtime? Once you have decided what information will be most useful for your business needs, then it is time for the audit itself.
What Types of Discrimination are Prohibited?
Discrimination can be based on race, gender, age, disability, national origin, religion, or sexual orientation. It is not only illegal but also morally wrong.
Discrimination may occur in hiring and promotion decisions; compensation levels; benefits such as health insurance and retirement plans; work schedules; leave policies and other employment practices. Employers are prohibited from discriminating against people because of their age (40 years old), race (black), marital status (divorced), or sex (female).
Employers must provide similar opportunities for advancement to all employees without regard to their race or color as well as any other protected characteristics listed above. They cannot limit equal access to training unless they can show that the limitation was justified by business necessity—for example, it’s required by state law or a collective bargaining agreement—or required by a bona fide occupational qualification defense that applies equally across races and genders.
Do Women Earn Less Than Men?
We know that women earn less than men in nearly all occupations. But just how much more do they get paid?
According to Global Gender Gap Report, “Another generation of women will have to wait for gender parity, according to the World Economic Forum’s Global Gender Gap Report 2021. As the impact of the COVID-19 pandemic continues to be felt, closing the global gender gap has increased by a generation from 99.5 years to 135.6 years.”
To Sum Up Pay Equity
Pay equity is important. In fact, it is imperative that companies pay their employees fairly and equitably. Paying women less than men for the same work reinforces a system of discrimination and inequality. It perpetuates negative stereotypes about women and their capabilities in the workplace, hurting both individuals and our society at large by denying us access to opportunities we should have as equals.
The gender wage gap affects everyone—not just women. If you believe in fair treatment for all people regardless of race/ethnicity or gender identity/expression then you need to stand up against pay inequity in your workplace as well!
In the end, pay equity is about equal pay for equal work. It’s about creating an environment where everyone has the opportunity to earn the same amount of money for doing the same job. It’s a complicated issue with many different factors at play, but if we want equality in our society then this is something that needs to be addressed sooner rather than later.