Transparent pay practices eliminate the gender pay gap in an organization, according to a new in-depth report by PayScale Inc.  

The analysis looked at 1.6 million survey responses on compensation collected between September 2017 and September 2019 and compared it to three previous two-year data sets.

Not all races, genders treated equal

While the gender pay gap is decreasing overall, PayScale says a “significant” disparity remains between the way women and men are compensated — and the gap is more pronounced for women of colour.

“While only 3 per cent of all White women make it to the executive level of an organization (compared to 6 per cent of White men), only 2 per cent of Asian, Black, and Hispanic women make it to the C-suite,” reads an excerpt from the report.

Women of colour who climb to the highest levels of management continue to earn less than their male colleagues, taking home about $0.63 for every dollar a white male executive makes.

“Even when we control for compensable factors, Black women who are executives get paid $0.95 cents for every dollar a White man with the same qualifications does,” the report reads.

PayScale attributes the pay gap to societal pressures placed on women as well as inherent bias, which can “seep into performance reviews” and “disproportionately affect people of color.”

While all races were equally likely to ask for a raise, women of colour were 19 per cent less likely to receive one when compared to a white man.

Men of colour were 25 per cent less likely to receive a raise in comparison to a white man.

Education, degrees matter less when you’re a woman

The report finds that wage gaps are greater for women with advanced degrees, a conclusion that aligns previous research: a paper published in July 2019 found that white women and minority candidates with 4.0 GPAs who apply for jobs in STEM fields are treated the same as white male candidates with 3.75 GPAs — a gap the authors attributed to unconscious bias.

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“Employers do not value education/degrees equally among men and women,” reads the PayScale report.

“Our data shows that employers tend to undervalue degrees when they’re earned by women: employers pay women less than men at every education level, after controlling for other compensable factors.” 

Transparency eliminates bias

PayScale finds that all women earn $0.80 cents for every $1 earned by a man. In situations where factors are controlled — meaning the job title, years of experience, industry, and location are the same and only differentiation between workers is gender — women earn $0.98 for every dollar an equivalent man makes.

But the $0.02 pay discrepancy disappears in organizations that make earnings transparent. In those companies, women earned an estimated $1 and $1.01 for every dollar earned by men, eliminating the gender wage gap.

“This latest research shows just how powerful transparent pay practices can be for organizations,” PayScale CEO Scott Torrey told the Associated Press.

“When employers use real market data and talk openly with employees about their pay, it serves to challenge the underlying bias that can impact decisions about compensation. Most employers want to ensure they’re paying fairly, so we encourage HR departments and senior leaders to adopt transparent pay practices as an important step toward achieving this goal.”

Exceptions

Not all industries achieve gender parity with transparency. Women employed in male-dominated fields — like manufacturing, maintenance, and repair jobs — still typically earn less, the report finds.

Food services, retail, accommodation, and customer service also have gender pay gaps.

“These industries are generally long-standing blue-collar industries where there is a lot of turnover,” Wendy Brown, director of content marketing at PayScale, said in an emailed response to HR Drive. She posited that transparency may be limited in these industries due to lack of access to compensation software.  

Image courtesy: Unsplash. Edited by We Rep STEM.