Originally published in HR Professionals Magazine
When I was an HR newbie, I was standing in line at the credit union waiting to deposit my paycheck. (Yep, it was a long time ago!) I became incensed when I overheard two fellow employees discussing their recent raises. They shouldn’t be sharing that information with each other, and certainly not in a public place!
In those days, the two words “pay”, and “transparency” had not yet been linked together, at least not in the private sector. Today the concept of pay transparency is well known and a subject of debate.
Why has pay transparency become common in business parlance? Do a bit of reading on the topic, and you quickly discover certain words popping up often enough to become themes. Words like trust, pay gap, and diversity seem to point to underlying issues, which have pushed the concept of pay transparency to the surface.
Trust
If you have any experience administering or managing pay, you’ve likely discovered employee skepticism about most things pay related. In my experience, this skepticism is often the result of employees not understanding how they are paid. In the place of facts, conjecture and assumptions take root, fostering a lack of trust. Although employee mistrust is not a new phenomenon, it must be recognized when discussing pay transparency.
Pay Gap
PayScale’s Gender Pay Gap Report for 2020 shows women in 2020 earn 81 cents for every dollar earned by men when measuring median salary for all men and all women. When measuring the “controlled” gender pay gap, which measures median salary for men and women with the same job and qualifications, women are paid 98 cents for every male dollar. Close, but not quite there.
Then there is the racial pay gap. On average, black men in the U.S. earn 87 cents for every dollar earned by white men according to a separate report by PayScale, Racial Wage Gap for Men, May 2019. Black women who work full time year-round earn 63 cents for every dollar paid to white non-Hispanic men, according to the nonprofit National Women’s Law Center.
The gender gap has created enough of a ruckus that some states have passed legislation giving candidates and employees the right to pay information for the jobs they are applying for or being promoted into. Other states have passed “ban the box” legislation making it illegal to ask candidates about their earnings history so as not to perpetuate patterns of pay inequality.
Diversity & Inclusion Society’s awareness of the need for diverse and inclusive workplaces, where everyone is welcome and encouraged to contribute, has risen to a new level in 2020. Given what we know about wage inequities affecting people in marginalized groups, the push for real change makes it essential that companies take a serious look at their compensation practices.
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