The Truth About Wage Gap

As the push for social justice and equality begins to take mainstream action, the term “pay gap” should be one most commonly heard, especially in the workplace. Pay gap, sometimes referred to as wage gap, refers to the unadjusted difference between median earnings of one demographic relative to the median earnings of another. For instance, in 2016, women who were full-time wage and salary workers earned 82% of what their male counterparts made, according to a 2017 study by the U.S. Bureau of Labor Statistics.

Racial Wage Gaps

When the term ‘pay gap’ is brought up, it most commonly refers to the difference in earnings between male vs. female workers; however, one disparity that is often overlooked is the pay gap that exists between different races in the workforce. While differences in wage among genders have narrowed over the years, a large discrepancy among workers of different race still remain. According to research by the Pew Research Center, in 2015, average hourly wages for African American and Hispanic men equated to $15, while white men earned an average of $21 per hour. The racial wage gap has not only existed for decades but has become increasingly apparent in recent studies. The Society for Human Resource Management released an article showing a 5 percent increase in pay gap between African American and Caucasian over the last thirty years. In 1979, wage gap for those demographics were 16.9, whereas of 2015, the gap increased to 22 percent.

Statistics for African American women workers yielded similar results; in 1979, the pay gap between African American women and Caucasian women working was at 4.5 percent, whereas it’s since increased to 11.7 percent. While education, and the lower shares of minority races with college education, can attribute to part of the average national wage gap, there is still a large disparity in pay between college-educated African Americans, Hispanics, and women and college-educated white men.

Wage Gap Among States

The gender pay gap exists in almost every congressional district and varies by state. States such as New York and California have passed laws that have marginalized their gender wage gap below the national average to where women earn on average 89% of men in respective fields; however, states like Louisiana are much farther behind on the issue. In 2016, median annual earnings for women in Louisiana equated to a mere 70% of that of men. While Louisiana has equal pay protections in place, most of the legislation only covers pay protection to public employees- just 17% of the population.

In March 2017, Governor John Bel Edwards partnered with United Way of Southeast Louisiana to host the Equal Pay Summit. The Summit acted as a platform for discussion on the condition of pay equity and public poverty in the state of Louisiana. Panels of business leaders and state representatives joined hundreds of attendees in the discussion of equitable pay and passing equal pay legislation in Louisiana. For a recap and more information, visit http://bit.ly/2nPoaOT

Making Progress Towards Equity

In 1963, President John F. Kennedy signed the Equal Pay Act (EPA) to “prohibit arbitrary discrimination against women in the payment of wages.” More than 50 years later, the pay gap persists and has become a public issue. With the surge of the Internet and online media, more issues regarding pay discrimination have been brought to light, and more people are joining in the battle to fight the inequality. In 2017, state legislators introduced approximately 100 bills related to equal pay in over 40 jurisdictions. On September 29, 2016, the Equal Employment Opportunity Commission (EEOC) issued a new act that requires businesses to provide employee pay data by gender and race. The act, effective beginning March 2018, is geared towards identifying possible workplace discrimination among employees of different genders or races.

In addition to Federal regulation, state legislators are also taking action in preventing pay discrimination. One trend that is happening among states is the prohibition of employer inquires of previous salaries. In other words, employers are unable to ask or even consider a candidate’s pay history when determining potential salary for a job. Another trend we see occurring is the redefining of “equal pay standards” among states.  The EPA initially requires “equal pay for equal work” from employers; however, some states have proposed legislation that requires equal pay for “comparable work” and work of “comparable character.”

Conclusion

As an employer, it is important to be up-to-date on pay disparity and the laws, both federal and state (and local), that surround the issue. Employers should remain vigilant to not only ensure compliance with regulation, but to promote a fair and balanced workplace for employees. Here are some approaches that businesses can take to help promote fair pay and wage equality in the workplace (via SHRM):

  • Train supervisors to avoid wage discrimination. Ensure that all supervisors and managers know how to make employment decisions based on legitimate and nondiscriminatory reasons.
  • Document guidelines for salaries and bonuses. Ensure that salary guidelines and requirements for bonuses (whether based on merit, productivity, sales or commissions) are well-documented and based on fair, objective, predictable and measurable criteria. This information should be clearly conveyed to employees so that they understand the employer’s expectations.
  • Be ready to defend all employment decisions. Ensure that all decisions regarding pay, performance and promotions are carefully documented. Doing so will serve as a defense in case of a claim of wage discrimination.
  • Audit pay practices. Ensure that differences in pay for the same or comparable positions are based on legitimate and nondiscriminatory factors and supported by written documentation. If they are not, take action to correct this situation.

At Frazee Recruiting, we look to match candidates of all backgrounds with employers, emphasizing the importance of fair trade and equity in the workplace. From temporary hire to executive placement, we are dedicated to helping companies and job seekers find the right match for their skills. Call us today at (225)-231-7880 or visit us at frazeerecruit.com to learn more.