gender pay gap

The Gender Pay Gap is Actually More Significant Than You Think

Most people know women in the U.S. make around 80 cents for every dollar a man earns. So, the gender pay gap for women in this country has long hovered around 20 percent. But recent research from the Institute of Women’s Policy Research (IWPR) suggests this number may be much more significant than we previously believed.

In this article, we’ll tell you what this new research found and what it means for your employees. Plus, we’ll let you which 5 benefits you can use to reduce the gender pay gap.


The Tale of the Tape

According to the study by the IWPR, in 2017, the gender earnings gap was 20 percent. Which means women earned 20 percent less than men. This figure is based on the ratio of women’s to men’s median earnings for full-time, year-round work. Though, as the study argues, this commonly used annual figure likely understates the problem.

So, the authors of the study decided to analyze the gender wage gap over 15-year periods, rather than year-to-year. Using a longer time frame yielded compelling results for the researchers. A multi-year analysis provided a more comprehensive picture of the gender wage gap.

Researchers measured total earnings across the most recent 15 years for all workers who worked in at least one year. Through this multi-year study, researchers found women workers’ earnings were 49 percent of men’s earnings. Which puts the actual women’s wage gap at 51 percent. A much greater figure than the 20 percent that’s typically used.

But, that’s not the only interesting number this study uncovered. According to the researchers, the penalties for taking time out of the labor force are a primary driver behind the gender pay gap.

Annual earnings were 39 percent lower for women who took just one year off from work, compared to those who worked all 15 years. This 39 percent is a much higher cost than women faced in the period beginning in 1968. During that 15 year period, one year out of the workforce resulted in a 12 percent reduction.

It’s important to note men are also penalized for taking time from work. But this penalty is significantly less for men than women. Per the IWPR study, women’s earnings losses for time out of the workforce are almost always higher than men’s losses.

Similarly, an essential part of the gender pay gap has been women’s weak labor force attachment. A total of 43 percent of today’s women workers had at least one year with no earnings. This percentage is close to twice the rate of men.


What Can Your Business Do?

As a business owner or employer, you’re not able to address some of the deep-rooted societal issues that are responsible for the current gender wage gap. Still, there are multiple actions any organization can take to help improve this disparity in women’s pay. Here are the benefits your firm can use to reduce the gender pay gap:


1. Paternity Leave

Paternity leave is the first benefit your business can use to decrease the gender wage gap. As the research noted above points out, women who take time out of the workforce make significantly less money over their careers than their peers. This phenomenon is especially prevalent in the U.S.

In 2014, research from Harvard economist Claudia Goldin reinforced this fact. Per Goldin’s research, the wage gap in the U.S. was largest for women in their 30s. In other words, the gender pay disparity is greatest for women in the U.S. during women’s prime, childbearing years.

This research exposes the bias behind another couple of shocking statistics that illuminate the roadblocks to equal pay for women. Per A Uterus is a Feature, Not a Bug, working mothers are half as likely to be promoted and earn an average of $11,000 less in salary.

Paid maternal leave is the obvious solution to lessen the impact of the obstacles facing working mothers. But maternal leave only creates another difference between working men and women and does nothing to alleviate the stigma attached to taking paid leave to care for your child.

Instead, your firm should offer paid parental leave to push both working mothers and fathers to take time off for the birth or adoption of their child. The more working fathers take leave, the more we challenge the notion that males should be a household’s breadwinner, and females the caretaker.


2. Development Opportunities

Career development opportunities are the second benefit your firm should use to address the gender pay gap. According to research by the Work Institute, the top reason for employee turnover was a lack of career development opportunities. Similarly, a WorldatWork study, from earlier this year, found the most significant increase in total rewards during the next 3 to 5 years will be in career development.

woman typing

Similarly, last year, the Employee Experience Index uncovered which practices are vital for an employer to create an enticing working experience. The number three most crucial part of the employee experience was feedback, recognition, and growth (all components of development).

So, your employees desire development opportunities. That can be good news! Your company can use career development to help narrow the gender wage gap. For example, implement a program that builds the skills of women who’ve taken time out of the workforce.


3. Flexible Work Options

The third benefit your business should consider is flexible work options. Flexible work options include flexible location, flexible schedule, and flexible time. Each of these options gives working women, especially working mothers, flexibility to work around the other demands of their lives such as childcare or caring for an aging parent.

A Gallup poll found 53 percent of stay-at-home mothers say flexible hours or work schedules are a significant factor in their ability to take a job. Flexible work options could help attract and retain valuable female employees who otherwise wouldn’t even consider taking the position.


4. Return to Work Program

Another compelling benefit for working mothers is a return to work program. Providing extended paid time off, such as paternity leave, is a tremendous benefit for working moms. But when an employee takes an extended leave, there needs to be a plan to reintegrate these employees back into the workforce.

Plus, return to work programs can be used for more than just returning parents. Employees with disabilities, recovering from an addiction, returning from a major illness, or coming back from the birth of a child are all examples of those who would benefit from a return to work program.

Return to work programs allows employees, to slowly reacclimate to the workplace. With this benefit your staff can get comfortable again in their role at a reasonable pace. Rushing staff back from an extended absence could leave an employee overwhelmed or overstressed.


5. Monitor Raises and Promotions

The final benefit your company can use to close the gender wage gap is to monitor your raises and promotions. Another contributing factor to the gender pay disparity is the fact women are 40 percent less likely than men to receive a promotion, according to a 2017 study by Visier.

This fact holds true even though women in 2017, per the same research, were 21 percent more likely to achieve “top performer” status than men. And, women managers were 22 percent more likely than male managers to be rated as “top performers.”

Similarly, per a 2018 PayScale study, men are 70 percent more likely to be in executive roles than women, by mid-career. By late career, men are 142 percent more likely to be in VP or C-Suite roles. Additionally, per a recent Pew Research Center study, women held only around 10 percent of top executive positions at U.S. companies in 2016-17.

So, if your company wants to lessen the gender pay gap, make sure to monitor your raises and promotions. It’s impossible to close the gender wage disparity if women aren’t promoted at the same rate as men. Plus, once a woman is promoted into a leadership role, it makes it more likely even more women will be promoted within your firm.


The Wrap

Most people probably agree it’s a good thing to pay women the same amount men get paid for doing the same job. Still, how to go about achieving equal pay is less apparent for most. Your business can use these five employee benefits to attack the causes of unequal pay and turn back the gender pay wage gap.