This month, Netflix aired an episode of their series Explained by Vox, which covered the gender wage gap in America. It’s commonly known women in the United States earn just 81 cents to every dollar a man earns.  But, this episode revealed other interesting statistics that hint at the true cause of this gender pay gap.

In this article, we’ll cover what the episode of Explained posited was one of the greatest causes of the gender wage gap in the United States. And, we’ll tell you how your employee benefits can be used to close this pay disparity. Then, we’ll detail how closing this gap can benefit your business’ bottom line.

The Gender Pay Gap – Explained

So, you might know the stat about 81 cents on the dollar, but what else do you know about the gender pay gap in the United States? Did you know this 81 percent declines significantly for women of color?

Black, Native American, and Latina women make 63, 57, and 54 cents respectively, for every dollar made by a man. And, despite making up 50 percent of the workforce, only 6.4 percent of CEOs in the Fortune 500 are women.

But, according to Vox, the key to explaining the gender pay disparity is to look at why it exists by examining where it exists. One of the biggest drivers behind the gender pay disparity is motherhood, especially in America. The United States ranks last out of 41 developed countries in the government-supported time off for new parents.

As of 2017, only 15 percent of U.S. workers received any paid family leave, according to the Bureau of Labor Statistics. This number is an improvement from the 11 percent it was in 2012 but is still far too small.

In 2014, research from Harvard economist Claudia Goldin showed how this lack of paid parental leave affects the pay disparity in America. According to Goldin’s research, the wage gap in the U.S. is the largest for women in their 30s. In other words, the gender pay disparity is greatest during women’s prime, childbearing years.

A new study by the Harvard Business Review demonstrates how even the length of a woman’s maternity leave can negatively affect their career. The study conducted an experiment with managerial staff.

Each manager received job applications which showed the applying women had taken either 12-months or one month of maternity leave. Managers who participated in the experiment found applicants who took a longer leave less desirable. And, both male and female managers held this opinion.

This study exposes the bias behind another couple of shocking statistics, 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.

What Can You Do?

Each of these statistics and studies demonstrates the reality of our country’s wage disparity between genders, especially for women who are mothers. So, as a business or employer, what can you do to help close this gap?

Well, you can start by paying women the same as you pay men. Other than that, the answer isn’t as clear as it might seem. Many people may read the information above and reach the natural conclusion that paid maternal leave is the obvious and simple solution for narrowing the gender wage disparity.

But, this answer is short-sighted and ultimately wrong. The true workplace solution to tightening the wage gap between genders is paid parental leave. Now, don’t get this last point confused. Maternal leave is still better than nothing. Still, if your firm offers only paid maternal leave, it creates another difference between working men and women.

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

Spotify was looking to reduce this “motherhood penalty” when it implemented a six-month parental leave policy, for all parents, regardless of gender or how they became parents (adoption, surrogacy, etc.). Ninety percent of employees who used the benefit within the first six months of introducing the policy were male.

Read more about which employee benefits can reduce gender inequality in the workplace.

Creating a Parental Leave Policy

The first step to creating a parental leave policy that helps close the wage gap is to make your policy clear and concise. Make sure your employees know who’s covered, how long they can take off, how much notice is required, and what paperwork needs to be filled out.

Similarly, make sure you communicate these rules to your staff regularly. You want your employees to feel comfortable and confident in taking parental leave. Your staff needs to know they won’t miss out on opportunities, or suffer professionally if they take parental leave.

Also, make sure your company’s parental leave policy doesn’t discriminate in any way. Recently, Estée Lauder and JP Morgan had lawsuits brought against them based on the company’s respective parental leave policies.

Many parental leave policies designate one parent as a primary caregiver. Designating a single primary caregiver can make your leave policy discriminatory based on gender, sex, and sexual orientation. Based on which state(s) you operate in, this discrimination can leave your business wide-open to a lawsuit.

Finally, your parental leave should include a process to move working parents back into the fold, following their leave. Part of Spotify’s aforementioned leave policy includes such a process. At Spotify, all parents get an additional month for a return-to-work transition period. A return-to-work period lets parents ease back into the workforce.

How Parental Leave Can Benefit Your Business

There are many ways parental leave, and subsequently decreasing the gender wage gap, can bring to your organization. Multiple reports and studies have detailed how valuable gender diversity is for business.

A Gallup study found gender-diverse business units in a retail company had 14 percent higher average comparable revenue than units that weren’t as diverse. Similarly, it found gender-diverse units in a hospitality company had 19 percent higher quarterly net-profits than less-diverse business units.

Improving your firm’s gender diversity, through parental leave, gives your organization different information, viewpoints, and ideas. Gender diversity allows your business to serve a more diverse customer base and helps your company attract and retain talented employees.

Paid parental leave is especially important for millennial employees. A recent poll by Unum found paid family leave ranks top among all workplace perks. Fifty-eight percent of all workers ranked paid family leave as their most desired workplace perk.

This percentage jumps even further when you look at only millennials. A total of 64 percent of millennials polled, ranked paid family leave as their top workplace benefit. This makes sense because millennial households are two times more likely to have both spouses working.

And, the number of millennials in the workplace is only rising. By 2025, millennials will make up 75 percent of America’s workforce.

The Wrap

It’s 2018, and most people understand there is a real gender wage gap in the United States. Still, many don’t quite understand why this wage gap persists. Thanks to years of research and discussion, we now understand the “motherhood penalty” is real.

Now, the key is to take this knowledge and turn it into tangible change. Use your firm’s paid parental leave to close the gender pay gap and reduce this motherhood penalty.