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The UK’s Institute for Fiscal Studies last month reported that women with university degrees still earned 20 per cent less per hour than similar men, a gap that has not changed in two decades.
The British government is trying to tackle the problem with publicity. Starting in 2018, it will require all companies with more than 250 employees to publish information about average and median pay differences as well as the number of male and female employees in each salary quartile.
But sunlight may not be enough to force change. As a young reporter, I worked for the Washington Post Company, which, years earlier, had been sued for gender discrimination by some of its female employees. As part of the settlement, the company was required to disclose publicly the pay breakdown by gender for various categories of newsroom job. Each time, the gaps were visible and significant. By now, one hopes the company is doing much better. Back then, the disclosures were simply a depressing reminder of how far women still had to go.
In the US, President Barack Obama has tried to put the weight of the White House behind the issue. In June, he convened a summit on the state of American women and asked companies to sign an equal pay pledge promising to analyse their hiring, promotion and pay practices annually with the aim of eliminating inequality. President Obama followed up with a second event in August to announce that a total of 57 groups — ranging from consulting firms and tech giants to airlines and retailers — had signed up.
One of them, Intel, has already been working on such imbalances for years. The technology group tracks base pay and bonus targets by gender, ethnicity, job classification and location. Since 2009, it has been running company-wide statistical analyses to spot differences that cannot be explained by performance, education, length of service or other legitimate factors. If follow-up interviews fail to turn up a qualitative reason for the gap, the company boosts the person’s pay.
This year, Intel announced that it had reached full gender pay parity and 99 per cent parity for under-represented minorities, which it defines as people who are black, Hispanic or Native American.
It is easy to be cynical about this achievement — statistics can easily be manipulated when many factors affect pay, and gender comparisons are especially complicated when men and women do different jobs. Intel, like many Silicon Valley companies, has a serious shortage of women — just 25 per cent of its workforce is female, and they are far more prevalent in its “non-technical divisions”.
Other companies, in an effort to prove that their equality pledges are not just empty words, have gone even further and are seeking outside validation.
All of them should be applauded for trying to live up to their promises. Not only is it the right thing to do, but it also makes good business sense.
Studies by the advocacy group Catalyst and the consultancy McKinsey suggest that high levels of female participation at board level are correlated with better financial results, as measured by return on capital and return on equity.
Lower down in the organisation, the same logic applies. At a time when many companies are struggling to retain mid-career women, a sense that the company plays fair will help keep good people around. As Intel spokeswoman Ellen Healy explains: “It’s in our interest to retain employees and hire at competitive rates. People who feel they aren’t compensated fairly will go elsewhere.” I certainly did.