Transcript of How to Reduce the Gender Wage Gap with TEA
You can also listen to this episode at the link below:
Cathy: Welcome to Parity, a podcast for everyone ready for a workplace of true gender parity with equal numbers of women and men at all levels of organizations including the coveted top positions. Women have had the right to vote for 100 years, but experts believe that we will not achieve workplace parity for another 135 years! 135 years is a long time, friends, to wait for equality. The goal of this podcast is to accelerate this change by being a coach, mentor, and trusted friend for all of you who are ready now.
I’m Cathy Nestrick. Waiting for 135 years until we achieve workplace parity is not ok with me, and that is why I was motivated to start this Podcast with my good friend Deborah.
Deborah: I am your co-host Deborah Pollack-Milgate. I am committed to a workplace where everyone can thrive. Until we collectively address the obstacles in women’s way, we won’t have this workplace you and I dream of. And what a year of obstacles we’ve come out of with the pandemic. Cathy, I’m so happy to be with you today to address a critical issue that’s really the antithesis of parity.
Cathy: Listeners, in today’s episode we are going to talk about the gender wage gap. Specifically, we will touch on
what the gap is, how it is measured, and why it is so difficult to reduce it,
how L'Oréal, Starbucks, and Salesforce are getting it right, and
action steps that we can all take to reduce the gap
As always, we will bring you current data and give you concrete takeaways so that you can make good decisions for yourselves individually and also so that you can make change within your organizations.
Deborah: Cathy, as I looked through the research out there on this issue, what occurred to me is that the wage gap is really the visible effect of everything you and I have been talking about. Unconscious bias, the motherhood bias, workplace culture, the failure to promote women – all of this culminates in a gap in what women are paid.
Cathy: That’s exactly right. You and I started Season 1 talking about how women begin falling behind at the very first promotion, even though women earn more college degrees than men. The wage gap is where the rubber hits the road as they say. When we aren’t hired and promoted at the same rates as men, we earn less. Bias has long-term, negative impacts on our pocketbooks.
Deborah: I have to confess here that I had not been paying enough attention to the gender wage gap. Frankly, I’ve had a knowledge gap. For example, I didn’t know how experts were calculating it. I know that men out-earn women generally - but how is the gap measured? Cathy, can you walk us through that?
Cathy: There are various ways of calculating this gap, but a critical point is that regardless of the actual methodology, all calculations support the conclusion that women on the whole earn less than men. And the gap is even wider for most women of color.
Deborah: Yes, it is telling that the only real point of contention between the experts concerns exactly how large the gap is. But no matter how you slice it, the gap is real and large, and unacceptable.
Cathy: American Progress is one of the top experts in this field. When they measure the overall wage gap, they do not compare job to job earnings - in other words, they don’t look at what one female customer service rep makes vs. a male customer service rep. Or what one female engineer makes vs. a male engineer. Instead, they look at all earnings of women and compare it to all earnings of men, for those people working full time in the United States. It doesn’t matter the kind of job, profession, or industry. All full-time wages are included.
Deborah: We could very quickly get bogged down if we tried to gather all the data at the individual job level. Plus, job titles are not standardized. A job for a Data Analyst at one organization may mean something entirely different at another organization. These inconsistencies have always made me wonder how you can even calculate the pay gap.
Cathy: Plus by calculating total earnings of women vs. total earnings of men, we are able to see the impact of gender stereotypes, which has a funneling effect of pushing people into certain jobs based on their gender. For example, women have been funneled into jobs like being a teacher or child care worker or retail clerk. These jobs have lower pay and fewer benefits. While some men are in those roles, they are underrepresented in these lower wage jobs. Men on the other hand, have been funneled into jobs like construction and manufacturing and management, into jobs with higher wages and more benefits.
Deborah: This reminds me of the work that we did in Season 1 when we did internet searches on words like “professor” and “minister” and “doctor.” For these terms, the search engine generally found images of white men and not images of women or people of color. If there was a woman who popped up, she was the “woman Professor” - she couldn’t be the stereotype of a professor or doctor. The funneling of people into certain jobs based on their gender is reinforced by our environment - what we see on the internet and in movies, and what we read in books, and it is often reinforced by our peers and family.
Cathy: Funneling has real economic consequences. When women are funneled into female dominated professions and industries, they are signing up for low-pay jobs with little or no benefits. Conversely, when men are funneled into male dominated professions and industries, they are signing up for the best paying jobs.
Deborah: Cathy, the counterargument out there is that this is not funneling at all. Women have chosen their own low-paying careers, the argument goes. But even if you accept that Cathy, this funneling doesn’t explain the entirety of the gap, because other studies also show that women are being paid less for the SAME work.
Cathy: You raise an interesting point about women choosing their own low-paying jobs. But we don’t have the free will that your point suggests. Whether we know it or not, we are under pressure to conform by being “funneled” into jobs that are female dominated. It takes an effort to ignore and even counter this pressure by choosing a different career path. And then in fields where women dominate, like teaching for example, we earn less than we should because women are generally undervalued, so society pays everyone in the teaching sector less than they should be paid.
Deborah: The gap is also much worse at the top regardless of whether women are working in male or female dominated professions or industries. For women who have climbed up within organizations, the wage gap tends to grow as we climb. Among the highest earning women and men - think doctors, corporate executives, and accountants - the gap is the largest. At the top percentile of wage earners, women earn only 73% of what men earn. The gap is more narrow as income levels go down.
Cathy: Listeners, let that sink in. The women who have overcome obstacles to get to the top of the corporate ladder, may find themselves at a greater disparity with their male counterparts than ever before. We should also point out the role of gender bias on income. When a man is promoted instead of a woman due to unconscious bias - which as we’ve discussed happens a lot of the time - then the man will earn more as a result of the promotion.
Deborah: Yes, and this leads to fewer women in those top earning positions. So we’ve got fewer women at the top, and those at the top are earning less.
Cathy: To sum it up, (a) women are funneled into lower-paying fields and men into high-paying fields - regardless of whether we even recognize that we are being funneled by the pressure of gender stereotypes, and (b) for those women fortunate enough to climb the ladder, the wage gap will tend to grow as we move up. We may start our careers earning close to our male peers, but by the time we retire, we will be earning substantially less.
Deborah: There are a couple of other reasons why the wage gap is so difficult to eliminate. The first is that some women, in fact many, become mothers. As we have seen so vividly during the pandemic, women are more likely than men to leave the workforce to care for children and aging parents. The “care economy” as some call it, often falls on our shoulders. Everytime we leave the workforce, we take a hit on our income when we re-enter the workforce, not to mention the position we may be qualified for.
Cathy: The other major reason for the wage gap is just more of that old-fashioned gender bias, right?
Deborah: You guessed it! I have been reading a really nicely-researched and lengthy report from the Economic Policy Institute, on the Wage Gap. It’s a little dated now - from 2016, but in that report the authors focus on a few things that are interesting. They talk about (1) motherhood, which we have mentioned. They also talk about what they call “unobservables” and societal norms. I really like the word unobservables, which seems to be a description of unconscious bias, maybe before that term became mainstream.
Cathy: Unobservables is a good way to describe unconscious bias - because it is a phenomenon that is really hard to see. As women, we also do a lot of caregiving, and that is “unobservable” outside the home.
Deborah: And Cathy, they also do a complete take-down of the notion that education can have anything to do with the gap, focusing on the fact that women outdo men at every level in terms of graduation rates and grades. They say expressly that women cannot outrun this issue by educating themselves into higher pay.
Cathy: Deborah, this is such an important point. Women earn more advanced degrees than men in this country. And we recently saw that Black women are the most educated group in the United States.
Deborah: Yes. Not even the most educated group of women. The most educated period. Black women are enrolling in and graduating from school in the highest percentages across racial and gender lines. And yet we know that Black women and other women of color have even greater obstacles in their way. And one last thing from the Economic Policy Institute article. They note that - like we did Cathy - that with the very first opportunity for a promotion, more men are promoted than women, despite the fact that women in general come into the workforce with more education.
Cathy: McKinsey refers to this phenomenon as the missing rung. The only explanation for the missing rung is gender bias. Deborah, now that we understand how the gap is measured and why we are having a hard time eliminating the pay gap, let’s discuss how big it is. Can you kick off that discussion?
Deborah: Sure, for every $1 earned by a man in the United States, a woman earns $.82. When you add in race, the wage gap is larger for most women of color because of the compounding impact of racial bias. Let me break this down by race and ethnicity so that you can see more clearly what this means. For every $1 earned by a man:
$.90 is earned by an Asian woman
$.79 is earned by a White woman
$.62 is earned by a Black woman
$.57 is earned by an American Indian or Alaskan Native woman
$.54 is earned by a Hispanic or Latina woman
Cathy: The earnings for Asian women are complex. If you aggregate all Asian women, then as a group, they do earn $.90 for every $1 earned by a man. However, Asia is a vast continent with many different cultures and ethnicities, and the wage gap for Asian women generally depends upon their nationality. For example, for every $1 earned by white men, Filipino women earn $.83 cents, Tongan women earn $.75 cents, and Nepali women earn $.50 cents.
Deborah: Listeners, we should also point out that Black men and other men of color also experience wage gaps relative to white men.
Cathy: Listeners, as you can see from these data points, intersectionality matters. Race, nationality, and ethnicity impact the wage gap, usually in a negative way as compared to white women. Additionally, women who identify as LGBTQA+ or have a disability, also have larger wage gaps due to biases beyond just gender.
Deborah: Wage gaps have a profound economic impact on women. Each year, women earn about $10,000 less as a group than men, and over a lifetime, we earn over $400,000 less as a group than men. This is hard for me to stomach. This is the cumulative effect of all of what we’ve been talking about - the motherhood penalty, the missed opportunities, and the I’ve decided to give the promotion to him and not you, and the woman who leaves her high paying job to get away from the toxic culture.
Cathy: Hold on to your hats listeners: Women as a group earn about $550 billion less than men each year, just in the United States. There is a real cost to bias and as women, we are living it every day.
Deborah: That number makes me cringe and do other things I won’t talk about. Cathy, I think we have collectively taken our listeners straight to the bottom!
Cathy: Yes, so it’s time to work back up. Let’s now talk about some companies that are making headway to reduce the gender pay gap. Before we talk about the companies, let’s talk about why any company is trying to reduce the pay gap. Today, companies are motivated to reduce the gap because we as their employees, customers, and investors are not happy with the gender pay gap because the pay gap is unfair.
Deborah: Yes it is. And we’ve seen that most people care about fairness.
Cathy: LeanIn.Org conducted a study and found some really interesting data about people’s views on the wage gap. Basically, they found that people disagree with the gap and think it’s wrong:
75% of Americans think the gender pay gap is unfair
only 16% think companies are doing enough to close it
66% of Americans are less likely to buy a product from a company that does not pay women fairly
I think the last data point is the most telling. Companies are putting their reputations at risk if they don’t take steps to close the pay gap.
Deborah: These data points don’t surprise me because fairness is important to people. And keeping employees happy has always been a concern, but it is even more so now that we’re living in the midst of the Great Resignation where many people are re-evaluating where they are working. I can guarantee you, if an employee believes she is earning less than her male counterpart for the same work, she will move on when she has a better opportunity. The tough part is knowing whether you individually are being paid less for the same work or not being promoted because of your gender? These are the unobservables! But let’s talk about the companies we can learn from. Who is out there making progress on these issues?
Cathy: Believe it or not, there are some companies performing wage audits and they are making information public. Listeners, a wage audit is when a 3rd party comes in and evaluates how people are being paid and specifically, they are looking at gender, race, ethnicity, abilities, etc. to measure whether people within an organization are being paid fairly and without bias. L'Oréal is an example of a company doing this. Angela Guy, L'Oréal's chief diversity and inclusion officer, hired a global company to do a pay equity audit and they received a certification confirming that they are paying people fairly. L'Oréal is the only company that has done a global pay equity audit of all their employees for not only gender but also race, ethnicity, ability, and LGBTQA+ status. They have set the bar very high.
Deborah: They absolutely have set the bar high - but it’s also just common sense and the right thing to do.
Cathy: I really like what the L'Oréal officer said about the certification. She said that it “gives us the confidence that our commitment is real.” Deborah, they aren’t just saying the words and publishing “feel good” press releases - they are taking real action. The company that they hired to perform the audit is Edge. For those of you interested in understanding more about the gender-focused Edge assessment and the Edge Plus assessment (which incorporates race and other factors), we will drop a link in the show notes.
Deborah: Starbucks is another company that is really trying to make a difference. They have published their commitment to achieve a zero pay gap and they have listed a number of things that they will do to achieve their goal including:
Basing starting wages on a published schedule, so hiring managers won’t have discretion to pay their buddies more
Forbidding asking employees what their previous income was because this has the effect of keeping pay gaps in place
Offering family leave, sick days, and child-care days
Making pay raises based upon metrics, and non-discretionary
There are a few additional action items that they are taking, but these are the highlights. I’m especially intrigued by the policy of granting pay raises based upon metrics, because that directly addresses the missing rung McKinsey has talked about.
Cathy: I knew I liked Starbucks and I’m very happy to pay extra for my tea (listeners, I’m not a coffee drinker but I do like me some Starbuck’s tea) to help support their commitment to pay women equally. The final company that we want to highlight is Salesforce. They conduct annual pay equity audits and publish the results. In 2021, they found that 3.5% of their global employees required pay adjustments as a result of the audit. 81% of the adjustments were based on gender, and 19% were based on race or ethnicity. As a result, Salesforce spent $3.8 million in additional wages just in 2021 to address these unexplained differences in pay. They’ve been doing these audits since 2015, and in total, have spent about $16 million to date to make their incomes fair. They are putting their money where their mouth is. Kudos to Salesforce.
Deborah: Yes, kudos to all 3 of the companies that we highlighted. And listeners, we have some solutions for you to consider within your current organization. You can also use these tips to evaluate new employers as you look to see how they handle the gender wage gap.
The first big solution is Pay Transparency: Companies can follow the lead of Starbucks and rely on formulaic starting offers and wage increases so that managers don’t have discretion to give their pals higher salaries, and promote them over women. Also, companies can publish salary ranges for new hires so that people have a better understanding of what to expect.
Cathy: That’s a good call-out. I agree that pay transparency is big because if leaders know that the gaps will become public, they will make adjustments. Another solution is not to ask people in interviews what their current salary is. If you are interviewing a woman, she may be making less than she should due to the gender wage gap. If you just pay her a little more to move to your company, then that wage gap will follow her. And listeners, if you’re in an interview and you are asked this question, politely decline or deflect if you can.
Deborah: Yes - it's time to pay everyone a market rate. And as an employer don’t make assumptions about what you think a woman needs to earn versus a man. Too often, indirectly we think the man has a family to feed and the woman does not. Not only is this unlikely to be true, it’s beside the point. We need to pay equally for equal work.
Solution 3: We live in a world with major consolidations. If you are within an organization where there are frequent acquisitions, that is your opportunity to make sure that pay is fair across the map as the new organization is brought on board. It’s not fair to the old or the new employees if the salaries are not aligned. And even when there is not consolidation, do your homework. To the extent other organizations are transparent in their pay scales, that is another opportunity to adjust how you handle wages across the board.
Cathy: Yes, back to transparency - if organizations say that they are paying everyone fairly, then let’s see it. The next solution centers are male allies. As we’ve said before, male allies, we need you to lean in!
Deborah: You like saying that, don’t you?
Cathy: Yes, I wish Sheryl Sandberg’s original approach had been encouraging all of us to lean in and not just women. But we are making this correction for her. And male allies, you can also help narrow the wage gap by being an equal partner to your spouse, girlfriend, and/or mother of your child by the work you do at home. Don’t thrust the burden of caring for children, the house, and aging family members on your female partner. Instead, lean in and partner with us so that we can not only care-give, but also continue working - just like you. Because if we drop from the workforce - even for a short timeframe to care for others - we will pay the price in our wages and career track when we try to go back.
Deborah: Yes, the gaps away from work are very detrimental to a woman’s career. And you know, allies, even when women take up this burden, and don’t complain, a more equitable arrangement is really better for the long-term health of the relationship. But now I’m outside the scope of our podcast I fear!
Cathy: Maybe, maybe not. But I also want to add that the children are watching. If they see the adults in their lives sharing caregiving equitably, then they will do the same thing when they grow up. If you want your daughters to have the same opportunities at work as your sons, then show them the way. Be a role model for how their life partner should behave at home.
Deborah, my entire family just oohs and ahs over my husband because he is that role model - he cooks meals for large family gatherings, he’s one of the first ones to stand up after a meal to clear the table, etc. - and I guarantee that his behavior is impacting what my daughter and my son are looking for in their life partners.
Deborah: That is a great point, Cathy. Role models really are critical. And that takes us to Solution 5: Educate others about the harmful effects of gender bias, starting with yourself. The gender wage gap is the result of the biases that women face. The more we talk about and teach others about unconscious bias, the less there will be in our society. To better understand bias, we have several resources for you and we’ll drop links in the show notes.
Cathy: Yes, Deborah, it always comes back to unconscious bias. Listeners, the next solution is to encourage your organization to conduct a gender pay gap audit. Talk to your HR or D&I team about this possibility. Not only is it the right thing to do, but it also helps you build a more loyal customer base and workforce. Clearly, L'Oréal, Starbucks, and Salesforce have benefited financially from their highly publicized efforts in this area so you can also sell it as a PR effort.
Deborah: I love the idea of the audit. And Cathy, I’m going to say - along the lines of you purchasing tea from Starbucks that it is TEA time. T-E-A, not T-E-E. That stands for Transparency, Education, and Audit because I think those three are the big takeaways for how we make change to reduce the pay gap. Have transparency in your pay scale, educate yourself on what others are doing and bias as it affects the pay gap, and audit your company to see how it is performing.
Cathy: TEA is a great way to sum up these tips.
Listeners, that brings us to our segment Parity in Play. Today, Deborah and I would like to talk about the discourse surrounding President Biden’s promise to nominate a Black woman to the United States Supreme Court. Some of the discussion has been positive and supportive, but so many people are showing their bias. Their unconscious bias is now out in the open for all of us to see. It is no longer “unobservable.”
Deborah: Yes, this is really a discussion that is crying out to be had. We have heard such diverse reactions, everything from praise to elation, to the suggestion that selecting on the basis of gender and race in a candidate will lower standards, or that it is improper to base a decision on a nominee’s race and gender.
Cathy: So let’s look at this through the lens of the parity prescription. What lessons can we glean, Deborah?
Deborah: Well, first off, when, historically, only white men were in the pool of candidates to consider, no one was complaining that only selecting from one group, in that case, White men, would lower the standards of the Court.
Cathy: Oh, now that’s funny. So the court was founded in the late 1700s and the justices were all White men until the appointment of Thurgood Marshall in the 1960s. For almost 200 years, we only considered candidates from one demographic group - White men. Are these people arguing that all of those justices were incompetent because we only considered White men for the appointment?
Deborah: Logically, that is their argument, but of course that’s not at all what they’re saying. In their point of view, 200 years of considering only White men was ok, but it’s not ok for us to consider only Black women today. And on top of this outright bias, the way they are having this conversation is hurtful to us all, especially Black women, and it is damaging to parity. But here’s the dilemma I see for women. We were not selected for such high positions throughout the history of this country because of our gender. And then when we finally are selected we are said to be selected – wait for it – because of our gender.
Cathy: Yes, we have been discriminated against and Black women even more so, and then when we are finally entrusted with a position of power, some will argue that we don’t deserve it.
Deborah: Yes, we can’t win. If I win a new client, there is always the suspicion that it is because of my gender. And at the bottom of all of this is the assumption that white men are inherently more qualified; therefore, if you make a selection that does not include this group, the logic goes, it was because of gender, or because of race. And further the very wrong suggestion is that this results in lower standards because you’ve excluded white men when the reality is there are a lot of qualified Black women to choose from - just as there were white men.
Cathy: Yes, which is a nice reminder of our earlier conversation that Black woman are The Most Educated Demographic in the US, so there will be plenty of excellent candidates to choose from. But I want to go back to your earlier point. I agree that too many people will never give the next Supreme Court Justice a chance which is a tremendous loss for us all. But there is a win in all of this too. We are in the process of putting more women and women of color into positions of power - whether they are elected to a local office, make it to the highest levels within their organization, or are appointed to the U.S. Supreme Court. And as we see these women in positions of power, more of us will begin seeing that women are just as competent as men. And unconscious bias will reduce over time.
Deborah: I agree wholeheartedly. And I am excited about a world where we don’t have to call out race or gender. Where all women, all people, would be considered for their qualifications without a prompt - preferably we would achieve this goal sooner than in 135 years.
Cathy: Yes, and I think that the appointment of a Black woman to the U.S. Supreme Court is a small step towards the end goal you just described. As we look back on this discussion, we should keep in mind 2 elements of the Parity Prescription:
Recognize Unconscious Bias - we can see the harmful effects when people speak out publicly without checking their own biases
Intentionally Include - if the conversations were centered around the idea of intentionally including everyone, we would see a more humane and thoughtful conversation
Deborah: Listeners, that’s a wrap. In today’s episode, we covered a lot of ground including:
-how the gender pay gap is measured, why it is so difficult to reduce it, and just how big the gap is
-how L'Oréal, Starbucks, and Salesforce are building more equitable pay structures
-action steps that we can all take to reduce the gap
Cathy: And you suggested we should have some TEA: Transparency, Education, and Audits
Deborah: During our next Episode, we will be returning to unconscious bias, to help you be better equipped to identify it and combat it wherever you see it.
Cathy: Please know that we are here to help you. Tune in while you are warming up by the fireplace, shoveling snow, or sipping tea.…. We now have time-stamped show notes. You can find links to resources that we mentioned in today’s episodes, as well as links to find us on social media and our webpage.
Deborah: Thank you for supporting the Parity Podcast. If you enjoyed this episode, then please:
1. Rate and review us on Apple and Spotify; and
2. Give us a shout-out on social media and with your friends
With your help, we are building the perfect community for our ongoing discussions.
We hope to connect with you again soon so that we can make progress with the Parity Prescription!
