Adjusting the Raw Gender Pay Gap

Adjusting the Raw Gender Pay Gap

While it is commonly noted that a 75% to 80% aggregate differential in pay exists – the average woman’s salary comprises 75-80% of a man’s earnings – the great disproportionality between women and men in terms of the types of jobs they hold suggests that without context, this isn’t a very useful fact. Therefore, many researchers have attempted to account for that context.

Modern Perspectives on the Gender Pay Gap

Indeed, the pay gap has been a subject of academic inquiry recently. Researchers have set out to determine whether there is indeed a pay gap, and if so, where it lies. Numerous sources have weighed in with their perspectives. The U.S. Department of Labor, for one, made the following statement in 2016:

“Differences in the attributes of men and women [work schedules, family responsibilities, and industry/occupation] …account for most of the wage gap. Those variables… collectively account for between 65.1 and 76.4 percent of a raw gender wage gap of 20.4 percent, and thereby leave an adjusted gender wage gap that is between 4.8 and 7.1 percent.”

Yet, as the American Association of University Women stated in 2012, while factors such as occupation and hours worked help us understand the pay gap, “these differences do not fully explain it.”

Thus, there are skeptics on every side of the debate, and for good reason: information has been extrapolated from sources that are not comprehensive or precise. The U.S. Bureau of Labor Statistics, for instance, does provide real data, but fails to encompass specific job levels and years of experience. Self-reported research could likewise be imprecise. Studies of all graduates of a particular graduating class, for instance, may be too localized and not broad enough. What has been lacking is the kind of compensation data sources designed for the specific purpose of collecting robust and comprehensive pay information directly from employers on a precise job-by-job, level-by-level basis.

How Compensation Surveys Have Changed

Until very recently, compensation surveys have not included gender. This is largely due to the simple fact that the majority of U.S. employers have been unwilling to share it. The U.S. business landscape is characterized by a culture of legal risks, and corporate compensation departments are often advised by legal departments to avoid supplying gender data. Yet, things are changing. According to an HRsoft survey, 50% of companies polled now participate in compensation surveys that collect gender data. In doing so, HR teams can proactively address the gender pay gap in their organizations to ensure their compensation policies are fair and align with their corporate culture.

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