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The COVID-19 pandemic threatens to upend the progress employers have made toward narrowing the gender pay gap.
Mercer’s 2020 update to its “When Women Thrive” research report identified a 21% increase in the number of employers conducting pay equity analyses, noting that the “increase reflects what has been a growing commitment of corporate leaders to achieve pay equity…” However, as Mercer also noted in its update, it is hard to close the wage gap when many employers are foregoing pay increases and, in some cases, implementing furloughs and layoffs.
A Bureau of Labor Statistics (BLS) study found that working women, particularly women of color, have been disproportionately impacted by the pandemic in what is being called a “she-cession” as compared to other recessions. This impact is the result of female dominated industries, such as restaurants, hospitality and retail, having been severely affected by the pandemic with no rebound insight. Additionally, school closures leading to an extended period of remote learning has caused an exodus of women from the workplace since women are less likely to have the type of jobs that allow flexible work hours and remote work and more likely to assume the lion’s share of the child care responsibilities.
NPR’s Weekend Edition Sunday that aired on June 28, 2020, reported that recent surveys show working mothers are spending upwards of 15 hours more than fathers on child care and household chores per week. This burden, along with the switch to remote schooling, are driving women to leave the workforce. According to the report, “[t]here has long been evidence of a ‘motherhood penalty’ that’s a primary driver of the gender wage gap.”
The Impact of the Motherhood Penalty
Mothers have a range of options when it comes to working after having children. They can continue to work full-time, cut back to a part-time schedule, or leave the workforce for a period of time. This “flexibility” comes with a downside. In many cases, their pay will forever lag behind their male counterparts, including working fathers.
The motherhood penalty is one of the principal drivers of the gender pay gap. When the gender pay gap is discussed, we tend to focus on the widely reported statistic that full-time, working women earn just 80 cents for every dollar paid to a male. What is less discussed, until recently, is the wage gap that exists between working mothers and fathers.
A study by the National Women's Law Center (NWLC) found that working mothers earn just 71 cents for every dollar paid to a father. This gap translates to a loss of $16,000 per year. Additionally, the gap exists, to differing degrees, in every state. In fact, while women lose money when they become mothers, men gain money when they become fathers.
Regardless of whether women leave the workforce because their jobs were wiped out by the pandemic or they had to resign or cut back to care for their children or elderly parents, employers’ progress toward narrowing the wage gap in their workforce will at best stall or at worse, expand. While the options for preserving progress may be limited in these challenging times, there are strategies to minimize the negative impact.
Continue to Conduct Annual Pay Equity Assessments
The Mercer report discussed above correctly warns that progress on pay equity can be quickly lost if employers stop monitoring their pay. The process of conducting the pay analysis and reporting its results out to management is, in and of itself, a deterrent.
Although the prospects of making pay adjustments may be off the table or severely limited this year, employers should nevertheless continue to conduct their annual pay equity analyses. Annual pay equity analyses are a best practice that can take time to integrate into a company’s compensation program and can prove difficult to re-engage after missing a year or more.
"Regardless of whether women leave the workforce because their jobs were wiped out by the pandemic or they had to resign or cut back to care for their children or elderly parents, employers’ progress toward narrowing the wage gap in their workforce will at best stall or at worse, expand."– Consuela Pinto, head of the pay equity practice at Fortney Scott
It is important to continue annual pay analyses because even if employers are not making pay adjustments because of the pandemic, major shifts in the workforce resulting from reductions in force, realignment of employees’ duties, reduced schedules and pay cuts can lead to unintended pay gaps. If the analysis shows pay gaps as a result of these changes, it is important to determine the root cause for the identified differences to ensure that they stem from legitimate business decisions made in response to the pandemic rather than bias.
If the annual pay analysis shows a pay gap, employers can take steps to gradually close a gap. While business circumstances may make full adjustments impossible, employers can make adjustments over time or they can defer all adjustments until the business is on more solid economic ground. It is critical that employers contemporaneously document their reasons for partial adjustments or no adjustments when a pay gap is found.
Do not forget legal privilege. COVID-related employment decisions are leading to litigation. It is more important than ever to wrap your compensation analyses and pay-related decisions in solid legal privilege. While the privilege will not protect the underlying data, it will protect the employer’s pay data analyses.
Employers are facing unprecedented challenges, especially with the Biden Administration’s expected focus on compensation and discrimination. If pay equity is put on a shelf, any advances made toward narrowing the wage gap — both nationally and with respect to individual workplaces — will be lost.
Regardless of the times, the legal risk associated with getting pay equity wrong remains significant.
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About the Author
Consuela Pinto is a shareholder and head of the pay equity practice at FortneyScott.