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Pay Equity & Race: A Discussion We’re Not Having (Yet)

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Race is pay equity’s unspoken factor. The pay gap is an unrecognized racial gap, created by systemic practices founded in a history of privilege, stereotypes and misconceptions. So, why are we not talking about race?

The existence of a racial pay gap is evident in the statistics but missing from mainstream discussion. Earning 82 cents to the dollar, it will take until March 31, 2020 for white women to earn what the average white, non-Hispanic man earned in 2019. Black, Native American and Latina women will not see the earnings of the average white , non-Hispanic man until August 13 (62 cents on the dollar), October 1 (57 cents on the dollar), and November 2 (54 cents on the dollar), respectively. While Asian women as a whole earn 90 cents to the dollar and earned that of the average white, non-Hispanic man by February 11, 2020, segmenting the grouping into communities shows the wage gap is far greater for some. Vietnamese women earn 64 cents, Hmong women earn 54 cents, and Burmese women earn 50 cents for every dollar the average white, non-Hispanic man earns.

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This pay disparity is even further highlighted when looking at the correlation between the earnings of men and race. Black men earn 87 cents, Native American and Hispanic men earn 91 cents, and Pacific Islander men earn 95 cents for every dollar the average white, non-Hispanic man earns, according to research by PayScale. So, if the racial pay gap is so prevalent, why are we not talking about race?

Before analyzing the modern-day racial pay gap, it is helpful to examine the birth of the conversation on pay equity, as well as how it was shaped by the mid-century zeitgeist. From its very onset, race was excluded from the pay equity discussion. President John F. Kennedy signed into law the Equal Pay Act of 1963 to abolish wage disparity based on sex. This act preceded the Civil Rights Act of 1964, which ended segregation in public places and employment discrimination on the basis of race, color, religion, sex or national origin. Given the historical timeline, it is understandable that race was not considered as an important factor in compensation analysis for several decades.

Historically, equal pay has been considered a feminist issue — more accurately, a “white feminist” issue. The commonly held misconception that shared gender correlates to similar experiences for white and non-white women has created a blind spot in the discourse for equal pay. In an April 2019 Morning Consult/ASCEND poll, 66% of white women agreed that women are paid less than men for similar work. However, only 34% of white women agreed that non-white women are paid less than white women for doing the same work. The limiting focus on gender as the basis of the pay equity movement only hinders the collection of data and proposal for policies that will generate progress in closing the gap. If we truly expect to make progress towards pay equity, we need to consider race in the discussion now. Megan Rapinoe, the face of U.S Women’s soccer and their quest for equal pay, explains “[t]he more I’ve been able to learn about gay rights and equal pay and gender equity and racial inequality, the more that it all intersects. You can’t really pick it apart. It’s all intertwined.” In order to adequately address pay equity, it must not be viewed as solely a women’s issue. The racial wage gap must be included in the conversation.

As a compensation professional, one plays a key role in addressing the systemic issues regarding pay equity. The first step is diagnosing the issue. One method includes using regression analysis, which can be used to create models to determine inequities. There are many tools available that utilize regression analysis in order to study the relationship between pay and gender. To uncover the racial pay gap, all that is required is a simple change in the variable in the equation while using one of these tools.

When looking at the data it is also important to understand the difference between the unadjusted pay gap and the adjusted pay gap. The statistics that we see are often that of the unadjusted pay gap: the average pay for men as a group, which is in turn compared to the average pay for women as a group. However, it does not account for important differences like education, experience, type of job role and a multitude of other factors. It’s important that when a regression analysis is completed, it models an unadjusted pay gap as well as an adjusted pay gap that adjusts for applicable factors. This will help to determine if a portion of the wage gap is due to a systemic problem in your compensation policies versus an issue in the diversity of your workforce in higher paying roles. Both issues are necessary to address but require different approaches. The issue of diversity in the workforce may be better suited to be led by human resources and/or the diversity and inclusion leader.

If your data leads you to determine that there is a systemic issue within your compensation policies, it is vital that you uncover the unwritten rules and policies within your company that lead to compensation decisions. Often, companies have operated with a “special set of rules” that have guided compensation decisions for years. The first step in rectifying this situation is to identify those rules. This can be completed through open discussion with senior leaders and HR. If accessible, seek help from your diversity and inclusion leader to aid in the discussion. Once identified, best practice is to remove the biased guidelines and replace them with policies that reflect the company’s adopted compensation philosophy, ensuring that they can be applied to all employees.

Additionally, consider working with talent acquisition to review hiring practices. The racial pay gap often begins as an employee starts their career with a company. As the years go on, the disparity is exacerbated as more compensation decisions are made. This effort to unearth the unwritten policies cannot be done in a silo. In order to achieve genuine change, transparency of compensation policy, communication of policy to all stakeholders, and enforcement of policy is necessary.

Unfortunately, honest conversations surrounding race are often avoided due to the uncomfortable nature and unexamined biases. However, these conversations are essential and must not be shied away from. Being able to have genuine dialogue about racial disparity is the first action item in beginning to bring equitable compensation to our workplaces and in turn, our society. So, when will we start talking about race?

Time is of the essence.

About the Author

Stephanie Anne Martin, CDE, is a compensation manager at BioTelemetry, Inc. She can be reached at stephanie.martin@gobio.com.


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