What is Equal Pay Day and Why is It so Important?
We build so much of our schedules around holidays and other important days of observance. These daysâ€™ predictable consistency is one of their best traits. But for Equal Pay Day, its inconsistent date is the point.Â
Each year, whatever day Equal Pay Day falls on represents how many more days US women need to work to earn the same amount as US men did in the previous year. This year, it's March 24, 2021. That's 82 extra days! The goal of Equal Pay Day is to eventually be on January 1 every year because that would mean pay for women and men is finally equal.Â
Like we did for International Womenâ€™s Day just a few weeks ago, we spoke to some thought leaders from around Cornerstone about Equal Pay Day. Steffani Frias, director, total rewards, and Jeremy Spake, senior principal, talked to us about Equal Pay Day's importance, why it's crucial in 2021, and what you can do to ensure pay fairness at your company. But firstâ€¦
What is Equal Pay Day?
Started in 1996, Equal Pay Day is a variable holiday symbolizing the wage gap between women and men. The date is different each year and represents the number of days women need to work to make the same amount of money as men.Â Â
Why is Equal Pay Day so Important?
Equal Pay Day is important because women are important. Ensuring equity in people processes is critical for talent management professionals, and one of the most impactful ways to do this is to ensure people are compensated fairly.Â
Given all other factors being equal, if a man earns $100k from January 1 to December 31, a US woman has to work, on average, all the way to March 24 of the following year to make the same amount. This is to say that women make $0.82 to every $1 a man makes. And that's just the average. When you add on the further intersections of race, the differences are even starker. Asian-American women are slightly above the average, with their Equal Pay Day being March 9 ($0.85/$1). While Black women's Equal Pay Day is August 3 ($0.63/$1), Native women's Equal Pay Day is September 8 ($0.60/$1), and for Latinx women, it is October 21 ($0.55/$1), so almost a full second year! Looking at this data highlights for us the deleterious effects of how unconscious bias often shows itself in compensation.
To Jeremy's points, today is really about raising awareness of gender pay gaps. Women and allies are all in this moment of real change. We have the opportunity to continue taking action towards ending an inequality that has persisted for centuries.Â
One of the things I like to draw attention to is the counter-argument that we don't directly compare men and women doing the same job when we measure the wage gap. That's a purposeful choice. It helps us capture the multitude of factors driving the gender pay imbalance that would get lost in just one-to-one comparisons. Factors like the differences in types of jobs, years of experience, and hours worked are drivers of the gender wage gap. Women are disproportionately impacted by the social norms that pigeonhole them as â€œcaregiversâ€ and other unpaid obligations. And then the skills these women honed â€” project management, financial management, people management, etc. â€” during all those hours of unpaid work arenâ€™t seen as â€œprofessionalâ€ or â€œrelevant experience.â€Â Â
These "norms" are societally perpetuated. Over and over again, women and men are funneled into these different industries and jobs based on antiquated gender definitions and expectations. And with Covid, we see these confining social norms impacting women even further.Â
The Impacts of the PandemicÂ Â
By now, most of us have seen statistics about the impact the coronavirus pandemic had on women in the workforce. And they're sobering.Â
The pandemic has hit women especially hard. According to a study from McKinsey & Company, nearly 56 percent of workforce exits since the start of the pandemic have been women, and women previously made up 48 percent of the US workforce â€” almost half. Not just that, but McKinsey & Company also found that employment for women isn't projected to return to its pre-pandemic numbers until at least 2024. That's millions of women forced to struggle for years just to get back to making $0.82 for every dollar a man makes.Â
And it's not like this started with the pandemic. There was a study from I think 2019 that showed that most white women [66 percent] agreed that women make less than men, but way fewer agreed [34 percent] that they made more than non-white women for doing the same work. Equal Pay Day shows us that is categorically false, and it's hard to be an ally when you don't see the problem.
To create more equity, leaders need to take action and address the biases that cause the wage gap and equity gaps. That's why there's no better time than this Equal Pay Day to introduce and ensure pay fairness at your organization.Â
How You Can Ensure Pay Fairness at Your Company
We see a lot of interest and engagement from leaders for a generally more diverse workforce. They're asking their talent teams to show them where they can do better. "Show us where we stand and the things we can actively act on." When leaders are invested and employees feel valued, people are more satisfied and invested in their work.Â
To do that, you definitely have to ground your comp programs in fairness. Check to see that if you're reviewing at a set baseline determined by market data. Regardless of gender, age, race, etc., is this fair? These are not things we always see happening, but we do see a lot of intentionality and evaluation to try and affirm what's fair.Â
To add to what Steffani said, the market data piece is absolutely integral and critical, but also, before it comes to rewarding performance, how are you rating performance? That's another point where unconscious bias shows up in talent management programs. And that's why calibration processes are the best practice.Â
In an ideal world, you've got continuous performance management happening, so you're collecting data about someone's performance over the course of a year, not just at the end of it. Then when you're making these kinds of overarching performance decisions, you've got all this data and all these other people in the room to calibrate ratings. You can now compare and contrast how one manager rates a person compared to how other managers rate their people. "Does a four-out-of-five-star employee look the same to you and to me?"Â
Calibration is critical to making sure everyone understands the performance baseline and what success looks like in your organization - and then that market data baseline Steffani is talking about is used to establish rates for specific roles in specific geographies or industry sectors. That fairness component comes into play when you're evaluating people's performance during calibration, and then the market data piece adds on to that. Those two things have to work in tandem together.
100 percent, Jeremy.Â
Ensuring pay fairness is such an important topic that we felt we wouldn't do it justice if we didn't give it its own, detailed, how-to blog post. Stay tuned for that later this month.Â
Continuing the Conversation
Thank you, Steffani and Jeremy, for taking the time to talk to us. If you want more information on how you can start or improve your organization's equal pay initiatives, be sure to listen to our recent HR Labs podcast episode. Activist and pay equity icon Lily Ledbetter talks to us about how to negotiate salary, equal pay for equal work, how companies can make swift, effective change, and so much more.