Today, Glassdoor Chief Economist, Dr. Andrew Chamberlain, testified during the House Financial Services Diversity & Inclusion Subcommittee’s hearing, “Closing the Racial and Gender Wealth Gap Through Compensation Equity.” He shared critical research and recommendations about how enhanced pay transparency can reduce gender and racial pay gaps and improve workplace diversity & inclusion (D&I). Other panelists included leaders and experts from Society for Human Resource Management, the National Women’s Law Center and Reboot Representation.
Throughout the nearly two hour conversation, panelists unanimously agreed there was work to be done to address pay inequality and that America has a critical opportunity to help correct these gaps as we rebuild our economy in the post-COVID-19 era. Here are four key takeaways from today’s hearing and Dr. Chamberlain’s testimony.
1. Thinking Big Picture About Pay Equality
Nearly 9 in 10 employees believe men and women should be compensated equally for similar work and experience levels, yet research from Glassdoor and others reveal glaring gender and racial pay gaps remain. For instance, Glassdoor research shows an unadjusted pay gap between U.S. men and women of 21.4 percent, meaning women earn, on average, $0.79 for every $1.00 men earn. And pay gaps remained even after controlling for workplace factors like education, work experience, industry, and more.
This is similarly true across racial and ethnic groups too. Dr. Chamberlain previewed forthcoming research during the hearing that shows Indigenous American or Alaska Native women make the least, $0.69 for every $1.00 white men earn. For Black women, it's $0.71 and Hispanic women it's $0.76. Asian women earned more on average than white men at $1.06, data shows. Similarly, Indigenous American or Alaska Native men ($0.84), Black ($0.85) and Hispanic ($0.86) men made less on average to white men, with Asian men the only group to see the highest pay across all groups with $1.27.
“Pay equality is about fairness. But it also helps build a more dynamic and prosperous U.S. economy. It clears the way for every American to make their best contribution to our prosperity — a win-win for workers and employers that can also be a pro-growth agenda for America,” Dr. Chamberlain said during his opening remarks.
2. Addressing Workplace Inequality Can Help Close Pay Gaps
While the subject of this hearing is gender and racial pay equality, Dr. Chamberlain noted addressing workplace inequality and improving satisfaction can help close the pay gap. That’s because research shows employee pay and workplace satisfaction are closely linked. For instance, new Glassdoor Economic Research shows just how varied employee sentiment is around workplace D&I, with Black or African American workers least satisfied, reporting an average D&I rating of 3.49 on a 1-to-5 star scale, well below the average of 3.73 stars across all workers. These cultural workplace inequalities can make it harder to resolve pay gaps, and are also likely caused in part by racial and ethnic group pay gaps.
3. Pay Transparency Can Help
Enabling people to freely and anonymously share their pay information empowers job seekers and employers by giving both better results in the job market. Pay equality drives better job matches, enhanced employee retention, and improved workforce morale. One pathway toward better pay equality both by gender and race and ethnicity is improved pay transparency: Employers and employees should make pay data more transparent, analyzing their own internal pay processes to study compensation data to ensure no gaps by race, gender, or other protected categories exist, or open up, whether intentionally or not.
“The best thing you can do is to assure that when men and women show up in jobs, they believe they will be treated fairly and they will not get the short end of the stick once they arrive,” Dr. Chamberlain said during the hearing.
4. A Path Forward on Compensation Equality
As the U.S. labor market recovers from the COVID-19 crisis, Dr. Chamberlain said we have a unique opportunity to address long-standing inequalities in the workplace. “Any long term solution to the pay gap has to address transparency and compensation equity,” Dr. Chamberlain said.
This critical time following a recession offers an opportunity to rebuild a more equitable labor force in the United States. This is the right time to disrupt and repair calcified social and economic institutions that dissuade, deter and prevent employees from publicly sharing basic information about pay and that have long stood in the way of broader gender and racial pay equality. Pay equality and transparency can both help society move a step closer to the ideals of equality underlying the United States’ founding documents, and also make our economy work better for millions of struggling Americans.
Video Replay: Watch the full congressional hearing and learn more about pay and workplace equality