Glassdoor Chief Economist Dr. Andrew Chamberlain testified before the United States Congress today with evidence that enhanced pay transparency can reduce gender and racial pay gaps and improve workplace diversity & inclusion (D&I). Chamberlain covered the status of gender and racial pay inequality, the nature and underlying causes of racial and ethnic pay inequality existing in the workplace today, and how potential transparency-driven solutions can address and help remedy these issues.
"In today's fast-changing economy," Chamberlain said, "the United States can no longer afford to leave millions of women and members of underrepresented groups sidelined in jobs that pay them unfairly, fail to fulfill their full economic potential, and stand in the way of their personal and professional growth. The key to sustaining and building a dynamic and prosperous U.S. economy into the future is to ensure that every American has a pathway to make their best possible contribution and to ensure they are equitably compensated."
Pay Inequalities Exist Across Gender, Race & Ethnicity
Nearly 9 in 10 employees believe men and women should be compensated equally for similar work and experience levels, yet Glassdoor Economic Research shows that women earn, on average, $0.79 for every $1.00 men earn. Even after controls for education, work experience, location, industry, job title and company are applied to help examine the impact of unexplained barriers, the study shows a 4.9 percent adjusted pay gap still exists. And it's a well-known fact that in the U.S. labor market there are significant pay gaps among racial and ethnic groups as well as gender, and that gender pay gaps are substantially larger among some race and ethnicity groups.
This is similarly true across racial and ethnic groups. 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 for Hispanic women it's $0.76. Asian women earned more on average than white men at $1.06. 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.
Here are 3 steps employers can take today to mitigate gender and racial pay inequality:
1. Monitor Workplace Satisfaction by Racial and Ethnic Groups
Pay is not the only dimension on which inequality is experienced in the workforce today. New Glassdoor Economic Research released today shows employee sentiment around D&I differs significantly across racial and ethnic groups. The report found Black or African American workers report 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. Addressing perceived workplace satisfaction can help address pay disparities, Dr. Chamberlain argues, as research shows pay and workplace satisfaction are closely linked. New Glassdoor product features offer more transparency into the state of diversity, equity and inclusion (DEI) at companies. Employee-provided company ratings and salary reports broken out by specific demographic groups build on Glassdoor's recent DEI product release and ongoing public commitment to leverage its product and resources to help achieve equality in and out of the workplace.
2. Address Workplace Inequality to Help Close Pay Gaps
While the subject of the hearing was gender and racial pay equality, Chamberlain noted that addressing inequities within workplace experience and satisfaction can help close the pay gap since 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 inequalities, and are also likely caused in part by the racial and ethnic group pay inequalities.
[Related: 3 Quick Wins for Establishing a Culture of Employee Engagement]
3. Move Toward Pay Transparency & Compensation Equality
Enabling people to freely and anonymously share their pay information, empowers job seekers and employers by giving both better results in the job market - more pay equality, 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 making 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.
As the U.S. labor market recovers from the COVID-19 crisis, Chamberlain said we have a unique opportunity to address long-standing inequalities in the workplace. 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 equity. Pay equity and transparency can both help America move a step closer to the ideals of equality underlying our nation's founding documents, and also make our economy work better for millions of struggling Americans.
[Watch more: Tune into the full congressional hearing and learn more about pay and workplace equality]
Your people notice when there is pay inequality at your company. Use Glassdoor's free pay audit tool to analyze compensation at your company to determine if and where pay gaps exist. To get involved in the conversation around pay equality on Glassdoor and start managing and promoting your employer brand reputation, unlock your Free Employer Profile today.