Tuesday, July 16, 2024

Opinion | Here is a key way the U.S. lags behind its peers on gender equality

Opinion | Here is a key way the U.S. lags behind its peers on gender equality

Josie Cox is a freelance journalist who writes about business, the workplace and gender inequality.

The United States is not alone in failing to fix the gender pay gap — the difference between what men and women are paid on average. In every major developed country, men earn more than women, according to the Organization for Economic Cooperation and Development.

But while many countries are doing something to address the problem, the United States is a laggard.

In Britain, for instance, any company with 250 or more staff must publish an annual report on its gender pay gap that shows the differences in bonus pay and hourly wages between male and female employees. Companies also have to break down the ratio of women to men in each quartile of pay. Most big companies also produce a supporting narrative explaining their figures, though this is not part of the mandate.

There are similar requirements in other European countries. In March, Australia’s Parliament passed legislation requiring companies with more than 100 employees to report their gender pay gaps.

By no means is this a silver bullet. While companies in Britain have been told they will be punished for failing to abide by the rules, no organization has been publicly disciplined yet. There are also no repercussions — beyond reputational risk — associated with submitting an unflattering set of data. The average pay gap is a blunt measure and doesn’t factor in the age or experience of employees or the nature of their jobs. Critics also say the rules overemphasize gender inequality and can lead to other causes of inequality, such as race or economic background, not getting enough attention.

Nonetheless, reporting requirements have raised collective awareness of the issue among those in power and those in search of a fair employer. Top executives might feel compelled to fix the problem rather than face the awkwardness of trying to publicly justify a huge gap or explain a widening one to their own employees. In 2017, the first year that companies had to report, women in Britain earned 18.4 percent less than men on average. By 2022, the gap had shrunk to 14.9 percent.

Meanwhile, in the United States, the gap has hardly moved in two decades, according to the Pew Research Center. In 2022, women in the United States were paid 82 cents for every dollar paid to men, a mere 2 cents higher than in 2002. That’s a problem simply because it reflects systemic unfairness. But there are broader implications, too. The wage gap also reflects a lack of diversity in senior roles — which can leave organizations susceptible to flawed decision-making.

According to analysis by the Institute for Women’s Policy Research in 2016, women in the United States received the same pay as their male counterparts, poverty for working women would be halved, and the nation’s gross domestic product would have been $482 billion higher in 2014. A report from Moody’s Analytics earlier this year estimated that closing the gender gap in labor force participation and the gender gap in management — which correlates strongly with the pay gap — in OECD countries would raise global economic activity by approximately 7 percent, or about $7 trillion in today’s dollars.

There are many reasons for the gap. Inadequate child-care infrastructure prevents some women from working outside of the home at all, and some company cultures — such as those that demand long hours, presenteeism (working while sick, exhausted or otherwise distracted) or being available around-the-clock — can also hold women back.

Some organizations have made efforts to remedy the discrepancies, through mentorship programs, internal diversity targets and support for mothers coming back into the workplace, for instance. But the effect is often temporary or falls short of meaningful change.

Research suggests the positive effects of diversity training — which could contribute to closing the gender pay gap — rarely last beyond a day or two, and such training can actually activate bias or spark backlash because members of groups that have not traditionally been marginalized feel threatened.

Some states and cities have already started forcing companies to disclose broad wage data and publish pay ranges alongside job advertisements. This should help level the playing field, as research shows that women and minority workers tend to ask for less money than White men.

But for now, mandates are piecemeal, regional and ineffective. Comprehensive legislation at the federal level is needed for meaningful change. Failure to report the gap has to be punishable to a degree that acts as a deterrent, and companies with a significant gap need to feel compelled to fix it. One way that companies could achieve this would be to make discretionary bonuses contingent upon the pay gap moving in the right direction. That way, senior executives who have the tools to make a positive change on gender pay would be incentivized to do so. And if that happened, then closing the gap would be a positive outcome for all Americans.

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