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7 Ways Employers Can Address Pay Gaps

Published about 1 year ago • 4 min read

Racial and gender pay gaps are both significant issues that affect many individuals and communities. The gender pay gap refers to the disparity in earnings between men and women, while the racial pay gap refers to the difference in earnings between people of different races or ethnicities.

Both of these gaps are rooted in historical and ongoing discrimination, bias, and systemic barriers that limit access to higher paying jobs and career advancement opportunities. Women and people of color are disproportionately impacted by these gaps, with women of color experiencing the widest pay gaps.

In 2022, women earned an average of 82% of what men earned, according to a new Pew Research Center analysis. This means that overall, women earned about $.82 for every dollar men earned. However, Hispanic or Latina women earned about $.58 and Black women earned about $.63 for every dollar White men earned.

Addressing these issues requires a comprehensive approach that includes policy changes, workplace initiatives, and broader societal efforts to promote equality and combat discrimination. But even though employers can play an especially critical role in narrowing pay gaps, many aren’t choosing to take action. In fact, in isolved’s 3rd annual HR Leaders Report, 40% of respondents said their company is not addressing racial or gender pay gaps (or they’re unsure if they are).

Among the 60% whose companies are addressing this issue, they’re using a wide range of tactics to do so. These include providing greater pay transparency (53%), providing better work-life balance (48%), conducting a pay audit (45%), extending paid and family medical leave (40%), leveraging workforce analytics for greater understanding (37%), providing programs for childcare (30%), and sourcing candidates from diverse sources (27%).

In today’s article, I’ll discuss these strategies in more detail. If your company isn’t tackling this issue yet, I hope this list provides some inspiration. Remember, addressing pay gaps isn’t just the right thing to do — it’s also an important way to boost your employees’ engagement and productivity, as well as your company’s ability to attract and retain talent. Let’s take a look.

7 strategies to address pay gaps

1. Provide greater pay transparency

When companies openly share salary ranges and pay scales, employees can gain a better understanding of how their pay is determined and identify any discrepancies that may exist. This knowledge can help to promote a more open and honest dialogue about pay and allow employees to negotiate for fair pay based on their qualifications and experience. In addition, pay transparency can encourage organizations to adopt more equitable pay practices and eliminate any biases that may be contributing to pay gaps.

2. Improve work-life balance

A lack of work-life balance often disproportionately impacts women, who may have to choose between advancing their careers and caring for their families. In fact, women are much more likely to have lower-paid, more flexible jobs, and they’re more likely to leave the workforce entirely. By providing arrangements like remote working, flexible hours, or part-time work, employers can help to ensure that all employees have the opportunity to pursue their career goals while also meeting their personal and family obligations.

3. Conduct a pay audit

A pay audit involves a thorough analysis of an organization's pay practices, including salary levels, bonuses, and benefits, to determine if any discrepancies exist based on factors such as gender, race, or ethnicity. By conducting a pay audit, an organization can gain a better understanding of its pay practices and identify any areas where pay gaps may exist. This information can then be used to take corrective action, such as adjusting salaries or bonuses to ensure that employees are being compensated fairly.

4. Extend paid and family medical leave

Paid leave policies can help to ensure that workers do not have to choose between taking time off to care for a newborn or sick family member and receiving a paycheck. This is particularly important for women, who often experience a significant pay gap due to the disproportionate amount of unpaid caregiving responsibilities they shoulder. Paid family and medical leave can help to alleviate some of this burden, allowing women to take the time they need to care for their families while maintaining their economic stability.

5. Leverage workforce analytics for greater understanding

By analyzing data on employee salaries, bonuses, and benefits, as well as demographic information such as gender and race, employers can gain a better understanding of their pay practices and determine if there are any biases or disparities. This information can be used to adjust people’s salaries, it can help organizations develop more equitable pay policies and procedures, and it can promote greater transparency and accountability in an employer’s pay practices.

6. Offer more childcare support

Childcare programs can play a significant role in reducing pay gaps by increasing women's labor force participation. Women are often the primary caregivers and are more likely to take a career break or work part-time to take care of their children. This can result in them having fewer opportunities for career advancement and earning lower salaries than their male counterparts. Companies that offer childcare programs, subsides, or other support can help their female staff members remain in the workforce and pursue their careers without interruption.

7. Source candidates from diverse sources

By actively seeking out candidates from underrepresented communities, employers can create a more diverse workforce, which can help to overcome systemic barriers and biases that may be contributing to pay gaps. In addition, hiring diverse candidates can foster a culture of equity and fairness, where everyone is given an equal opportunity to succeed and advance. This can help to close pay gaps by promoting greater transparency and accountability in pay practices and ensuring that all employees are compensated fairly based on their qualifications and experience.

Addressing pay gaps should be a key part of your business and DE&I strategy

Pay gaps represent a significant barrier to achieving equality and social justice. When certain groups of people are systematically paid less than others, it perpetuates patterns of discrimination, bias, and inequality that can have long-lasting and far-reaching consequences. Addressing pay gaps is essential for promoting diversity, equity, and inclusion in the workplace, and ensuring that individuals are paid fairly for their work regardless of their gender, race, ethnicity, or other factors. Additionally, closing pay gaps can have business benefits such as improved productivity and better talent attraction and retention.

Unfortunately, only 6 out of 10 companies are taking steps to address this issue right now — but I hope this article has inspired you to push for more action at your organization. Please join the conversation on LinkedIn and let me know your thoughts on this topic!

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