Why Pay Equity and Pay Transparency are Important

As illustrated in Census data, women only earn 83 cents for every $1 a man earns - with the gap being even larger among women of color. This disparity has led to several inequalities and marginalizations among varying groups of people. Furthermore, it’s made it more challenging for certain people to overcome lower-income backgrounds and improve their quality of life.

While these problems haven’t always been addressed - as many people in power would lose out on strong capital gains - many businesses are taking a second look at pay equity and pay transparency. As noted by Rocki Howard, Chief People of Equity Officer of The Mom Project:

“Pay equity is not as easy as equal pay for equal work - it’s much more nuanced. It’s about barriers to access and barriers to entry. It’s about occupational segregation, vertical segregation, ineffective pay legislation, women’s overall pay hours, the pregnancy pause penalty, and bias and discrimination.”

Throughout this article, we’re going to take a deeper look at how you can achieve pay equity and pay transparency. While this is a complicated process - with multiple obstacles your business will be forced to overcome - such actions will inevitably move your business and society one step further.

What is Pay Equity and Pay Transparency

Simply put, pay equity is defined as providing individuals with equal pay for work of equal value. When brought up in conversation, pay equity addresses circumstances where a man or woman does the same work, but the pay is unequal.

On the other hand, pay transparency is a policy that requires employers to explicitly detail specific information concerning wages and salaries for a certain position or job role. Not all pay transparencies are the same, and some require less detail than others.

These differences are largely dependent on the state in which one lives. For example, in Colorado, an employer must disclose compensation ranges along with benefits when seeking out new employees for a position. However, some employers are going further by also discussing salaries both within and outside a company.

The purpose of pay transparency is to ensure that potential employees don’t undervalue themselves. When comparing and contrasting similar positions among different companies, they have the ability to see how much their work is valued by other organizations.

Why are Pay Equity and Pay Transparency So Important?

If you’re an employer, then you’re already aware of how different individuals will impact your salary expectations. Largely, these are based on aspects of the individuals ranging from their background, levels of education, socioeconomic standing, and personal life experiences.

For example, an employee may have been taught to always question employers about salary ranges along with developing the skills for negotiating higher rates. Such skills naturally help to improve on garnering lifelong earning potential. But not everyone has been taught such skills and, therefore, starts off at a disadvantage compared to others in the workforce.

As Rocki Howard explains, “This is often the challenge with individuals who come from underprivileged environments. We aren’t exposed to the options, the social graces, the political lessons, the networking that facilitates the obtainment of higher paying jobs.”

Naturally, this is one of the many aspects leading to unequal pay among genders and ethnicities. However, many out there also face unmistakable prejudices and biases that continue to have a negative impact on diverse groups of people.

Why Should You Incorporate Pay Transparency and Pay Equality into Your Organization?

While pay equality and pay transparency aren’t always addressed by legislation, organizations that take matters into their own hands are often more likely to succeed. The simple reason, a diverse selection of top talent often has more to offer than parallel top talent. That being, diverse individuals have more varying life experiences to bring forth to an organization.

Even more so, the incorporation of pay equality and pay transparency will likely have long-term benefits within your company. If an employee is earning what they feel they deserve - with the ability to support a family, pay off debt, buy real estate, etc. - they’re more likely to stick with your company.

This loyalty will also go beyond helping promote your brand to levels you didn’t expect. It allows you to help push society forward. In accordance with a 2021 Diversity Hiring Report, over 50% of job seekers still believe employees from an underrepresented community are at a disadvantage in the job searching process. If your organization helps to incorporate pay equity and transparency, you’re helping to diminish that percentage.