Ep 86 - Spotlight on gender pay gaps

[00:00:00] And we're live. Welcome to Comp Coffee, my name is Ruth Thomas and I am Chief Product

[00:00:24] of Angelist here at Payscale. And already five seconds into this episode you will have

[00:00:28] probably noticed something very different. Russ Wakelin who's been the long time host of

[00:00:33] Comp Coffee has moved on to new adventures and I am going to be taking over as the

[00:00:37] mainstay host of the show. Of course, I'm going to be joined by many different guests

[00:00:42] as we progress with Comp Coffee. If you've got any ideas of who you would like to hear

[00:00:47] join me on Comp Coffee then do email us at coffeeatpayscale.com and even if you'd like

[00:00:53] to come and join me here and have a chat drop an email to coffeeatpayscale.com. Well,

[00:01:00] there are I think I just looked up 44 days left in 2023 so it's the time of the year

[00:01:07] when we start to get a bit reflective and also part of my role in thought leadership

[00:01:13] is doing predictions for 2024. So we've got about three more episodes of Comp Coffee

[00:01:18] to run for the rest of this year. Most of those we're going to be focused on looking at

[00:01:23] potential predictions for 2024 and today's topic is gender pay gaps. And the reason

[00:01:30] we've chosen gender pay gaps is because on the 22nd of November it is the UK equal pay

[00:01:37] day and will explain why that is on the 22nd of November in a moment. I'm delighted

[00:01:42] to say I'm joined by two colleagues today. I'm joined by Vicki Pikman, my longtime

[00:01:47] collaborator on all things pay equity and Vicki is director in product of data products

[00:01:54] and also joined by Liz Sheffield who's manager in our content marketing function and a long

[00:02:00] time observer and excellent writer on all things to do with HR. So welcome Liz and welcome

[00:02:07] Vicki. Thank you. So it is that time of year when we are probably thinking about Thanksgiving,

[00:02:15] thinking about Christmas lists and probably also thinking maybe about New Year's resolutions.

[00:02:21] So Liz do you set new year's resolutions so that's something you're into? Depends on the

[00:02:27] year Ruth. I appreciate you bringing it up early for me because maybe I will this year.

[00:02:34] Yeah I just go back and forth based on my ambition. Yeah. And how are you feeling? What

[00:02:40] about you Vicki? I don't really agree with them because I feel like if you want to do something

[00:02:46] you should set a goal and do it. I don't think and I think we generally, if you set one then

[00:02:52] you're generally disappointed by February. And so particularly as it's like in the hard

[00:02:57] months of the year, so actually I think it's probably better not to. But yeah.

[00:03:02] I kind of agree with you and what I do instead is set intentions. So I normally kind of think about

[00:03:10] things that I would like to be potentially more focused on or less focused on or things

[00:03:16] that I'd like to be more intentional about. And then you kind of let's set in yourself up to

[00:03:21] fail I think. Anyway, back to gender pay gaps. So I mentioned at the top of the show it is coming

[00:03:28] up to UK equal payday. Can you tell us why that's a different time than US payday and why is it on

[00:03:36] the 22nd of November this year Vicki? Yeah so in the UK so aren't you differently than they do

[00:03:42] in the US? So in the UK it's the day on which women basically stop being paid. Men continue to be

[00:03:50] paid to the end of the year. Women have a shortfall on that amount and that's the day at which

[00:03:56] you know, and there's you know it's like the women put their out of office on. They don't of course

[00:04:00] stop working unfortunately. Just not that was set. Yeah they just not pay for it. That was where

[00:04:05] the out of office joke came from. And so it's creeping closer to the end of the year. The gender pay

[00:04:12] gap gender pay equate day is declared by the four-step society which is a leading charity here in the UK

[00:04:20] women's rights at home work and in public life. And they use the mean the pay gap from the ONS

[00:04:28] data which is the Office of National Statistics in the UK. And this year it is the mean pay gap

[00:04:35] is 10.7% for full-time workers and that's the one they use last year it was 10.9%. So we're having to

[00:04:44] do a decimal place. And so last year the equal pay gap was 20th of November whereas this year it's on

[00:04:50] the 27th. So we're creeping there slowly. I thought I'd have a little look at the data going back

[00:04:57] some time and just for context 13 it was 15.7% and 2003, so 20 years ago it was 19.4%. And actually

[00:05:12] the first record I could find on the ONS website was 1997 and that was 20.7%. So exactly 10% higher.

[00:05:20] So it's taken us just a little over and years to get down that 10% 20 years ago.

[00:05:27] That's great, well it's low progress. We're getting there but it's very slowly.

[00:05:35] So Liz, you know, tomatoes, tomatoes. You do it differently in the US. Tell us when the US

[00:05:41] equal pay day is and how that's calculated. Yeah so over here on the other side of the pond equal pay

[00:05:47] day was March 14th 2023. And it is interesting so for the US that day is the day we celebrate

[00:05:57] where we symbolizes, it may celebrate maybe not the right choice of words there but that symbolizes

[00:06:04] so December 31st men are paid through that day would have taken until March 14th 2023

[00:06:11] for women to make the same amount that the men made the previous year. So I think it's a really

[00:06:18] powerful way to illustrate the gap which is what we're here talking about. For us it's declared by

[00:06:24] the National Committee on Pay Equity which I think it's reassuring, we have a national committee

[00:06:29] about pay equity and it's also significant for us here at Pay Scale because that's when we

[00:06:35] publish our gender pay gap report. So this year in 2023, we took data from January that was collected

[00:06:42] January 2021 through January 2023 and that was a over 750,000 people that had submitted

[00:06:50] information about their salaries, their demographic information including their race and then

[00:06:57] we leveraged that sample to look at what the pay gap was. So along the lines of what Vicki was

[00:07:03] talking about, we found that indeed there is still a pay gap and for the controlled pay gap

[00:07:10] women are earning 99 cents for every dollar earned by men but the uncontrolled pay gap is when

[00:07:17] women are earning 83 cents for every dollar earned by men right again some progress still to be made.

[00:07:26] So just to clarify, the 10% is uncontrolled pay gap so that is the mean as well. So it's the average

[00:07:36] man versus the average woman in the whole of the UK. Okay, so let's do a bit of clarification

[00:07:43] for the audience because it's a question that we always get asked what is the difference between

[00:07:47] the controlled and the uncontrolled pay gaps? There's lots of different names for them Vicki do you

[00:07:52] want to help us out there? Sure, so the uncontrolled is an aggregate. If we just talk about a company

[00:08:00] from a minute rather than thinking about it as a country because it's slightly easier to kind of

[00:08:05] conceptualize. There's a company if you're looking at the uncontrolled pay gap it is that average

[00:08:11] so mean or median depending on both man versus woman by what they're paid and it's the percentage

[00:08:17] and it's between the two men, men, men, women by the way that's the calculation there so that is

[00:08:23] in general and that's often we often think about as the opportunity gap. So like why is it

[00:08:29] often that the average woman is lower than the average man in the organization and it's generally due

[00:08:35] to like the ability to progress within that organization. So it's not just about pay it is about pay

[00:08:40] obviously it's not the pay but it isn't just about paid because it's to do with the whole organization

[00:08:47] controlled pay gap is when you actually then control for factors so it's also called the adjusted

[00:08:53] pay gap as well which means that what you're doing is you're looking at factors to make sure that

[00:08:58] you're making it more closer to equal pay versus the uncontrolled. So what you're doing is you're

[00:09:03] looking at people who are doing similar roles maybe they've got similar experience, similar

[00:09:10] so it's whatever factors that you are defining as your kind of compensable factors we call them

[00:09:16] reasons to be paid differently and so then you're reducing it that's what if we control for job

[00:09:23] and experience and maybe location then you're going to reduce that down to being like

[00:09:29] closer to equal pay and then that's why that number generally goes closer to 0%. So when we were

[00:09:36] talking about the GPG report this year the control gap was 99 cents in the dollar so quite small but not

[00:09:43] yet closed and the uncontrolled was 83 cents on the dollar so that's why you see that can

[00:09:48] exactly and that control pay gap sometimes called the equal pay gap as well so it's like equal pay gap

[00:09:54] opportunity gap is sometimes happy. Exactly and when we're looking at it in our report and also

[00:10:00] the ONS when they're looking at it that say that's at a national level rather than a company level

[00:10:06] and often then you can actually get closer it often looks like it's closer to 0 because there's a lot

[00:10:12] more factors to control for but more sample size and people are being paid similar across companies

[00:10:18] whereas within companies it's quite rare to get it quite as close to like 99 cents on the dollar

[00:10:25] like or you know that 1% pay gap sometimes they can actually get it is more like a sort of 2 or 3%

[00:10:30] and that's because there are fewer people there's more noise around it as well so not everybody

[00:10:35] every company who's listening to this will be like oh my control came up pay gap isn't the sense

[00:10:40] that country like that's why it's yeah and I guess you know my observation always is and I think

[00:10:45] you pointed out with some of that trend data there bickies that whichever gap you look at in kind

[00:10:50] of more recent years progressing closing them seems to have stalled for many reasons despite the fact

[00:10:57] that we do see employers remaining highly committed to addressing pay equity it's one of the questions

[00:11:03] we ask in our compensation best practice report which is our kind of big annual survey that we do

[00:11:10] over I think it's over 5,000 participants and it's really your kind of encyclopedia of all

[00:11:17] things and trends that are happening with pay practices and we're actually fielding currently

[00:11:22] for responses so we'll include a link to that survey in the resources for this podcast

[00:11:28] but you can find that on payscale.com at the moment or if you follow me on LinkedIn I think I've

[00:11:32] been sharing the link for you all as well to encourage you to take part but when we looked at

[00:11:38] cvpr earlier this year we saw that 63% of companies remained committed to addressing pay equity

[00:11:45] and that was slightly down from the year prior in 2020 2022 when it was 66% so we still see

[00:11:52] like a high level of commitment been asked a few times this year you know because of the economic

[00:11:57] situation where people be less inclined to address pay equity um I just say no because

[00:12:03] we are seeing an increasing number of equal pay cases and litigation coming this year

[00:12:11] probably because of the whole environment of pay transparency and you know if you're a company

[00:12:16] that's going through a difficult time financially the last thing you want to do is kind of get hit

[00:12:21] by an equal pay came because the cost is probably going to be more than it would do to fix the inequity

[00:12:26] in your company in the first place so so here's the big question ladies do we think the gender pay

[00:12:33] get will stay the same get larger shrink in 2024 what's your views bicky do you want to start yourself

[00:12:41] I got not hugely optimistic I think if we talk about the there's obviously what we should talk

[00:12:47] about the conceptually controlled and uncontrolled from a controlled gap I'm a little bit more

[00:12:53] optimistic and that's because a few things one is that we've got a lot of companies who've been now

[00:12:58] working this this for a little while right as you say you know we've got the majority of companies

[00:13:04] are doing something about it no they want to do something about it and that's now been growing

[00:13:08] and so as more and more companies do it then more and more companies do it you know that's but also

[00:13:12] with the pay transparency laws coming in you have to get your house in order to be able to host

[00:13:17] those ranges and so you have to understand what's happening within your organization in order to do

[00:13:22] that so that you don't basically advertise the range that your employees are going to be upset about

[00:13:27] and so like I do think at the controlled level so that you're talking about the same jobs

[00:13:32] they're going to have to fix that and so then that becomes like that's the control gap is that

[00:13:38] that the job level are people being paid the same and so I do think there's a commitment to that

[00:13:43] and the laws and the legislations that are coming in the way together it's hard though

[00:13:47] like from a company point of view I think you can do it from a country point of view if we're looking

[00:13:51] at our gender pay gap report whether that will change from 99 cents to one right that's a lot

[00:13:56] harder to get to that last bit right okay so Liz what about the uncontrolled pay gap for the

[00:14:03] opportunity gap do you think we'll see a change in that in 2024 well I was just feeling more

[00:14:08] optimistic based on what Vicki said about the controlled pay gap but when you bring up the

[00:14:15] opportunity gap or an controlled pay gap I don't have a lot of optimism there I think there's so

[00:14:23] much going on in the world right now that this is not bumping up to as the top priority we have a

[00:14:28] huge election as you know on the US next year and a lot of different legislation frankly around women

[00:14:37] that don't lead me to believe that it's gonna be a top priority that said I try to be an

[00:14:43] eternal optimist I would love to be wrong and I do think as you said Vicki pay transparency laws

[00:14:50] I think women honestly are we're speaking up more about some of these things being more educated

[00:14:57] in the in the wider range so that brings me some hope about it but what about you Ruth what are

[00:15:02] you and well normally we kind of when we try to look at we're looking at any key demographic

[00:15:07] changes potentially that might be happening like we saw happened during COVID and you know that

[00:15:12] can sometimes have an impact on whether the gap's going to close I can't really see anything that's

[00:15:17] going to have a significant impact you know there's nothing really that I can see it's going to

[00:15:24] happen that's going to significantly change it and like you I am getting I do have some concern

[00:15:29] around how the topic of pay equity is becoming politicized and you know with with a lot of

[00:15:34] campaigning I just read something earlier this morning from the economist saying that 70 countries

[00:15:40] are going to vote next year and that's almost half the world's population are going to be you know

[00:15:47] voting for new governments next year which is like incredible so there's going to be a lot of

[00:15:52] campaigning going on there and you know my concern is whether these issues you know just become a

[00:15:57] little bit politicized yeah what about you Vicki so I've been trying to think about this from a

[00:16:03] UK point of view as to whether or not the UK one may change you know obviously from the because it's

[00:16:08] the equally big and we have seen like a huge increase in in salaries here in the UK and

[00:16:18] a lot of that has been lower wage people so there's been some big strike actions or union

[00:16:25] actions so we've had and for the first time this quarter I think it is that pay is actually more

[00:16:31] than inflation so even though pay has been rising inflation has been rising more so real-time pay has

[00:16:36] been not rising but whereas we're just coming out of that but we've also had an increase in living

[00:16:42] wage increase in the national living wage which is the minimum wage here and so because a lot

[00:16:47] of the lower paid workers are women like I'm wondering whether that will actually affect it because

[00:16:55] if we bring up the lower and and because of you know maybe if we don't increase the because

[00:17:01] obviously there's also the recession issues coming up both in the UK and the US like a lot of

[00:17:06] worry about that so maybe if we're kind of slightly squeezing pay it might make a difference I will say

[00:17:14] that will be a slight might but also the numbers we're looking at with the full time

[00:17:20] that the this forces side uses the full-time percentages full-time pay gap and obviously a lot

[00:17:26] lower paid workers are part-time so and if you look at the whole pay gap the whole that's um

[00:17:32] 13.2% of this year is so like it's higher so it might affect that more than it will affect the

[00:17:38] right what do you think about um so I think I don't quote me on this but I think one in four women

[00:17:46] left the workforce during the pandemic or because you know caretaking and I should have looked at

[00:17:52] this before we chatted but I mean that has an impact as well right if there's more women leaving

[00:17:57] the workforce I don't know if more coming back now so that's really interesting because during

[00:18:03] the pandemic the pay gap decreased to its lowest amount and that's because women left so the

[00:18:10] lower end fell out and then some of the amidst ridiculous right because it was like yeah it's great

[00:18:15] oh hold on that's because women aren't worried anymore so and actually here in the UK and

[00:18:22] and in the US in activity has been decreasing so they call it in activity it's not in active to

[00:18:26] obviously it's chocke and but it's sort of inactive yeah but like that's what it's known as

[00:18:33] that it's not employment um and um it has been decreasing recently and I think you know some of

[00:18:40] the reasons for that are the fact that the costs of living have gone up and you know and also some

[00:18:44] chocke has come back in the UK though it chocke is there's a lot of issue in chocke and with the US

[00:18:49] and so um it's not as many women have come back as left I think oh but um it is definitely

[00:18:57] I think there's definitely getting better again yeah definitely the cost of living crisis having an

[00:19:02] an impact and you know there was that whole kind of along with all the very great resignation great

[00:19:08] everything it was the great retirement and we lost kind of a segment the workforce just after

[00:19:13] covid where they were like you know I've really just had enough um that we've seen a number of those come

[00:19:19] back to the workplace you know as a result of the cost of living maybe you know they're now suddenly

[00:19:24] working out that their pension wasn't going to last them as long as they potentially thought it was

[00:19:29] and with all the kind of um squeeze that we've had really on kind of our day-to-day and expenses so yeah

[00:19:37] so we talked about the gender pay gap but our race and ethnicity a factor in the gender pay gap

[00:19:44] is I think that's something we do look at in our GPG reports isn't it yes we do so uh we look at

[00:19:50] intersectionality so um if um that's the intersection of various social categories of race

[00:19:58] class gender and we apply those to the um gender get paid gap as well so

[00:20:05] so these kind of intersections create this interconnectedness between um if we went what we ask in our

[00:20:12] report we look at um if women of different races are impacted differently by the gender pay gap

[00:20:19] and we look at so if women of color are affected and indeed they are um when the data is uncontrolled

[00:20:27] American Indian and Native Alaskan women have the widest pay gap so um 73 cents for every dollar

[00:20:35] that a white male makes and then that gets even worse when you're kind of we're talking a little

[00:20:41] bit about the executive level there Hispanic and Black women are making 65 cents to every dollar

[00:20:48] that their executive peers are making uh whereas white women are making at the executive level 71

[00:20:55] cents for every dollar than a male so and that sort of like you were earlier saying Vicki that

[00:21:02] um in lower paying jobs maybe that's it and again like a class situation people that's another

[00:21:10] piece of intersectionality so short answer Ruth yes it has an impact

[00:21:16] knowing the UK Vicki we have a mandatory gender pay gap reporting scheme it's been around since

[00:21:22] 2017 um where organisations have to publish their gender pay gap and unfortunately we haven't seen

[00:21:30] any significant movement in that in the six years of reporting but what about ethnicity reporting

[00:21:39] why don't we have FSU have you know we don't have FSU reporting you know is it coming

[00:21:44] and you know we've heard a lot about the new EU page transparency directive that's got a whole

[00:21:48] hosted requirements is that going to allow us to push reporting through on race and ethnicity?

[00:21:54] yeah so the the UK gender pay gap reporting is only uncontrolled pay gap for the companies they don't

[00:22:01] have to report on a controlled level and there's no requirement to do anything about it which I think

[00:22:05] is probably whether your issue is like uh so they just have to say the numbers and then move on um

[00:22:11] we are one of the countries that is due to have an election next year and

[00:22:18] the Labour government is at the moment holding higher than the Conservative government and they have

[00:22:23] put forward a proposal that does include mandatory reporting of ethnicity pay gaps and this is

[00:22:30] the liberty pay gaps as well I believe and now that doesn't necessarily means going to happen but

[00:22:36] I think it's more likely to in the UK at the moment we have a voluntary scheme so if you want to do

[00:22:43] which you know means that most companies don't and so I think it's coming for that I think we will

[00:22:50] end up building that up in the UK the ONS does do some stats around it as well but they

[00:22:55] I don't know whether they do intersectionality I think maybe they just do them individually

[00:22:59] so and I think this as well won't maybe touch on intersectionality which of course is the most

[00:23:03] major kind of point of all this is it's not about you know your one group or your other group

[00:23:09] you're actually there lots and lots of different groups and as we was talking about actually that

[00:23:13] it's the occupational segregation that we often see that causes some of that so people are in certain

[00:23:19] groups are paid less and those groups are where some demographic old people in certain locations

[00:23:26] you know so actually it's really complicated picture and if we don't use that intersectionality

[00:23:30] we kind of miss that that really important picture from the EU point of view it's not in there

[00:23:38] as far as I can tell it's just gender pay gap and I think that is because in the EU as a whole

[00:23:44] there's not like a grieve scheme on like how to report on ethnicity and so each country has like

[00:23:52] different categorisations different groups of people that own different you know

[00:23:56] obviously you know there's different ethnicities across Europe so it's not it's not easy to do

[00:24:01] with men and females it's not easier it's not easy to do and so I think that's probably why there's

[00:24:06] also some legislation about like not being able to ask future issues you know obviously

[00:24:13] more culture leadership and so I think it's harder but I do I don't think it's going to go away

[00:24:20] I think it's definitely going to be you know requirement in the long run it's just how harder to do

[00:24:26] yeah because interestingly I remember having a look at some of the schemas for some of the

[00:24:30] European countries and they are you know they cover everything from race ethnicity but also

[00:24:36] immigration status religion so you know they have quite complex based on the cultural

[00:24:41] you know his political socio-economic histories so many different countries are like 28 member states

[00:24:47] whatever it's France you know protected categories in France like there's like twice as much as

[00:24:53] there are in the UK or you know so many and I think that's the problem is like how do you then kind

[00:24:58] of wrestle that across the whole of the EU right okay so none of us are particularly optimistic

[00:25:06] about significant change in gender pay gaps for the year sorry folks if you were joining for good news

[00:25:11] today and maybe this should be our new year's resolution you know so be optimistic about gender pay

[00:25:19] so if you could recommend one thing to close us out with that you would recommend any

[00:25:25] business here to do in their organisation that could potentially help to close the gender pay gap

[00:25:30] in 2024 what would that be I'm going to start with you first Vicki so I've been doing quite a lot of

[00:25:36] work on how companies can sort of work out what their comparable workers are and I am a very big

[00:25:44] component of job architecture and I know this is something that companies did kind of years ago

[00:25:49] and I think it's really important that is coming back now and that's because it's not just about

[00:25:54] job titles it's actually about understanding where your jobs are and where they fit with each other

[00:25:59] in the hierarchy of your organisation and across the organisation as well as up and down

[00:26:03] and if you work on your job architecture as a company and you know where your jobs are then you can

[00:26:09] understand whether people within those jobs are being paid fairly and then across the whole level

[00:26:15] and across the and it means that the calculations are really easy to do because everything's actually

[00:26:19] organised and it also helps to pay transparency because it means you can quite easily understand

[00:26:24] if I'm going to post a range who does that impact and particularly in the UK and the EU because

[00:26:30] equal value is more important but in the US the law is about comparable work it's not just about

[00:26:36] job titles and so although it's potentially a big project I would say saw yourselves out with

[00:26:43] a really great job architecture that happens to be one of your favourite topics as well

[00:26:49] apologies to everyone who knows me playing that part game

[00:26:53] for me for all what's that part of giving me if you stand up and talk about something for two

[00:26:56] minutes that would be one of your choices I think. I'm fully in with job architecture

[00:27:02] okay Liz what about you what would be your one thing you would recommend to our listeners

[00:27:06] to do in their organisation to close the gender pay gap in 24 kind of toes into what the queen

[00:27:11] of job architecture was just saying that's my new title for you. Okay so Tyson with sort of job

[00:27:19] requirements so I've seen Walmart for example recently said that they are going to be removing some

[00:27:26] college or degree requirements from jobs across their organisation so not just sort of front line

[00:27:33] but also even in corporate jobs which I think is a little renegade which is it's in its wonderful

[00:27:39] so that really kind of starts to level where all learning counts I have a background in training

[00:27:45] so of course I'm all for the learning but people you know they're tenure in a job their skills

[00:27:51] they've learned on the job these things can start to matter more or just as much as a degree and

[00:27:57] you know you don't need a degree for everything so I think there's some states here as states

[00:28:03] as well that have implemented this for their sort of state job do I think that's going to fix

[00:28:09] everything no of course not but it's a one step forward to just look at those requirements and ask

[00:28:14] yourselves and that kind of goes to the opportunity gap right maybe now not everybody's had the

[00:28:19] opportunity to go to college and they shouldn't kind of be punished for that for the rest of their

[00:28:25] lives and you are right it's kind of there are so many things that you can do so many

[00:28:30] little things and big things that you can do within your organization and for me I was to take it

[00:28:36] right back to basics it's just like it measure your pay gaps if you're not measuring your pay gaps

[00:28:42] then you don't know what the problem is and you don't know what you can fix and I know we've been

[00:28:46] afraid of measuring pay gaps for quite a long time because of all the legal ramifications but

[00:28:51] you know that time is really past not that the legal risk has gone away but in the sense that

[00:28:57] your employees you know your investors your customers your suppliers or have an interest in whether

[00:29:06] you are paying people fairly within your organization and so you know now is the time to really

[00:29:12] measure those gaps so that would be my recommendation well thank you very much Liz and thank you

[00:29:18] very much Vicki for joining me today to talk about gender pay gaps that's what we think

[00:29:24] what do you think email us at coffee at payscale.com and you'll find in the episode

[00:29:31] the links to the resources that we've talked about today and if you have any suggestions for

[00:29:37] future top lecture like it's talk about email us there as well thank you very much

[00:29:54] you