U.S. gender pay gap narrows

Do men continue to make more than women? Overall, it would appear so, but we see some encouraging trends below the surface.

According to a 2021 diversity, equity and inclusion survey conducted by the compensation software company Payscale, women in the United States earn 82 cents for every dollar earned by men. Digging deeper, however, it appears that when men and women have the same job and qualifications, the median salary gap narrows to near equity, with women earning 98 cents for every dollar earned by men. While this number is positive, the data highlights other hurdles that have yet to be crossed. The gender pay gap widens with age and job level; in addition, men's salaries increase faster than women's salaries as they progress in their careers.

In honor of Women's History Month and International Women's Day on March 8, it is important to understand the factors behind these disparities in order for opportunities to improve for all.

The global gender gap

Gender equity is about more than just wages. The World Economic Forum introduced the Global Gender Gap Index in 2006 to measure the progress of gender parity, which is measured based on improvement in four factors - economic opportunity, education, health and political leadership - from 156 countries across the globe. The index fell in 2021 from a year earlier, which is not surprising considering the effects of the pandemic both on health and the economy, women's fallback position as primary caregivers and additional work responsibilities. Using the results of the past 15 years as a proxy, it will take more than a century, roughly 135 years, to finally close the global gender gap.

Political empowerment seems to be the differentiator

According to the World Economic Forum index, Iceland leads women's advancement, having closed 89% of the gender gap with eight other countries closing at least 80% of the gap. Iceland's example is worth noting. According to Meghan Werft, editorial coordinator of the equity advocacy group Global Citizen, Iceland has several laws protecting women at work. It provides a framework for businesses to achieve gender equality, including a provision that company boards must include at least 40% women. The country also has a strong parental paid leave policyine months for both parents.

The United States showed great improvement, moving up 23 places to No. 30 overall, closing 76% of the gender gap. This increase is largely due to the increase in political empowerment, which doubled to a score of 32.9%, the survey found.

Despite these gains, throughout 2020, nearly 2.3 million U.S. women left the labor force, the Bureau of Labor Statistics data show. The pandemic pressures, including lack of child care and increased workplace demands, are considered largely responsible for the shift.

The exodus of women from U.S. job rolls prompted Reshma Saujani, author and founder of Girls Who Code, the nonprofit that supports educating women in computer science, to create a plan encouraging businesses and government to team up and find ways to accommodate working mothers better. The Marshall Plan for Moms promotes improved paid parental and sick leaves, equal pay, support for child care and more control over schedules.

Investors and businesses prompt change

Amid the rise in public awareness about social issues, consumers and investors continue to expect businesses to establish and document social policies for the workplace, including equity and inclusion for women. Companies are developing diversity, equity and inclusion initiatives because they are good business and because they are the right thing to do.

Increasingly, investors want to understand and measure the results of environmental, social and governance (ESG) policies that businesses put into place. Bloomberg recently established a proprietary Gender-Equality Index (GEI) to standardize and measure the results of these efforts. Its 2022 index included 418 companies headquartered in 45 countries with a combined market capitalization of $16 trillion. The index reported many positive results:

• On average, the GEI companies' boards had 31% female representation.
• 72% of participating companies had a chief diversity officer or an executive in charge of diversity and inclusion.
• 67% of managers are required to complete unconscious bias training annually.
• 65% of participating companies sponsor community financial education programs for women.

The takeaway

As companies reimagine the future of their work environment and develop their strategies, it makes sense to consider the following:

• Review and implement measurable plans and processes for diversity in hiring, promotions and salary adjustments.
• Allow for a proper amount of flexibility and predictability in scheduling work to help all employees succeed.
• Consider policies that accelerate gender parity and close the pay gap.
• Evaluate benefit and wellness programs to include updated sick and parental leave policies.