Employers are demonstrating a heightened commitment to addressing gender-based wage inequities despite pay-budget constraints caused by the COVID-19 pandemic. However, pay disparities still exist, and employers’ efforts should remain ongoing, new research from several sources indicates.
Pandemic Could Widen Pay Disparities
Women are at a higher risk of seeing greater earnings penalties as result of the COVID-19 pandemic, pay analysts warn. That’s because women are “more likely to have to take time off work, or even resign their positions, in order to care for children who are no longer in school as well as other family members,” according to
The State of the Gender Pay Gap 2020, a report from PayScale, a provider of on-demand compensation data and software.
The firm’s research shows that women often incur a pay penalty on returning to work after a prolonged absence—earning 7 percent less on average than men in the same position.
“As the pandemic continues and uncertainty plagues the workforce, women are being disproportionately impacted
as child care solutions are scarce and the pressure to balance work and parenting increases,” said Tanya Jansen, co-founder of beqom, a cloud-based compensation software firm. “The pressure is on business leaders to reassess their compensation systems to create an equitable environment for women within their companies and to keep society from taking major steps back in gender equality,” she said.
[SHRM members-only toolkit: Managing Pay Equity]
Many employers have been taking action to remedy gender-based pay disparities. For instance, the percentage of employers conducting a gender-based pay equity analysis rose to 56 percent in 2020, up from 35 percent in 2016, according to a recent study of 1,157 organizations by HR consultancy Mercer. The increase reflects a growing commitment by corporate leaders to achieve pay equity for women, according to the firm’s report
Let’s Get Real About Equality.
Eighty-four percent of organizations that analyze pay said that if they discover an employee is eligible for an increase to ensure gender parity in compensation, the adjustments typically address both base and variable pay. However, only 44 percent of organizations have a formalized process for remediating pay inequities, the survey showed.
“It is difficult to implement pay increases to correct for inequities when, for many, pay increases of any kind are off the table” due to business challenges related to the pandemic, Mercer consultants Brian Levine and Haig Nalbantian wrote in an
analysis of the findings. Under these circumstances, they advise employers take these measures:
- Continue to assess the risks. Companies with rigorous, regular pay-equity review processes are more likely to have equitable employment practices—in hiring, promotion and retention—leading to greater workforce diversity. “Lowering the review standard, even for a year, can lead managers to question the organization’s continued commitment and create longer-term, broader challenges,” Levine and Nalbantian wrote. “A resurgence of inequities could result.”
- Scale the response where budgets are limited. Where disparities are identified, pay adjustments should be considered. If necessary due to budget constraints, these can be phased in over time. Conducting an annual pay-equity analysis provides an “opportunity to accelerate further when budget dollars are again available,” the consultants noted.
- Consider new opportunities to counter gaps. In the current crisis, pay reductions will be a reality for many, Levine and Nalbantian acknowledged. “Given that reality, why not push the pay reductions in the form of salary or bonus cuts to those who are already overpaid?” they suggested.
Women’s Promotion-Related Raises Lag
Another pay hurdle women face was highlighted in a new study by Nulab, a cloud-based compensation software firm, which found that
women promoted to leadership roles within the company are likely to receive a lower raise than a man would receive.
Based on responses from more than 1,003 managers surveyed earlier this year, Nulab found that on average, male managers received an increase of $9,070 upon assuming their new leadership role, while female managers received an increase of $7,899—a difference of nearly $1,200.
“The gender pay gap is still a very real and prevalent problem when it comes to leadership roles and compensation,” said Analisse Dunne, people operations manager at Nulab. “Employers can do their part to eliminate this discrepancy by ensuring that decisions regarding compensation are both thoughtful and performance-based.”
“Women face extraordinary challenges in being heard, seen, and dealing with their own confidence issues,” said executive coach Susan Hodgkinson, founder of The Personal Brand Company. Only part of the issue can be addressed by coaching woman, she said, “because the people who actually need to change are the people with gender-biased and just generally biased belief systems—typically the men in charge. Inclusion is necessary, not elective, for success for individuals and the companies that they represent.”
Women of Color Face Bigger Hurdles
The playing field isn’t equal at the beginning of women’s careers, PayScale’s research indicates.
White female individual contributors earn 82 cents for every dollar earned by a male individual contributor. When controlling for factors such as position and level of experience, a white female individual contributor makes 99 cents to every dollar her white male counterpart makes, according to the firm’s survey of nearly 1.6 million people from January 2018 through January 2020.
The gender wage gap, however, is wider for Black and Hispanic women at the individual contributor level and continues to widen as they move up the organizational ladder.
“We know that unconscious bias often seeps into performance reviews and pay increase decisions and that biases disproportionately affect people of color,” PayScale’s researcher noted.
Martine Ferland, Mercer’s president and CEO, commented that “policies, processes and programs need to be aligned and connected to eliminate bias—especially the unconscious bias that leads people to hire and develop people who look, talk and think like they themselves do.”
Further progress in pay equity requires “getting women into leadership positions,” Lisa Harpe, principal consultant at DCI Consulting Group, said during WorldatWork’s Total Resilience Virtual Conference & Exhibition. “We need to ask where women are in the workforce” and whether they’re being excluded from higher paying jobs and leadership positions.
Beqom’s Jansen added that by addressing unconscious bias in hiring and promotions, making compensation practices transparent and providing more flexibility for employees, “during these difficult times, employers can work to empower their workforce equally, regardless of gender.”
As the recent surge in COVID-19 cases has led schools to move to complete or part-time distance learning, productivity for working parents is set to decline at the start of the school year, according to research by Perceptyx, a business analytics software company.
A July survey by the firm, which collected responses from 1,500 working adults, shows that working mothers are nearly twice as likely to carry 100 percent of the child care responsibilities during the workday compared to working fathers. Moreover,
Among senior leaders who believe carrying out distance learning from home will place an extremely difficult burden on their family, mothers are more than 1.5 times more likely than similarly situated fathers to report that they do not intend to stay at their current employer for at least the next 12 months.
“It is clear that for working mothers in senior leadership positions, we risk losing decades of progress toward breaking the glass ceiling because of the demands of distance learning,” said Brett Wells, director of people analytics at Perceptyx.
How an organization supports employees faced with distance learning plays a big role in retaining these workers: 92 percent of employees who strongly agree that their organization is providing the flexibility and support to work from home when children are at home intend to stay at the organization for at least the next 12 months. This drops to 66 percent for employees who do not agree that their employers are providing flexibility and support.
“To adequately support working parents, organizations must be willing to consider cases at the individual level,” said Wells. “Open and honest conversations are paramount, and a well-crafted employee listening and action plan can enable organizations to identify support areas that employees will value the most.”
Related SHRM Articles:
Women May Take Extra Financial Hit from Pandemic,
SHRM Online, April 2020
Family Obligations Widen Gender-Pay Gap, Research Suggests, SHRM Online, December 2018
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