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Why You Should Care About the Gender Pay Gap

Just last week, Tuesday April 12 to be exact, the Equal Pay Act turned 53 years old. We all know why we have an Equal Pay Act – to ensure that men and women receive equal pay for equal work and, conversely to eradicate pay inequities based on gender. Under the Equal Pay Act, we have seen qualified success. In 1963, the year that Congress passed the Equal Pay Act, the average earnings for women nationwide were $16,908, compared to $28,684 for men, reflecting a 41.1% pay gap. If we compare average earnings nationwide today, we can certainly see an improvement. In 2014, nationwide, women’s earnings averaged $39,621, compared to men’s average earnings of $50,383. Women’s earnings nationwide were therefore 79% of men’s average earnings, reflecting a 21% pay gap. The good news is that these figures reflect that the pay gap has been almost halved. This reduction was the result of applying compensation best practices, and the phenomenon of women entering jobs that were men dominated. The less-than-good news it has taken over half a century to achieve that decrease, and that there still remains a significant disparity between men’s and women’s earnings.

To be fair, yes, the difference in women’s versus men’s earnings is partly explained by certain life choices. Yes, women often choose more traditionally “female” jobs or professions that pay less than traditionally “male” jobs or professions. Yes, women often work fewer hours or leave the workforce altogether to have and raise children. But that does not explain the entire gap. The American Association of University Women’s 2012 study followed college graduates over time. Even after considering college major, occupation, economic sector, hours worked, GPA, months unemployed since graduation, type of college/university and its level of selectivity, age, geographical region and marital status, it found a 7% difference in earnings of male and female college graduates as early as one year after college graduation. An earlier American Association of University Women (AAUW) study, entitled Behind the Pay Gap, found that even after accounting for the above factors and lifestyle choices an unexplained 12% gap between women’s and men’s earnings existed 10 years after college graduation. In other words, there still remains a significant pay gap.

Why should you care though? As a taxpayer, you should care because families increasingly rely on women’s wages to make ends meet. When families are unable to do so, guess where they turn? Government programs. Who pays for them? Yep, the taxpayers. As an employer why should you care? Because, most likely, fair pay does impact your bottom line. Employers are more likely to see higher morale, better job performance and lower absenteeism and lateness if their employees believe they are being paid and treated fairly. Moreover, employers with a reputation for treating and paying their employees fairly are more likely to attract and retain top talent.

Finally, as a federal contractor, why should you care about pay equity? The short answer: because it is part of your Affirmative Action obligations. Not only do the Equal Pay Act and Title VII prohibit pay discrimination against women (as well as EO 11246), but as many of you know, the OFCCP is vigilant about enforcing Affirmative Action regulations. The OFCCP has also made it very clear that pay equity is a priority. When the OFCCP sets a priority, it tends to be reflected in Compliance Evaluations and the documentation contractors are required to create and maintain. The documentation in turn is supposed to reflect a contractor’s efforts to ensure not only that hiring is in compliance with Affirmative Action regulations but also employment practices, which include pay. Taking proactive steps to ensure that women receive equal pay is the right thing to do and makes good business sense. It’s also the law.

For more information contact Ahmed Younies at (800) 708-3655, x703 or [email protected].

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