Post-Pandemic Pay Equity Requires Vigilance

Women left the workforce in droves when schools moved to remote learning and day care centers closed at the start of the COVID-19 pandemic last year. Even if they return to work, this stoppage could be a significant and lasting setback for gender-based pay equity.

Before the pandemic, many metrics showed a slow but steady narrowing of the difference in pay between men and women. Data from Visier Solutions Inc., for example, found that the gender pay gap in the U.S., comparing working women and men overall, had narrowed by 6 cents between 2017 and 2020. In 2017, a typical woman earned 77 cents for every dollar earned by a typical man; in 2020, that amount was 83 cents. The measurements are from a subset of the Visier Insights database of more than 4,000 companies.

While figures on the post-lockdown pay gap aren't yet available, when women are out of the workforce for a significant period of time, they lose opportunities to earn pay raises, gain skills and get promoted.

Hope for the Future?

Some observers, however, see reason for optimism when it comes to the future of pay equity.

The key reason for optimism is the current state of the labor market. With so many employers doing everything they can to attract workers, including increasing pay significantly, women returning to the workforce will have plenty of job opportunities and a significant amount of leverage in pay negotiations.

"With the current labor shortages, I don't think anyone will take a hit when they get back into the workforce," said Lori Wisper, managing director for rewards at consultancy Willis Towers Watson in Chicago. "Starting salaries are trending upward, and anyone re-entering the workforce could see a pay increase from where they left off."

Researchers are also finding some positive trends that could provide long-term support for women in the workforce that, in turn, could support greater pay equity. "The rise in work flexibility during a pandemic recession is likely to be persistent, and disproportionately benefits women who have major childcare responsibilities," according to a 2020 study released by the National Bureau of Economic Research.

The analysts noted that "numerous employers have reorganized work to enable their staff to continue working while caring for children at home" and that "some of these changes are likely to persist, leading to long-term changes in gender inequality in the labor market." This is especially true if employers follow through on their promises to maintain some level of remote or hybrid work for their employees.

Pay Equity in a Competitive Labor Market

"Flexibility keeps women in the workplace and allows them to design their workdays around their overall life responsibilities," said Amy Mosher, chief people officer of HR technology firm isolved in Charlotte, N.C. "People began asking for continued flexibility as children returned to school and day care."

She includes work flexibility as a key element in isolved's efforts to ensure pay equity. As a rapidly growing company with a workforce that is 65 percent female, "we have been prioritizing pay equity, culturally and otherwise, across the workforce, even before the pandemic," Mosher said.

The company is also working to ensure a level playing field when bringing in new talent. It begins its focus on pay equity during the hiring process where candidates are asked about pay expectations rather than their pay history. Hiring managers and recruiters are also directed not to ask about any gaps in a job candidate's employment history but instead to discuss the time and type of work done, Mosher said.

In some cases, isolved is removing requirements for college degrees from job descriptions for certain positions to open up opportunities to a broader array of candidates.

The company is particularly aware of pay equity concerns in traditionally male-dominated areas of operations, such as sales. "We are paying for performance against revenue, not the number of hours worked or calls made," Mosher said.

The addition of virtual engagement with clients has leveled the playing field for many employees working in sales, she noted. Since everyone had to learn how to land new clients and work with existing clients remotely as a result of pandemic travel restrictions, they were on the same learning curve. "Everyone had to learn how to engage people remotely," Mosher said.

Ensuring Equitable Pay

Researchers at the Society for Human Resource Management recently reported that employers can improve efforts to pay employees fairly by conducting pay audits and engaging with people on the front lines of implementing pay strategies.

Employers that want to ensure their compensation systems and hiring practices are supporting pay equity must remain vigilant, however. Looking at average pay by gender can reveal any gaps in pay between the two, Wisper said. If work included in different jobs is done in a substantially similar manner, the pay for those jobs should be paid in a substantially similar manner to ensure fair pay levels.

By identifying pay levels for a benchmark job, such as senior accountant, employers can determine a salary range for that position. Senior accountants, for example, might earn somewhere between $95,000 to $108,000 per year.

After plotting the actual pay of the people in that job, an employer may find it has a pay equity issue if men typically earn more than women in that position.

"The danger right now is having pay get skewed because employers are so desperate for people," Wisper said. As new employees are being hired at higher starting salaries, existing employees in those positions may be earning the same or even less than someone new in the same job, due to pay compression.

This is particularly true as starting pay for front-line workers grows from $15 per hour up to $20 per hour or more in some organizations. "Employers may have to dig deeper in certain hot spots to see if something is going on" in employee pay from a pay equity perspective, according to Wisper.

Proceed with Caution

When monitoring compensation to ensure pay equity, Wisper urged employers to go beyond simply complying with the law. "There is compliance, and then there is overall fairness," she said. "You can be in compliance and people may not feel they are being paid fairly."

Employers should conduct any pay analyses in conjunction with legal counsel, Wisper advised. "These types of analytics can be damaging to a company, even when the company goes in with the intention to examine these issues and fix them," she said. "These results could be discoverable in the event of any legal or government action" involving compensation.

Joanne Sammer is a New Jersey-based business and financial writer.