Equalizing pay is a critical step toward creating an inclusive workplace, yet it’s often at the bottom of the priority list for an organization’s DEI plan.
More than one in four Americans believe employers should provide pay transparency in job postings, and 61% are more likely to apply for those roles, according to a survey conducted by cloud compensation software provider beqom. And even though candidates expect
“Pay transparency is aligned with how employees expect to be valued today,” says Tanya Jansen, co-founder of beqom. “They want to know they’re being paid fairly and that their compensation is flexible enough to meet their specific needs.”
But without that knowledge, more than 43% of American employees did not negotiate their salary when interviewing for a new job during the pandemic. More than half of that group were women, who said they didn't think they had the leverage as the main reason for staying silent.
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Women often suffer the worst consequences when
Equal pay for equal work is also not a reality for many people of color: on average, Black women are currently paid 63 cents for every dollar paid to a non-Hispanic white man, according to the National Women’s Law Center. This adds up to a median wage gap of $2,009 a month, $24,110 a year and $964,400 over the course of a 40-year career compared to their white male peers.
“For DEI initiatives to succeed, employees must feel seen, included and appreciated,” Jansen says. “Employees who trust their employers and see transparency around pay can seek comfort in the fact that they are not being paid less than their colleagues in the same role purely because of their race, gender or sexual orientation. This creates a feeling of inclusivity.”
Despite making pledges to DEI and bettering the landscape for women and minorities, companies continue to show hesitancy toward fostering
Yet there is some progress being made. Microsoft, among other employers, allows employees to compile a spreadsheet that keeps track of wages in an effort to keep it fair and transparent. Additionally, states including Colorado and New York have passed legislation requiring employers to disclose pay decisions, and also bars them from asking about compensation history.
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More needs to be done on a federal level to see real change, Jansen says. Legislation around pay transparency in the U.S. would not only create an overall sense of fairness and equity among employees, but it also shows that the company is providing salary at the competitive market rate and gives employees a more holistic view of their future workplace.
“It would force companies to show their cards,” Jansen says. “Employees could then compare which companies could pay them at market rate, and for those that are perhaps offering a lower salary, what they would get in return.”
As for why companies continue to keep those cards close to their chest, Jansen says organizations have their reasons. For example, oftentimes employees aren’t comparing all of the important factors that lead to fair compensation decisions, like experience or benefits that may be impacting their wage. However, it’s on employers to make those factors clear and keep them from impacting unfair compensation.
“Unless employees themselves have full transparency of what they are paid, then there will most likely not be pragmatic conversations between employees about compensation comparisons,” she says. “That can be really harmful to an organization, but by providing more transparency into how pay decisions are made, and being open about total compensation, employers can provide more context to help employees understand that their pay is fair.”
