Will equal pay efforts fall victim to the DEI purge?
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Today, many companies of all sizes are dialing back or eliminating DEI (Diversity, Equity & Inclusion) initiatives. Naturally, this brings deep concern for affected, historically-marginalized workers. It also raises this critical question: Will pay equity – that is, equal pay for all – be collateral damage in this societal shift?
Equal Pay is Still the Law
Even though “equity” is part of the DEI mission, “pay equity” has been enshrined in laws and regulations. For example, we still have the Equal Pay Act (or EPA), enacted in 1963, and the Lilly Ledbetter Fair Pay Act, enacted in 2009. The EPA law prohibits employers from paying employees of one gender lower wages than employees of the opposite gender for performing the same work. The Lilly Ledbetter Act amended Title VII of the Civil Rights Act of 1964, clarifying that each paycheck providing discriminatory compensation effectively extends the time allowed to file a Title VII claim for pay discrimination.
Significant Gender Pay Gaps Still Exist in Indiana and Beyond
Despite these regulatory efforts to close pay gaps, Indiana has the 15th largest dollar gap in the U.S., according to the 2023 Census Bureau’s American Community Survey. And in September 2024, the U.S. Bureau of Labor Statistics reported that Indiana’s gender gap is the 5th worst in the country.
What do the statistics tell us?
In the US, women made 83 cents on the dollar in 2023 compared to their white male counterparts, a drop from the 84 cents earner per dollar in 2022.
In Indiana, meanwhile, White, Non-Hispanic Women make 74.6 cents on the dollar compared to white men. Digging deeper, Asian American Women make 77.9 cents per dollar, Black Women make 69.6 cents, and Latina Women make 57.2 cents. Black men fare poorly, too, earning just 63.7 cents compared to each dollar earned by white men in equivalent positions.
Is the Gender Pay Gap Narrowing?
Despite laws and societal awareness, the gender pay gap has barely narrowed over several decades. In fact, according to the Society for Human Resources Management (SHRM), the pay gap widens as women move up the corporate ladder. For example, compared to their male counterparts in equivalent positions, female managers and supervisors earn 83 cents on the dollar, female directors earn 82 cents, and female executives earn just 72 cents. SHRM further reports that women who work remotely earn 79 cents on the dollar while women who work on-site earn 89 cents on the dollar. Working mothers make just 75 cents for every dollar a working father earns.
Does Pay Transparency Help?
Fourteen states will have laws requiring some level of pay transparency by the end of 2025. (Indiana is not among them.) Beyond this, each new generation entering the workforce expects or demands more pay transparency, seeking clarity regarding how pay is determined.
What impact does pay transparency have? According to Bamboo HR, 19% of employers implemented salary increases in 2024 as a result. Additionally, 60% of companies are now publishing pay ranges in job postings, up 45% from the previous year. According to the USA Today Blueprint Survey, 52% of respondents say salary transparency is helpful in attracting and retaining talent. However, 14% of employees say they quit their jobs because they saw ads with higher pay elsewhere.
What Can Be Done to Close the Gaps?
Perform Audits
Companies should conduct both an annual discrimination audit and a pay equity review. An annual discrimination audit will look at protected to non-protected classes for race, sex, and age. A pay equity review will ensure that each employee is appropriately placed in their pay range based on education, previous related experience, time in job, and performance.
Continuous Monitoring
It is management’s responsibility to ensure ongoing fairness and equity in pay. In addition to annual audits, each new hire should be compared with others in the same or similar job to ensure continued pay equity. If new hires earn more than current employees, it is essential to increase existing employee pay to avoid creating or amplifying pay gaps.
The Bottom Line:
In an era when DEI initiatives are crumbling, pay transparency and equity are imperative for companies who want to remain competitive in their industry, geographic area, or marketplace. Unfortunately, according to the World Economic Forum, it will take until the year 2158 – another 133 years – to remedy the equal pay issue! Despite laws being on the books beginning in 1963, we have a long way to go to; and true progress begins at the organizational level. How are you advocating for equal pay in your organization?
Cassandra Faurote is the CEO of Total Reward Solutions, a compensation consulting firm and author of Compensation Sense 101: Common Sense Answers to Your Questions About Employee Compensation and Total Rewards. Reach her at cassandra@totalrsolutions.com.