Why Does Equal Pay Really Matter?

There is no question that women and minorities are not at salary parity with white males in our business culture. But the prevailing myth that this is an evil plot to oppress us doesn't fly with me, because things get much more complex.
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This week we celebrate Equal Pay Day, when we're encouraged to wear red to visually reference how far women and minorities are "in the red" with their salaries.

There is no question that women and minorities are not at salary parity with white males in our business culture. They are not. But the prevailing myth that this is an evil plot to oppress us doesn't fly with me, because when you look under the covers of equal pay, things get much more complex. In sum, the current wage gap serves a purpose, both for businesses and for many women themselves; and in doing so it's undermining the interests and needs of us all.

What a deeper dive into the data shows, on the surface is this:

  • There are generational influences and younger women are at less of a disadvantage than older women. (This may change - time will tell.)
  • The wage gap differs when looking at hourly vs. annual wages.
  • Wages for women are trending up while wages for men are trending down -- leading to a future crossover point?
  • Women and men view work vs. life in dramatically different contexts, and make their choices accordingly, leading women as a demographic to drop in and out of the workforce more often, with less emphasis on upward career momentum.

The Truth Beneath the Wage Gap

Even with the factors above accounted for, there is still a significant and meaningful wage gap, but the explanation for it is simply less clear. Combine these insights with the fact that companies incent hiring managers to get the most value for the least price -- a generally "good business practice" in our capitalist society -- and what we see is a system that is designed to take advantage of women and men who don't strategize and negotiate their value.

Sheryl Sandberg, author of Lean In, famously quotes male CEOs as chiding her for writing her book because, "now all the women that work for me want a raise."

Traditionally, however, women have failed to negotiate their value as effectively as men do, in part, because they've been conditioned not to do so. Our cultural stereotypes show negotiators to be "tough" and "aggressive," both qualities that women are penalized for as being unfeminine and unattractive. Anecdotally, I've spoken with many women who are also relieved that they don't have to justify what they view as a ridiculously high salary, which frees them somewhat from the guilt they feel around balancing their time, energy and prioritization of family matters. (Some men feel this way too, by the way.)

So, basically the wage gap boils down to a cultural dynamic in which a business can negotiate bargain prices for critical resources (women) while some women feel they are also getting a bargain deal because they have less pressure to prioritize work above work+life.

Why the Wage Gap Really Matters

The status quo, though appearing unjust on it's face, seems to work for a lot of people under the cultural realities that if businesses wanted women's full talent, they would pay for it and if women wanted equal pay, they'd learn to negotiate for it. But this mutually dysfunctional system isn't helping any of us prepare for the workplace of the future. This desire to hire "cheap people who value work above all else" hiring philosophy is rapidly becoming a competitive disadvantage for companies of all sizes.

The nature of work is changing. Employment is becoming more fluid as employees work remotely and under a wider variety of employment agreements than ever before. Finding the right talent for the right job -- and keeping it -- is becoming a competitive advantage for companies everywhere. Women are very talented leaders and more and more of them are leaving to pursue entrepreneurial ventures where they feel their talent, financial aspirations and work+life needs can coexist more comfortably. Millenials, too, are planning to leave for the same reason.

If your business is systematically incenting anyone -- women, millenials or men with family needs -- to churn quickly out of your workforce, it means you're hiring less capable employees in their stead and spending unnecessary overhead to replace them when they leave.

What kind of business sense does that make?

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