Today — August 13 — is Black Women’s Equal Pay Day in 2020, the approximate day a Black woman must work into the new year to make what a White man made at the end of the previous year. This is a minuscule improvement (a mere 9 days) compared to last year, when Black Women’s Equal Pay Day was August 22.
The pay gap indicates that Black women make 62 cents for every dollar that White men make, a difference of $23,540 per year. Over a 40 year career that’s nearly $1 million ($941,600 to be exact.)
The opportunity gap is at play here too. Black women are less likely to be in senior positions. Among Fortune 100 companies, less than 2% of senior executives are Black women. There are many factors that contribute to the opportunity gap, including broader social issues like lack of educational opportunity, housing segregation and poverty. Microagressions exist in the form of hiring discrimination, one study found that 56% of Black people interviewed reported discrimination during the application process.
There are also more subtle barriers to change within companies. Many employers post jobs publicly, but individual hiring managers often leverage referral networks, a practice the EEOC disfavors for obvious reasons. Once they get the jobs, the problem continues. Much like the research on gender, one study found that employers set starting pay lower for Black candidates and penalized them for negotiating. That disparity worsens over time. Research shows that women of color are 19% less likely than White men to get a raise when they ask for one.
Reason for hope?
But despite all of the barriers, I’m hopeful. I’m starting to see leaders act rather than talk and admire the problem. There are three things some (but not most) companies are doing today that will lead to real change:
1) improving transparency by giving employees a snapshot into how their pay was established; and
2) setting specific goals that leaders are accountable to
3) tying compensation to progress against those goals.
This is a promising start — but it’s only a start, and there’s hard work yet to be done. It’s up to corporate leaders to go beyond words and commitments and take action, starting with ensuring that their pay practices are untainted by differences because of gender, race or ethnicity.
StitchFix is a great example of both transparency and accountability. Here is their commitment and equality manifesto:
“We recently retained an expert third party, Syndio, to audit our U.S. pay data. While we had confidence in our approach and philosophy, we wanted to ensure that our compensation system withstood external review applying appropriate and accepted methods and standards. The conversation around pay equity has been primarily rooted in gender biases, but we decided to also examine our pay through the lens of race, in addition to gender. The results showed there is no statistically significant difference in pay across gender and/or race at Stitch Fix.”
Why am I a fan? 1. They illustrate a clear commitment to more equal opportunities and set goals. 2. They used a third party to analyze fair pay, not only by gender, but by race and age as well, and shared results. This enables StitchFix employees to understand whether they are paid fairly relative to others. 3. StitchFix is focused on accountability, which is critical.Leaders respond to metrics and goals.
If you want change, follow the money.
There is no secret to how we can implement change that endures. If you want action, tie it to executive compensation. As the adage goes, “you get that which you incent.”
The New York Times highlights accountability in the article, “Want More Diversity? Some Experts Say Reward C.E.O.s for It”
“Achieving diversity goals helps determine one-sixth of the cash bonus of Microsoft’s chief executive, Satya Nadella, a bonus that last year totaled $10.8 million. “This is an important demonstration of executive commitment to creating an inclusive workplace, and we find this helps ensure there is shared accountability to make progress,” the company said in a statement.”
Companies must establish goals that are achievable (and not aspirational and false) and make them an element of compensation for all leaders. Here’s an example:
- Aspirational goal: we aspire to increase the number of minorities in leadership by XX% in 2025.
- Actionable goal: each of our executives has annual placement rate goals and their compensation is tied to success.
The difference can be subtle, but it’s very real.
Many companies are taking steps in the right direction, but to create lasting and systemic change, we will need to infuse compensation with the right level of transparency and accountability to ensure commitments to fair pay are not one and done.