Let’s try to understand what is equal pay.

For Equal Pay Day on April 4th, I sat on a panel at the Lean In Seattle Chapter. Lean In is an awesome movement, started by Sheryl Sandberg of Facebook, that encourages women to ‘lean in’ eqand find the courage to participate, advocate and contribute in the work place (and their lives) with confidence. It was awesome! There was a large turnout and our one hour panel could have gone on for several more hours—and in fact the individual conversations and questions afterwards did! I left with some clear takeaways I wanted to share after preparing for and participating in this discussion:

 

The Problem.

 

There have been multiple nation-wide Equal Pay Day campaigns aimed at promoting awareness of this specific gender inequality issue. In short, women in the United States, and globally, are not being paid the same amount as men for the same job. In the U.S., controlling for age, ethnicity, education and experience women are paid 22% less than men. The breakdown is worse if you focus on ethnicity, with minority women being paid significantly less than men.

 

The Deeper Issue.

 

I believe the reasons for the wage gap are much more complicated than the numbers indicate. Why? Because it’s actually illegal for an employer not to pay the same salary to two equally qualified people of different genders for the same job (1963 Equal Pay Act). However, 50 years after this Act came into law, we’re still having the same conversation. So, what else is at play here?

 

One technical issue is that the 1963 Equal Pay Act only allowed women to bring a claim against an employer 180 days after the first unequal pay check. This significantly limited the likelihood women would bring suit because a) 180 days is not enough time for a new employee to know or understand the pay scale at the company and b) 180 days is not enough time to gather the significant evidence you need to build a viable case. In 2009, the Lilly Ledbetter Act was passed to amend the 1963 Equal Pay Act and allow lawsuits to be filed up to 180 days after the last unequal pay check. An improvement, but this amendment still doesn’t require employer transparency, employer earnings data to be available, or allow other proposed solutions to be enacted.

 

Thus, the onus is still on the employee to negotiate, research and stand up for her right to be paid an equal wage.

 

Other reasons we’re still talking about this?

 

Aside from legal difficulties in enforcing equal pay, I believe there are three additional significant factors that promote wage inequality.

 

1 -Our economic system is based on money and the growth of companies.

 

The bottom-line, that is, corporate earnings/profits, is the linchpin of a corporation’s vitality, it’s reviews and ratings, and thus it’s ability to raise further capital. Reducing overhead costs is very often in a company’s best interest. The most expensive costs to a company are the wages they pay their employees, therefore if they can reduce labor costs (i.e. pay someone less for the same job), their bottom-line improves. This approach to corporate management does not consider the ethical issues around providing equal pay to all employees. In addition, some companies, attempting to keep their wage costs in check, will argue that it’s the employee’s responsibility to negotiate their wage, so if an employee accepts a lower salary, that decision is on them, not the company. A ridiculously a-moral argument, but again, this reality is why we have to be our biggest advocates in this system we live in.

 

In all fairness, there are some employers acknowledging and trying to close the wage gap, simply because it’s the right thing to do. Also, just to add flames to the argument for equal pay, data indicate that wage equality may actually be more profitable for a company in the long run and it’s most certainly better for our economy.

 

2- Women’s financial literacy in the U.S. is extremely low.

 

In a recent assessment, only 22% of women answered basic financial questions correctly. If we don’t understand finances and the power of our income, then we will continuously fail to understand why we need to negotiate and pay attention to our salaries. The only guaranteed income we have in our lives is the income we work for; marriages, inheritance and investment returns are subject to many things outside of our control. There are data that show over the course of a woman’s lifetime she could lose $500,000 to $1 million dollars (some say even more) of earnings because she didn’t negotiate her salary. Those numbers are shocking and they are the difference between retiring when you want to, owning a house (or two!), and building a wealth base that allows you the freedom to create a lifestyle that is right for you.

 

3- There is a confidence gap between men and women which inhibits women from negotiating their salary.

 

A recent study published by the University of California Davis showed that self-esteem is lower among women in developed Western countries because the ideal image of success is a man, and women, by our very nature, will never be able to mold ourselves into a male stereotype. In contrast, this study revealed that women in Asia were more likely to compare themselves to other women and their self-esteem was higher. I could rant and rave about this, but I believe something in our culture inherently teaches women that we are not perfect or good enough as we are and there is a constant fear of failure. This becomes more apparent when data show women negotiate 30% less often than men and ask for, on average, $16,000 less than their male counterparts. 

 

In my coaching, I’ve seen this at different levels, where women are afraid to seem aggressive or greedy, or they don’t believe they contribute enough to the team to justify asking for more (even though they’ve been told they are essential to the team’s function).  

 

Conclusion.

 

There is a lot of work for us to do as women regarding this issue. Personally and as a collective. To start, here are some ideas on how to prep for your salary negotiation. Second, let’s break the ice on talking about finances among female friends. How are others managing their finances? There is no fear or judgement here, just practical truth. We all have to do it, may as well start supporting each other in it. Once we find a way to talk about Equal Pay and personal finances when we have questions– with our friends, our colleagues, or whatever community you have where you feel safe–we will surely build confidence, gain the financial knowledge to know what to ask for, and hopefully, find the financial independence we all deserve.

 

To learn more about Mikaela Kiner, her company, UniquelyHR, (and see what employers think about hiring!), check out her website: http://uniquelyhr.com/