March 14 is this year’s Equal Pay Day because it marks the day that a woman has to work through in 2023 to receive the same pay as a man did in 2022. (Put another way, the average woman must work 14.5 months to make what the average man earns in a year. As I’ll note below, it takes even more time for women of color.)
Sixty years after John F. Kennedy signed the Equal Pay Act to end gender pay discrimination, women still make only 84 cents on the dollar compared to men and 77 cents compared to white men. As bad as this is, it’s even worse for most women of color. Black women participate in the workforce at much higher rates than women as a whole, but still only receive 67 cents on the dollar in pay. Therefore, Black Women’s Equal Pay Day wasn’t until September 21 last year. Meanwhile, Latinas and Native women won’t reach parity until October 5 and November 30, respectively, meaning they effectively work almost two years to make what a white man makes in one.
COVID-19 exacerbated this pay equity problem – both here in America and around the world. That’s because women were nearly twice as likely to be economically impacted by the pandemic, partly because women’s jobs were eliminated more often and partly because women were more likely to take on the additional care burdens that came with sick relatives and kids out of closed schools. (In the US, two out of every three caregivers are women.)That said, these pay disparities have barely moved for twenty years.
Debra Lancaster of Rutgers University’s Center for Women and Work told the Washington Post that one reason for this pay stagnation is that women are “confronting structural problems. We’re left with glass ceilings and concrete ceilings, particularly for Latino and Black women, and there is a pervasive undervaluing of women’s work.”
The problem is particularly manifest at the C-suite level. Women are more than 50% of America’s population but make up only 8% of CEOs of Fortune 500 companies. Even starker, 39 of these 41 female CEOS are white, and only two are Black. “Companies are not developing or spending money [on Black women],” argues Professor Ella Bell Smith of Dartmouth’s Tuck School of Business, “or making sure that Black women have the skills, the polishing, to be able to take senior positions, to be able to get the positions that are going to bring in revenue.” When Black women are given opportunities today, she points out, they are usually in DEI positions. “That’s not going to bring in revenue,” Smith says. “That job is not going to make you a top-game player. It’s not going to put you in competition with the White men for those high-profile, revenue-earning [jobs].”
In good news, women are now faring better on corporate boards. According to WSJ, more Black women were added to boards between 2021 and 2022 than at any other time in the last fifteen years, making up 12% of new members. And a report released just last month by MSCI found that women now make up 30% of boards in the United States. While this is still far below women’s share of the population, research has suggested that 30% is a key tipping point. As Linda Tarr-Whelan wrote in her book Women Lead the Way, when women reach 30% of any decision-making body, whether it’s a corporate board or a country’s parliament, new voices, ideas, and priorities emerge. (Despite solid gains for women in the last midterm cycle, women still make up only 27% of the US Congress, so we’re not quite there yet in government.)
Creating more and better opportunities for women in leadership – and paying all women equal pay for equal work – is the right thing to do and it leads to better outcomes. Per the 2018 Global Leadership Forecast, businesses, where women held 30% of positions and 20% of senior leadership roles, were nearly one and a half times more likely to enjoy sustained and profitable growth. “It’s not because women necessarily have superior skills,” Kathy Caprino points out in Forbes. “Instead, the key is that the organizations have built inclusive cultures that enable everyone to thrive. Organizations with greater gender diversity reported higher levels of collaboration, higher quality leadership, greater agility, and [were] more likely to experiment in pursuit of innovative approaches.” More recently, McKinsey found that working to improve gender equity in the workforce and other areas after COVID-19 could add as much as $13 trillion to global GDP in the next seven years.
So, what should CEOs do to help move these trends forward? I suggest the following.
Sponsor women leaders. Research shows that workers who have mentors at their organizations are more likely to receive raises and promotions. But even more important than mentorship is sponsorship. As Herminia Ibarra outlines, a “mentor is someone who has the knowledge and will share it with you. A sponsor is a person who has power and will use it for you.” A key barrier to reaching the C-suite for women is that they get fewer high-stakes assignments that lead to advanced roles. Furthermore, people tend to gravitate toward sponsoring someone like them, so white men in leadership positions end up helping other white men. To break this cycle, male business leaders should work to expand their comfort zone and mentor more women, particularly women of color, and more companies should offer official mentoring opportunities.
Develop a compensation philosophy and conduct regular studies. The path to achieving pay equity begins with organizations developing a clear compensation philosophy. Working with compensation specialists to evaluate aligned markets and create fair compensation ranges is critical. Furthermore, conducting regular compensation studies is a helpful tool to hold leaders accountable to ensure employees are paid at minimum, the fair market value, for their work and to ensure adjustments are distributed equitably based on market data and employee performance.
Support access to childcare. Lack of access to quality, affordable childcare is a perennial problem for American workers, especially women. Half of US families have had trouble finding childcare, and a recent study found that a 10% decrease in childcare costs leads to a 0.5-2.5% bump in maternal employment. Simply put, if more families could afford childcare, more women would have the option to enter the workforce. If businesses themselves aren’t in a financial position to help with this, they can still support policies and programs that will.
Take DEI seriously. Diversity, Equity, and Inclusion (DEI) efforts must be a C-suite level priority, that white men show equal commitment to as women and people of color. DEI is only a term if the work does not have the resources, support, and leadership buy-in to make it real and actionable. Nearly two-thirds of business executives agree that DEI is “very” or “extremely” important, but only 56% say they have been involved in these efforts. We cannot put the onus of DEI efforts solely on women and people of color.
For us all to make progress, and for our businesses to make progress, this work must be a shared responsibility that everyone takes seriously. Only then can we break the structural logjams that are keeping women’s wages down and ensure that one day soon, everyone will celebrate Equal Pay Day on the same day of every year – December 31st.