Equal Pay Day is Tuesday, April 4, 2017.
This day originated with the National Committee on Pay Equity in 1996. April 4th symbolizes how far into the new year women must work to earn what men earned in the previous year. In the U.S., women earn around 80 cents for every dollar men make, though results vary when you break them down by industry and other factors. But no matter how you run the numbers, the pay gap in finance is one of the widest.
Breaking Down the Gap in the Finance Industry
A 2016 study from Glassdoor found that the financial industry has one of the highest gender pay gaps. Even after accounting for factors such as age, education, experience, location, occupation, job title, and company, the wage gap remains. In finance, the pay gap is 6.4 percent – the seventh highest gap out of the 25 industries analyzed.
One of the arguments used to explain the pay gap is choice. Some point out that women choose to enter lower-paying jobs, trading big salaries for shorter working hours and greater flexibility. While that may be true for some women in some jobs, choice does not tell the whole story. Even when women choose big careers in lucrative fields, the pay gap remains.
Women in Leadership Roles
Many factors contribute to the gender pay gap, but the lack of women in leadership roles is discouraging. A 2016 study by the CFA Institute revealed that women in finance hold only 9.8 percent of CEO roles, 10.2 percent of CIO roles, and 11.4 percent of CFO positions. Leaders tend to promote people who think and look like them, so when few women occupy leadership positions, even fewer women see promotion.
Since 1963, the Equal Pay Act has made it illegal for companies to pay men more than women for the same work. But the burden is on female employees to bring lawsuits showing discrimination. This action often comes with its own set of consequences. So what else can we do to close the pay gap?
The pay gap is the smallest for younger women and those who never married. The ‘motherhood penalty’ recognizes that moms are more likely to take time off, work reduced hours, and even quit work to take care of children. And their wages suffer. Employers should instill policies to support all parents. Policies like paid family leave, flexible hours, and supported child care help lighten the load for employees with children.
When employers are transparent about salaries and wages, all employees have more negotiating power and pay disparity cannot remain hidden. In 2016, President Obama signed a Fair Pay and Safe Workplaces executive order to require companies with 100 employees or more to report to the federal government how much they pay employees, broken down by race, gender, and ethnicity. However, earlier this year the Senate voted to scrap that rule and President Trump is expected to sign a repeal any day.
The National Committee on Pay Equity is encouraging supporters to wear red on April 4th to symbolize how far women and minorities are “in the red” with their pay. It’s also a good time to contact your House Representatives and Senators to tell them how important equal pay is to you.
Finally, if you are in a position to make or influence hiring decisions in your company, there is one simple action you can take: hire more women.