Despite controversy, the gender wage gap continues to narrow
Many companies in California ensure that different pay for gender reasons is non-existent.
February 19, 2018
You wake up to the sound of Alec Baldwin’s voice playing on your Echo Dot, signaling the start of your day. You get out of bed and perform your usual morning routine. You get into your sleek Molten Lava Honda Civic Sedan and drive off to work like you do every single weekend.
But this day is different. Today is payday.
After a quick ride, you arrive at the McDonald’s you’ve worked at since you were 16. You work for hours on end, pouring your heart and soul into the job you need to pay for college. You cannot wait until you finally get that paycheck that you deserve.
At the end of the day, you finally receive your paycheck. You feel so accomplished and satisfied that all your endeavors finally paid off until you look to the person next to you and see that they earned more money than you did.
But it’s not because they are higher up in the company hierarchy or worked harder than you.
It’s because he is a man and you are not.
While pay in California may not be equal on a gender level quite yet, it is at the closest it has ever been. Actions of many companies have created this minimal gap by ensuring that both men and women are paid equally at the same level. While filling the gap may not occur today or tomorrow, the actions of these companies will ensure that it happens in the foreseeable future.
NewEnamel is an at-home prescription-strength dental care company that provides a recommended dental kit based off an online assessment. NewEnamel Co-Founder and Practice Director Keith Harband has worked at big companies such as Disney where he noticed this change.
“Disney would’ve adjusted people’s wages so they were at parody because not only is it the right thing to do, it is the lawful thing to do. Disney is very PR as well and wouldn’t want to upset the public,” Harband said.
Harband was referring to Disney following the legislation passed by the California government in 2015, which made it illegal for companies to pay employees of the same rank differently based on their sex.
Despite putting this law into effect, many companies have found a way around this since enforcing the law is difficult when finances and money made are often kept private.
One way companies found their way around this law is by paying employees based on their performance, a factor that is overlooked by many pay gap studies.
“In business, wage is a meritocracy, and it doesn’t matter the gender, color, or religion. By performing at certain levels, people can receive compensation and receive a higher wage,” said an investment banker who requested to remain anonymous.
Rather than pay by basic skills or experience, business companies and corporations pay their employees on how they perform. What this means is that if an employee is bringing in more profits to a company, their chances of gaining a raise would be significantly higher than an employee who brings in fair or average profit.
“Just because an employee has worked 15 years doesn’t mean they work more efficiently than someone who has worked for only three years,” Harband said.
While it may seem impossible that people overlook such a prominent factor, it is not. A report by Pew Research Center explains what they took into account when calculating the gender pay gap. What they didn’t include in their calculations was, in fact, performance-based compensation.
It also seems strange that the gap would still be so significant if employers base a worker’s earnings purely on performance after a base salary. A factor that contributes to this is maternity leave.
Women who have recently had children are on paid leave where they get to spend time raising their newborn. While employers still pay them in full, someone who is not working has no chance of increasing their pay from performance as they are not working.
However, even maternity leave is on the mend. The investment bank company mentioned earlier has eliminated the titles of “maternity” and “paternity,” changing them to just “primary” and “non-primary.”
“Our company gives 16 weeks off for the primary caregiver and two weeks off for the non-primary,” the banker said.
What this means is that a mother is not necessarily the one who takes off a significant amount of time for their child. Even though it is more likely that the mother is the one who takes care of an infant, the father has an equal opportunity to do so as well.
Nevertheless, calculating wage based on performance is extremely difficult to do and even when taken into mind, would not close the gap completely.
Whereas performance is not a prominent enough factor to change the gender pay gap, diversity is.
When hiring employees, companies try to employ a very diverse workforce. The employers will look at the resumes and skills of applicants, and retain those who would best fit the company while also trying to hire an equal amount of each gender.
“There are multiple studies that show more diversity on boards leads to better returns for shareholders and better outcomes,” said Renee Gala, Chief Financial Officer within the biotech industry.
Catalyst conducted a study that showed that adding gender diversity on executive teams were likely to outperform others on profitability by 21 percent. The study also showed that diversity increases market performance, market value, gross and net margins, revenue, and earnings per share.
Even adding just one woman to a board can create a lasting impact.
“If a woman who is confident and well-spoken walks into a boardroom, she can command that room better than a man could and I’ve seen that happen,” said the banker from personal experiences.
This matter is so important that California enacted a law requiring that boards of directors have at least one woman on it — a decision that sparked controversy.
“[California] should not have to pass a law to have women on a board of directors. I am disappointed that a bill was required to achieve more women on boards,” Gala said.
Gala shares the same view as many others who believe that a bill is not necessary to get women on a company’s board of directors and that it defeats the purpose of women getting on the board because they deserve to and are qualified.
Even with this in mind, the law does ensure that women are not discriminated against and get a genuine shot at being a business executive.
“I think it is important for businesses to extend opportunities to both genders and I’m confident there are qualified women out there. I think it is a good thing that the law requires that companies add women in addition to men,” said Carly Gatzert, a Spanish teacher at Carlmont High School.
Every company including women on their boards is now getting even closer to reality.
“[Women on boards] is already happening because investors demand it,” the banker said.
In business-related companies, shareholders essentially own the company and decide what to do with it.
“It’s the shareholders that force change. If they don’t like the things you are doing or the decisions you make, they’ll do two things: they will either vote you out or sell your stocks,” the banker said.
The shareholders are the people that force a company to pay women equally if that is what they desire, as they own stocks in the company and can quickly get rid of them, putting the company in ruins.
“Shareholders are worldwide, meaning it’s a worldwide effort to get women equal pay,” the banker said.
Ever since women in the United States gained the right to vote in 1920 this country has moved closer to equal rights among genders.
The feminist movement of today has brought progress and improvements to the lives of women, and achieving gender equality has become a priority of many states.
This progress shows no signs of slowing down and if the United States continues to develop the way it has in recent years, the sun will set on the division of wage by gender. When it rises, an era of gender equilibrium will begin.