Equal Pay Day 2024

Equal Pay Day is the date that symbolizes how far into the current year women must work to earn the same amount that men earned in the previous year. Equal Pay Day originated in 1996 by the National Committee on Pay Equity to bring public awareness to the wage gap between Men and Women. Recent reports are showing that Women earn 16% less than Men on average, which means that for every dollar earned by men, full-time year round working women earned 84 cents. When you include all workers (part time and seasonal), the wage gap increases to 22%. For Women of color, the wage gap is even larger.

The goal of Equal Pay Day is to not only make the wage gap well-known, but to promote change. Although there has been significant improvement in the wage gap since 1996, gender and race/ethnicity pay disparities still exist when examining the raw wage gap. Understanding the reasons for those disparities and taking steps to ensure pay equity has numerous benefits for organizations. So, in honor of Equal Pay Day, we wanted to focus on the Return on Investment (ROI) to pay equity work.

Pay Equity and ROI:

In a 2021 survey of over 1000 HR Professionals, almost 60% of companies had conducted some type of pay equity review. Many organizations recognize the legal and compliance implications of pay equity, but there are many additional benefits that organizations might not recognize when deciding whether to take the plunge into a full pay equity review.

In 2020, Indeed surveyed over 1500 workers from across varied industries and career levels and found that job applicants are 75% more likely to apply for a job if the company has a reputation for paying fairly. When it comes to the perception that the company cares about, and monitors, pay equity can not only create a positive public relations image but it can also lead to applicants seeking jobs at the organization.

When current employees feel they are being paid fairly, they are significantly more likely to feel engaged and fulfilled with their work. Employee engagement has a tremendous impact on other organizational KPI’s, such as decreasing absenteeism, decreasing turnover, decreasing safety issues, and increasing sales and profitability. But when workers find out that they that they are making less money than their coworkers, despite similar experience or title, their motivation and productivity drops and can even lead them to look for a new job.

Pay Transparency Research:

• An Indeed study found that applicants are 68% more likely to apply for a position if the salary range is listed in the description and 60% more likely if the company publishes transparent salary bands for all jobs. 
• A 2024 SHRM survey found that 91% of employees who feel their organization is transparent about how pay decisions are made also say they trust that their organization pays people equally for equal work regardless of gender, race, and ethnicity.
• Recent research also shows that companies that are transparent in pay decisions and with communications to employees about their pay have up to a 30% reduction in turnover.
• Additional studies by SHRM identified that two-thirds of organizations that list pay ranges have more applicants, increased quality of applicants, and increased their ability to attract and retain top talent.
• Organizations that are subject to pay equity compliance have indicated that the next step for them is being more transparent internally – a goal that requires a better understanding of their pay equity and the application of their compensation philosophy.

Recommendations on Equal Pay Day:

• Evolving pay transparency requirements should be viewed by organizations as a call to arms – if you’re worried that external candidates and competitors will know your salary ranges, the same worry should apply to current employees as well. If you haven’t done an external market analysis, created a pay structure, or updated your market analysis in the past 3 years, it’s time.
• Now is also the time to consider a robust pay equity analysis. Given the legal and compliance risks, a pay equity analysis should be completed by experts who can build customized models that mimic your pay system and help you understand your organization’s individualized risk.

Getting employee pay right is worth every penny. There is no better time to start than now. Contact us to learn more about how our team of industrial/organizational psychologists and labor economists can help you achieve your organization’s pay equity goals.