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The gender pay gap is a well-known and persistent problem. Much awareness has been raised about this issue; however, it persists. While the severity of this problem varies from country to country, with cultural undertones exacerbating the situation in certain regions, the problem, nonetheless, is present in almost all countries.
In the US, the gender pay gap has remained stable in the last decade and a half, with men earning about 19% more than women. Men earned 47% more in Canada and 18.3% more in the UK (Barroso & Brown, 2021; CLC, 2021; Office of National Statistics, 2020).
Multiple viewpoints on the insidious impact, etcetera, of wage inequality have been presented, and while a thorough understanding of the problem and its impact is essential, the key to remedying this or any other problem are solutions. It is imperative that a practical solution is devised to end this problem swiftly, so it does not linger on and pain us in the future.
This report presents two viable solutions that can be implemented to reduce and end pay differences in organizations, a difference indicative of wage discrimination based on gender. While the reasons and causes may be many, they have been studied at a granular level by many authors. The causes of this problem are not the main focus of this report; this report focuses on practical and rapid solutions for this problem, especially, solutions applicable to corporations.
While many may be expecting further legislative action on this issue by Congress, arguably, we cannot reasonably continue to expect Congress to wave its magic legislative wand to remedy the situation if the issue has persisted for hundreds of years. If no action has happened in decades, it probably won't happen now. Furthermore, legislative action on such an issue would be difficult to achieve due to a plethora of reasons associated with the equivalence of pay, such as differences between job descriptions, duties, etcetera.
The solutions expounded in this report are a modified version of solutions presented to lower CEO to worker pay ratio (see the full report on solutions for reining in rising CEO salaries)
Proposed solution 1
A swift solution to eliminate gender pay difference in corporations, compatible with ESG (environmental, social, and governance), would be a report of pay difference made mandatory by the top stock exchanges as a listing requirement – with an average difference of, say, more than 5% between men and women of the same rank being a violation of listing requirements. This method would essentially make it mandatory for organizations to audit the salary difference among people of the same rank or holding similar levels of responsibilities in the organization.
As failure to do so would mean a violation of listing requirements, such a move would mean that the elimination of pay differences based on gender would become a necessity, rather than remaining aspirational platitudes.
For example, let's assume that the New York Stock Exchange (NYSE) implements a listing requirement of equivalence of pay. Firms, to maintain their listing, and to be compliant with the listing requirements, would need to ensure that no gender-based wage discrimination occurs in the organization; i.e., for a corporation in the fast-food service, two restaurant managers of restaurants of approximately equal size and sales, should be paid equivalent salaries, with no wage discrimination. The board's audit committee would need to conduct internal audits to ensure that there is no wage discrimination.
The board would also need to assure that wage discrimination isn't present in the organization, as it would be a listing requirement for their firm's shares, and failure of compliance, being costly, would best be avoided.
Proposed solution 2
The second solution is primarily rooted in shareholder activism. If nonprofits and the media continue to highlight this issue, especially to significant shareholders such as pension funds, hedge funds, major shareholders' proxies, and individual shareholders, shareholder activism can spur around this issue.
With a heightened interest around ESG (environmental, social, and governance), this issue has a good chance of making it on the ESG radar of significant shareholders. If it does become a significant ESG concern, shareholders can push to make equivalence of pay an obligatory requirement in the organizational charter through a bylaws' amendment vote.
If such an amendment is passed, it would be compulsory for the audit committee, and the remuneration committee to assess salary differences in the organization based on gender and adjust salaries across the board to eliminate wage differences, as doing so would be a binding requirement.
As one or two prominent companies adopt such changes to bylaws, the pressure would build on others to adopt the same best practice; more and more firms would make such amendments to stay compliant with ESG best practices and avoid a negative ESG screening. Of course, the more such an amendment is adopted, the closer we get to our objective of wage equivalence and elimination of the gender pay gap.
The two discussed solutions in this report are solutions that would provide permanent results, not temporary solace. The solutions are also practical, with rapid implementation possible.
Bibliography
BROWN, A. B. (2021). Gender pay gap in US held steady in 2020. Pew Research Center. Retrieved from https://www.pewresearch.org/fact-tank/2021/05/25/gender-pay-gap-facts/#:~:text=The%20gender%20gap%20in%20pay,-%20and%20part-time%20workers.
Canadian Labour Congress . (2021). Canada's Unions #DemandBetter for Equal Pay Day 2021. Canadian Labour Congress. Retrieved from https://canadianlabour.ca/canadas-unions-demandbetter-for-equal-pay-day-2021/
Office of National Statistics. (2020). Gender pay gap in the UK: 2020. Retrieved from https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/genderpaygapintheuk/2020
Shafqat, S. (2021). The Quickest, Most Practical Solutions for Reducing the CEO to Worker Pay Ratio & CEO Salary Growth. Retrieved from https://www.riskconcern.com/post/the-quickest-most-practical-solutions-for-reducing-the-ceo-to-worker-pay-ratio-ceo-salary-growth