Equal Pay for Equal Work? Not Yet
Pay equity is just one tool to assess gender and racial equity in a portfolio. But it is a useful practice around which investors can build engagement initiatives and evaluate a company’s performance. This
evaluation can be applied across sectors and asset classes.
The Equal Pay Act of 1963 mandated that men and women in the same workplace be given equal pay for equal work, yet women are still paid 82 cents for every dollar a man earns,1 a disparity that is much worse for women of color. Based on 2019 U.S. Census data, Black women are paid 63 cents to every dollar a white man is paid, and Indigenous and Latinx women are paid 60 cents and 55 cents, respectively.2 Though “equal pay for equal work” has been the law for decades, there are still substantial disparities in pay for full-time, year-round work.
Further, the COVID-19 pandemic will likely have a lasting effect on the pay gap, since more women than men dropped out of the workforce to care for families. According to a study by the Institute for Women’s Policy Research, a woman who takes off for a single year will likely never catch up, earning less for up to 15 years after she returns to the workforce.3
Representation along with pay equity, comprise a more holistic picture of a company’s treatment of diversity, equity and inclusion. For example, on a team with 10 men and 1 woman, the woman may be paid the same compensation as her male colleagues. In this case, there is full pay equity but a stark lack of representation and, therefore, true equity is not achieved. Conversely, a team may offer impressive representation, but if all women and people of color (POC) are paid a fraction of their white male colleagues, then representation exists without pay equity, and again true equity is not achieved.
To drive progress, investors should seek to understand how a company addresses gender and racial equity in representation and pay concurrently. Glenmede has published extensive research around a more comprehensive approach to investing in gender equity and racial equity. To explore further, please reach out to us.
1 5 Facts about the State of the Gender Pay Gap,” Department of Labor, March 19, 2021. https://blog.dol.gov/2021/03/19/5-facts-about-the-state-of-the-gender-pay-gap#:~:text=Women%20earn%2082%20cents%20for,for%20many%20women%20of%20color.
2 Equal Pay Day Today 2021, based on 2019 US Census Data.
This article is intended to be an unconstrained review of matters of possible interest to Glenmede clients and friends and is not intended as personalized investment advice. Advice is provided in light of a client’s applicable circumstances and may differ substantially from this presentation. Any opinions, expectations or projections expressed herein are based on information available at the time of publication and may change thereafter, and actual future developments or outcomes (including performance) may differ materially from any opinions, expectations or projections expressed herein due to various risks and uncertainties. Information obtained from third parties, including any source identified herein, is assumed to be reliable, but accuracy cannot be assured. In particular, information obtained from third parties relating to “ESG” and other terms referenced in this article vary as each party may define these terms, and what types of companies or strategies are included within them, differently. Glenmede attempts to normalize these differences based on its own taxonomy, but those efforts are limited by the extent of information shared by each information provider. Definitional variation may therefore limit the applicability of the analysis herein. Any reference herein to any company, data provider or other third party should not be construed as a recommendation or endorsement of such third party or any products or services offered by such third party. Any reference to risk management or risk control does not imply that risk can be eliminated. All investments have risk. Clients are encouraged to discuss the applicability of any matter discussed herein with their Glenmede representative.