Wage gaps persist — and are getting worse — going into 2019

Dive Brief:

While inflation-adjusted wages grew modestly for most workers last year, "large gaps by gender, race, wage, and education level remain," according to new data released by the Economic Policy Institute (EPI) — and some continue to get worse.
Wage growth since 2000 was faster for white and Hispanic workers than black workers; in fact, black-white wage gaps were larger in 2018 than in 2000. Among black workers, only those with a collegiate or advanced degree had higher wages than in 2000, but their wage growth was still significantly slower than white and Hispanic workers with the same degrees.
Gender inequity also continues, according to EPI. Women with an advanced degree are generally paid less than men with only a college degree. Additionally, although unemployment remains low, EPI noted that wage growth is slower than expected given the current job market.

Dive Insight:

The public revelation of gender and racial pay gaps has encouraged employers to take creative, at times dramatic, measures to ensure employees are paid fairly — but as reports like EPI's show, the reality that underpins these gaps is often more complex than first seen. Government-mandated disclosures of pay disparities actually do help close the gender pay gap, a study in Denmark noted, but other data suggests that employers have a long road ahead of them.

"When measured by total earnings across the most recent 15 years for all workers who worked in at least one year, women workers' earnings were 49 percent — less than half — of men's earnings," a study from the Institute for Women's Policy Research noted. It could take as long as 108 years for the gender pay gap to close — and that's just the gender pay gap.

The pressure for businesses to bridge the gap is significant, quite literally in some cases. Arjuna Capital, an activist investment firm, continues to call on major employers to disclose their pay gaps. Employers also have to pay strict attention to fairly typical aspects of the hiring and compensation process; salary bonuses may worsen the problem, as more are awarded to men traditionally, and black workers tend to be paid less due in part to the imbalanced nature of the salary negotiation process, one study showed.

On top of rising demands from employees that seek more transparency, consumers and job seekers are looking to purchase from and work for companies that represent responsible stewardship and address societal issues. That pressure may fuel efforts to achieve equity across gender and racial lines.