Paying men and women equally helps companies, so why don’t they?
Investment fund manager Natasha Lamb is on a mission to get companies to commit to equal pay for women. And she’s getting results.
Spend an hour in any office or boardroom and you will hear a man explain something using a football or baseball analogy. I’m not sure I’ve ever heard a woman do that, and I think it’s a difference that helps explain one of the most persistent issues in our society: the unconscious bias perpetuating the gender wage gap.
I sometimes play cornhole, where you toss a beanbag into a hole on a wooden board, usually while holding a beer. This isn’t a feat of strength, and there is no competitive advantage to being male. But here’s what I’ve noticed: when I compete against men and sink a beanbag, my opponents often express surprise. I certainly don’t “throw like a girl.” I’ve even heard other men taunt my opponent with that playground putdown, “you’re losing to a girl.”
Most of my male friends are smart and well-meaning. They probably wouldn’t see the sexism in their reaction. But we all, men and women, carry unconscious biases that we’re quick to deny. It should be no surprise that a number of technology and financial firms have balked when asked to disclose their gender pay numbers. Of course Silicon Valley and Wall Street have difficulty admitting a gender wage gap problem.
In August, Google engineer James Damore made headlines by calling this disparity a myth and lauding men’s supposed biological advantage in the tech world, in a memo that used long-debunked pseudoscience to support its own spurious claims. That kind of malarkey is easy to dismiss. (As was Damore, who was fired from Google just days after posting the document.) But it’s hard to deny a gender-based wage gap that shows up across many industries — including at Damore’s former employer, which is under investigation by the US Department of Labor for “extreme” gender pay disparity. I was recently surprised to learn my own occupation, financial adviser, has the biggest pay gap of any job in the country. Female advisers are paid 61 cents on the dollar compared with men. That’s despite evidence that women make better investment decisions than men.
While the gender wage gap has fallen by almost half since John F. Kennedy signed the Equal Pay Act of 1963, women still earn 80 cents on the dollar compared with men. Job choice and seniority explain some of the difference, but as much as 40 percent of it may be the result of discrimination, whether outright or unconscious. And the Great Recession stalled progress — 2016 was the first year since to see it narrow, and then only by 1 percent.
At this rate, the gender wage gap won’t close for another 40 years. Changing structures is easier than changing mind-sets. Paying women less is more often due to unconscious bias than conscious bias, or sexism. Unconscious bias is embedded and reinforced from the time we are children, making it difficult to eliminate. But by changing the rules of the game — the structures surrounding hiring practices, starting salaries, and negotiation, companies can make remarkable progress.
To start, we need to literally renegotiate salaries. While negotiation workshops for women, like those offered free of charge by the City of Boston, are helpful, the onus should not be on women to become more aggressive negotiators. Employers themselves need to audit and remediate unfair practices. It’s hard to measure unconscious bias, but the numbers speak for themselves.
Getting more women into the pipeline for leadership roles is also important. Only 6.4 percent of the CEOs on the 2017 Fortune 500 list are women. Not much, yes, but up 50 percent from last year. And, providing women with more corporate-backed mentorship, motivation (including fair pay), and opportunity is key to advancing those numbers.
Stockholders can also bring the issue into focus. It’s not a question of being politically correct: A great deal of research shows gender pay equity is just good business. Companies that pay a competitive wage to women are more likely to attract and retain the best talent, who become the best leaders. And companies with gender-diverse leadership teams outperform their peers on financial measures. One study found such companies boasted 36 percent higher stock price growth and 91 percent higher profit margins.
My investment company, Arjuna Capital, filed in 2015 a first-of-its kind shareholder proposal asking eBay to report on and close its gender pay gap. That year, eBay’s board opposed us, and only 8 percent of investors supported it. But the following year, as Intel, Apple, and other leading US tech companies began engaging with us to address their own gender pay gaps, investor support grew. It was viewed as a competitive issue to attract and retain top talent. And by the spring of 2016, 51 percent of the votes cast at eBay’s annual shareholders’ meeting were in favor of paying women a fair wage, and the company committed to fix the problem that day.
Since that time, we have gotten eight out of nine of the world’s largest tech companies to commit to gender pay equity. This year consumer companies Starbucks and Nike committed to the same. We’ve now shifted our attention to Wall Street, where six of our gender pay proposals went to a vote this spring. This year the votes fell short — but we have the momentum.