Gender Pay Gap: Individual or Institutional Responsibility

We Americans like to consider ourselves mavericks; people who create our own rules; people who are responsible for our own destiny and situations. It’s the cowboy way. Whether or not this is true is a completely different issue. It is this perception that guides us as we attempt to find solutions to problems.

Many of the laws about Equal Pay in the US differ from the UK laws and it could be in part to our individual focus as a country. Sure we have the Equal Pay Act signed by President Kennedy in 1963 which states employers cannot pay someone a lower income based on sex and then the list of exceptions ends with “a differential based on any other factor other than sex”. Such an exception is wide enough that a truck could drive through it thus companies usually can find a winning argument against any lawsuits. There have been additional laws passed such as the Lilly Ledbetter Fair Pay Act signed by President Obama in 2009 focused on improving the ability to sue the employer after being paid unequally.

It is evident by our laws that the onus is on the individual to find out if she is being paid equally and then to sue if she is not. Just the discovery of whether the pay is equal or not is a herculean effort. The vast majority of jobs are advertised without any reference to pay. One woman researched over 200 jobs and only 4 had any reference to pay. Another major hurdle is the use of salary confidentiality agreements. Over 60% of US women who work in the private sector are subject to salary confidentiality agreements and thus have no idea if their pay is on par with their male colleagues.

Could it be that our focus on the individual isn’t due to our maverick mentality but because it is much easier to say that each person needs to become a better consumer of jobs – caveat emptor – than to change the institutional mechanisms that contribute to the situation? Regardless the reason for the focus on the individual, in the past 10 years that focus has resulted in an emphasis on teaching salary negotiation to women.

Typically, teaching salary negotiation to women is very different than teaching men. Much time is needed to eliminate the fears of such negotiation before getting to the tactics of negotiating income. Although companies expect salary negotiation when deciding on the initial salary offer (95% of corporate recruiters state they are open to negotiation) women are fearful. Studies by Harvard College and Carnegie Mellon confirm that women should be fearful of potential backlash. Another problem is that women often assume the first offer is equitable and the best. This is when I reinforce that it is important to acknowledge that a key reason to work is for financial gain. Women tend to put that aspect on the backburner. In the research for Noam Wasserman’s book The Founder’s Dilemmas, financial gain does not crack the top ten reasons to work for women (both entrepreneurs and employees) while it makes number 3 (entrepreneurs) and 4 (employees) for men. Acknowledging financial gain as a key element for work personally helps to reinforce that all business decisions have a financial element as well. Viewing accomplishments in terms of their financial impact truly enlightens women on the value of their work.

Personally, I believe it is a combination of the individual ownership and changes to the institutional process that will ultimately eliminate the gender pay gap. As women learn that the first offer is never the best offer, companies should start including a minimum or salary range with job advertisements. As women learn how to prevent the backlash for speaking up, companies would stop asking for salary history since the women’s will always be lower than men’s. As women become comfortable acknowledging that they need to work to earn money, companies will not use credit histories as a means to know how desperate a person is to accept a job with subpar pay. As women learn to negotiate by highlighting their financial impact to the organization, companies will start acknowledging that there are blind biases incorporated into the hiring, review, and promotion processes and address them.

Our countries may be addressing the Gender Pay Gap from two different angles but I don’t’ think either can be fully successful without borrowing some of the other countries ideas.

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Katie Donovan is the founder of Equal Pay Negotiations LLC, which teaches salary and employment package negotiation for the woman’s perspective because the first offer is never the equal or best.    Offerings include online courses, mobile apps, workshops, and one-on-one training.    Ms. Donovan can be followed on Twitter @KDSalaryCoach

DISCLAIMER: This article has been written by one of our Guest Bloggers and does not necessarily represent the views of Pay Justice Ltd. The views and opinions expressed are solely that of the author credited at the top of this article.

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