U.K. rule could finally lift women
A new reporting rule in the United Kingdom requires companies that have more than 250 U.K. workers to disclose data on any gender wage gap by Wednesday — and so far the numbers reported by companies from a range of industries have hardly been flattering.
The average hourly pay rate for women at Deloitte in Britain was 18 percent less than for men (and up to 43 percent less than for men, depending on whether one includes partners). At Intel’s U.K. operations, women make 33 percent less than men on average, the chipmaker reported. And at Goldman Sachs’ U.K. arm, the gap is nearly 56 percent.
But while much of the focus has been on the double-digit pay gaps — prompting a #PayMeToo online campaign in the U.K. as hundreds of companies rush to meet the April 4 deadline — perhaps more telling is another set of figures that each company must also report.
In addition to calculating differences in bonus pay and the overall average and median gap in hourly wages — which does not take into account things like job descriptions, education levels or years of experience — companies are also expected to show the gender breakdown of workers they employ across four pay bands in the country, from highest to lowest.
The numbers won’t surprise anyone who has studied the issue, as it’s well known that companies tend to have fewer women in their leadership ranks — and therefore in their highest-paying jobs, causing a disproportionate effect on the overall numbers.
“It takes you back to the age-old question, which is why are we seeing more women in the lower quartile and not in the higher quartile?” said Cheryl Pinarchick, who co-chairs the pay equity practice at the U.S.-based employment law firm Fisher Phillips. “The data in the U.K. is reinforcing that fact.”
Yet by shining a glaring spotlight on what’s been called the “position gap” — or how many fewer women are at the higher rungs of the corporate ladder — the U.K. data also reveals a rare company-by-company look that could have a real impact, some experts say. Companies’ inability to hide potentially embarrassing figures could prompt more pressure to show they’re boosting the number of women in the higher ranks.
“We’re going to be able to track this over time,” said Gail Greenfield, a principal at the New York-based human resources consulting firm Mercer. “The first year maybe they get a pass and are able to say, ‘We didn’t quite understand our situation.’ Next year when they report again, they can’t say that.”
Some companies have been releasing the data with explanations about the efforts they’re making to get more women into higher-paying roles and to shift their gender balance, Greenfield said. “So they’re going to be under pressure to show some improvement in the number of women in the higher quartiles.”
For many companies in the U.K. database — which includes more than 9,000 employers — the bar graphs showing the ratio of women to men in the four pay quartiles looks literally like a set of stairs — an unsettling, realistic illustration of the long-used corporate ladder analogy.
At Goldman Sachs’ U.K. arm, for instance, 17 percent of those in the highest-paid quartile are women, and it steps down from there, with 31 percent in the second, 58 percent in the third and 62 percent in the lowest-paid quartile.
In a memo sent to employees, Goldman chief executive Lloyd Blankfein and president David Solomon said they want to have 50 percent of the firm’s incoming analyst class be women by 2021. “At Goldman Sachs we pay women and men in similar roles with similar performance equally,” the two wrote in March. “However, the real issue for our firm and many corporations is the underrepresentation of women and diverse professionals both in magnitude and levels of seniority.”
At Intel, meanwhile, women made up 13 percent of its highest-paid workers, 20 percent of the next quartile, and 33 percent and 47 percent of the last two, respectively. In its explanatory report, the chipmaker suggested a similar culprit. Intel said its recent analysis “confirms that there is zero statistically significant pay difference by gender. The UK gender pay data we’re publishing today reflects a lower representation of women in senior roles.” In a recent report, the company also said it was ahead of its overall workforce diversity goals in the United States.
Some law firms and professional services firms excluded their partners from their calculations at first since they are considered equity owners but then bowed to public pressure and recalculated their numbers to include them.
Deloitte, for instance, initially published an average gender pay gap of 18 percent, which excluded partners. The company updated that number in March, saying the gender earnings gap (salary and bonus of employees and total earnings of equity partners) was 43 percent.
“These calculations again serve as a stark reminder that we don’t have enough women in senior roles — this is not about unequal pay, but the shape of our firm,” Emma Codd, managing partner for talent at Deloitte U.K., said in a statement.
Some have criticized the United Kingdom’s focus on the numbers as a blunt instrument that doesn’t look closely enough at pay equity (whether companies are offering equal pay for equal work), potentially obscuring what is already a hotly debated issue.
Others have questioned how much the data really reveals. Claudia Goldin, a Harvard University economist who has studied the gender pay gap, said the data appears to be missing a key element — the absolute average or median wage that companies pay their workers. “Having the quartiles is good, but one needs to know what the actual earnings are,” she said, pointing to the food service sector as an example, where there tends to be a lower wage gap but also low wages overall.
Still, Natasha Lamb, who works for an activist U.S. shareholder that has successfully pressured tech firms and American banks to reveal whether men and women who work in the same jobs are paid equally, thinks the broader U.K. rule is an important one. She says she has begun urging companies to release a global median pay gap, rather than just comparing those with the same job titles.
Looking only at equal pay for equal work, she said, “doesn’t tell the whole story, which is this structural deficit which is across our society. We think a real authentic representation would show both.”