Tuesday marked Equal Pay Day, the date through which US women would have needed to work past 2021 to receive the same compensation on average as men did during that year.
A small sign of progress is that the date fell one day earlier than it did in 2021. But the pay gap remains large, and few companies appear to be taking steps to close it, new reports suggest.
Only 23% of large public companies analyzed pay disparities by gender in 2021, a figure that has changed little over the past two years, according to a report this week from Just Capital. The firm examined practices from 954 companies in the Russell 1000 Index and found that 215 have measured pay gaps at their firms. However, 47% of the companies that examine the issue don’t disclose any data on pay disparities, the report noted.
“These figures tell us that companies continue to release information about their gender pay equity performance only when they are doing well or have achieved their parity goals,” the company stated. “Within this group, 33 companies disclose reaching full parity, or a women-to-men pay ratio of one or greater.”
A detailed paper this week from Arjuna Capital and Proxy Impact gave top grades to seven of 57 major US companies on their pay disparity practices. The paper evaluated quantitative data on racial and gender pay disclosure and commitments for businesses in the finance, technology and communications, consumer and health care sectors.
The companies that were awarded a report-card-scale “A” in the paper include Mastercard, Starbucks, Pfizer, Citigroup, Bank of New York Mellon, Adobe and American Express, all of which publish statistics on median pay gaps and adjusted pay gaps, which compare compensation for people in similar roles.
“In practice, many companies have shied away from publishing unadjusted ‘median pay’ gaps, as they can reflect an unflattering structural bias in their corporate ranks,” the report stated. “These gaps are often larger than statistically adjusted pay gaps and unless companies are mandated to do so, as they are in the United Kingdom, they are often loath to admit they have a problem.”
The firms gave a “B” to Wells Fargo, Bank of America, Microsoft, Apple, Intel, Verizon, Target, Nike and McDonald’s “for their efforts to disclose and act on their racial and gender pay gaps.”
In the financial services sector, the report doled out a “D” to four firms: Reinsurance Group, Discover Financial Services, Marsh & McLennan and Cincinnati Financial. It failed MetLife, Hartford Financial Services, Goldman Sachs, Lincoln National and Arthur J. Gallagher.
Of the financial firms that received low grades in the report, two provided comments to ESG Clarity.
“We recognize the increasing importance of environmental, social and governance topics to investors and are actively working to continue to increase our disclosures around these topics, including gender and racial pay equity,” a spokesperson for Cincinnati Financial said in an email. “We typically update our ESG report … each November.”
Another firm, The Hartford, provides “equal pay for equal work,” and for a decade has analyzed and adjusted compensation “to ensure fairness, equity and market competitiveness” the company said in an email statement.
“We have extensive, long-standing policies and practices in place, which include a robust annual evaluation process, to ensure we have the insight we need to achieve and sustain these results,” the company stated. “For 2020, our analysis confirmed that on average, across the US, base salaries for women were 99.9% of those of men in comparable roles and base salaries for people of color were 98.8% compared with white people on comparable roles.”
A spokesperson for Discover directed ESG Clarity to the company’s recently issued diversity, equity and inclusion report.
A need to improve
On average, women in the US are paid 83% of what men earn, representing a difference of more than $10,000 per worker annually, the report from Arjuna and Proxy Impact noted. Things are worse when race is factored in, with median pay for Black workers just 64% of what white workers make.
“For Black and Latina women, the career earnings gap is close to $1m, with Black women earning 64% and Latina women earning 57% of that of white, non-Hispanic males,” the report stated. “Indigenous American and Alaska Native women earn 69% of white men’s wages.”
At the current rate of change, pay parity for US women would be reached by 2059, and it would take until 2133 for Black women and 2206 for Latina women, the authors wrote.
Aside from simply being the right thing to do, reducing pay disparities can help companies attract and retain talent and improve a company’s reputation, the report noted.
Further, companies with more diversity in their workforce and boards tend to outperform peers, the authors wrote, citing research from Institutional Shareholder Services, S&P Global Market Intelligence, Refinitiv, McKinsey and others.
Pay gaps have been an increasingly important issue to institutional investors, which increasingly have approved shareholder resolutions on the subject.
Last week, for example, 59% of Disney shareholders voted in favor of a measure asking the company to report its median and adjusted pay gaps by race and gender. Arjuna Capital was the lead filer of that shareholder resolution. A similar measure that Arjuna filed this year at Apple failed to pass, with 35% of shares voting in favor.
Over the past eight years, more than 80 companies have faced at least 143 shareholder proposals for pay gap reporting, according to the report. So far this year, at least nine such resolutions have been filed. Three, however, were withdrawn, as Chipotle, Home Depot and Target voluntarily agreed to report median pay gap figures by race and gender. Another unnamed public company has agreed, and the shareholder resolution is expected to be withdrawn, the report stated.
“The high votes and quickly reached agreements show that companies and investors are becoming more comfortable with median pay gap reporting,” according to the report.