Pay equity is often a topic of discussion among corporate leaders, but several powerhouse brands aren’t living up to their words, according to a new report.
Arjuna Capital and Proxy Impact released findings looking at 51 companies Tuesday to coincide with Equal Pay Day. Titled the “Racial and Gender Pay Scorecard,” the report indicated that one in 10 of the companies examined earned an “A” grade.
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Grades for the fourth edition of the Scorecard are based on quantitative disclosures, as opposed to qualitative assurances, by companies taking concrete steps to close racial and gender pay gaps. All of the companies have been approached by investors through the shareholder proposal process and asked to improve their public pay equity disclosure.
Equal Pay Day, which is March 24 this year, marks how far into the year women must work to earn what men made the previous year, as measured by median page. Pay gaps are defined as the median pay for women and people of color compared to the median pay for men and non-people of color. The U.S. Census Bureau, the U.S. Department of Labor, the Organization for Economic Cooperation and Development and the International Labor Organization consider median pay the valid measurement of pay inequity.
The divides are significant across race and gender. Black workers’ hourly median earnings, after being adjusted for inflation, have dropped 3.6 percent compared to 2000, representing 75.6 percent of white workers’ wages. Women in the U.S. make 82 cents on the dollar versus men. Intersecting race and genders, Black women make 62 cents on the dollar, Native American women make 60 cents and Latine women make 54 cents. Black workers make 75.6 cents on the dollar versus white workers. Black men make 87 cents on the dollar versus white men, whereas Latine men make 91 cents.
The fallout from the pandemic shutdown has led to millions of layoffs, furloughs and women being forced out of work to care for their children and other loved ones. That fracture has made pay inequity more glaring to some. Shareholders are also taking notice and have asked companies to report on their analyses, policies and goals to try to reduce racial and gender pay gaps, according to Proxy Impact’s chief executive officer Michael Passoff.
Arjuna Capital’s managing partner Natasha Lamb, the lead author of the report, acknowledged how the world’s largest corporations are under intense pressure to close their racial and gender pay gaps in response to investors’ insistence, the Black Lives Matter and the #MeToo movements, public policy and regulation.
“Despite a wave of corporate statements expressing solidarity with Black Americans and women, there are very few standout companies that actually provide an honest accounting of and commitment to closing racial and gender pay gaps,” she said.
Facebook Inc., Google, Amazon Inc. and eBay Inc. were among the companies that earned a “C” grade. Nike Inc., Apple Inc. and American Express were among the brands that fared better with a “B.” In recent months, some large companies including Nike, Macy’s, Gap Inc., VF Corp. and Tapestry Inc. have shared some of their goals for diversity and career opportunities in special reports.
Nine companies’ scores dwindled year-over-year, including Amazon, Google, Microsoft, Intel, Wells Fargo & Co., Verizon, Expedia and Starbucks. Less than half of the 51 companies disclose racial pay gaps, and there was a noticeable difference in the racial/gender pay disclosure. To that point, while two-thirds of financial companies have improved their scores from last year, one-third of tech companies have done so.
The recommendations highlighted in the latest report include having companies commit to 100 percent pay equity, 100 percent global coverage of employee base and annual disclosure of pay equity. The report’s authors, Lamb and Passoff, noted in the report’s recommendations the need for full disclosure of quantitative adjusted racial equal pay percentage and the U.S. unadjusted median racial pay gap percentage, among other suggestions.
Highlighting how reporting wage gaps can be “a big first step” in correcting the problem, the report referenced the first empirical study on the impact of mandatory wage transparency that was conducted in 2019. It determined that in countries where wage transparency was mandatory, that narrowed the wage gap and increased the number of women who were hired and promoted into leadership positions.
The report also presents a roadmap for companies to make progress, starting with analyzing current pay structures and disclosing any gaps. Expanding the pay equity shareholder campaign and creating an annual scorecard identifying industry “leaders and laggards” will help improve corporate disclosure and practices, while advancing the goal of racial and pay gender equity.
PwC has estimated that closing the gender pay gap could potentially boost the OECD countries’ economies by $2 trillion annually. Noting how racial and gender pay equity is increasingly an area of focus for many companies, the report cited how WorldatWork and Koran Ferry have reported that 60 percent of U.S. companies are trying to address pay inequity across race and gender, and those that are not are now considering doing so.