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On Equal Pay Day, women are far from achieving pay equity

Equal Pay Day is today, a symbolic date that represents how far into the year women must work to earn what men earned in the previous year. But the gender pay gap is getting worse — especially for young professionals.

The National Committee on Pay Equity (NCPE) established the day in 1996 as part of a public awareness effort. According to data from the U.S. Department of Labor, progress toward closing the gap was greatest during the 1980s, but has since slowed in subsequent decades.

Last year, women earned 77.9 cents for every dollar earned by men, which is only a slight move up from 2016 — when women earned 76.3 cents for every dollar earned by men, according to a new report from PayScale, which provides compensation data.

In 2015, women under 40 earned an average 81 cents for each dollar earned by men. That wage gap improved slightly in 2016, with women making 82 cents. However, last year the gender wage gap increased, and women made 79 cents for each dollar men earned. At the same time, the gender wage gap for workers over 40 didn’t experience any meaningful improvement, according to a separate report from HR analytics firm Visier.

Female salaries are dropping relative to men while their work continues to improve over those of their male colleagues, according to Josie Sutcliffe, a vice president at Visier. For this report, Sutcliffe targeted large U.S.-based employers, which included more than 60 companies representing 1.5 million U.S. employees.

Last month, Starbucks (SBUX) announced that all employees are earning equal pay for equal work. Over the past few years, companies like Salesforce (CRM), Apple (AAPL) Adobe (ADBE) and Intel (INTC) said they have also closed the gender pay gap.

But these companies are anomalies and do not represent the overall trajectory of corporate America. Although the Securities and Exchange Commission requires publicly traded companies to share how much the median worker makes relative to the CEO (also known as the pay ratio), the U.S. doesn’t mandate companies to disclose gender pay gap.

Roadblocks along the corporate ladder

The state of female workers at every rank doesn’t look rosy, but the biggest issue is what Sutcliffe calls ‘the manager divide.’ Women are underrepresented in manager positions, which contributes significantly to the gender wage gap.

“There’s more to it than equal pay for equal work. Women, especially those in key motherhood years, get less and less opportunity to hold manager positions. And that directly correlates to the overall pay gap between men and women,” said Sutcliffe. “Women should have access to those manager roles and companies should think about their intentional or unintentional bias when they decide to promote managers.”

According to the Visier report, female workers are increasingly outperforming their male counterparts, and female managers are 22% more likely to perform better than male managers. Still, access to managerial positions remains biased towards men.

While men and women tend to start their careers at similar levels, men are 70% more likely to be in vice president or C-suite roles than women by mid-career (30-44 years old). By late career (45 and older), men are 142% more likely to be in higher paying roles. What’s the primary reason? Women tend to be unemployed for longer periods of time to care for children and family members.

“For those who have been unemployed for a year or longer, nearly a third of women report that caring for a child was the primary reason for their unemployment. Only 4% of men report the same,” according to PayScale.

Public shaming

The UK government is among the latest to mandate that large companies report gender pay gaps. According to the New York Times, Australia, Germany and Iceland are forcing companies to show how much they are paying their male and female employees for the same job.

This obligatory transparency has illuminated the staggering pay gaps, particularly in industries like finance. Europe’s largest bank HSBC reported the worst gender pay gap among the UK’s largest companies, with men making 59% more than women.

On Monday, a U.S. appeals court ruled that employers can’t base a new hire’s pay on past salary because that is a major factor in widening the pay gap between men and women.

“The financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy,” Judge Stephen Reinhardt, who died last month, wrote for the court.

Closing the gap

Until the U.S. implements a similar public shaming mechanism to close the gender gap, corporations have to make it a priority to encourage and promote female career advancement, according to Sutcliffe.

She suggests measuring performance ratings by gender and comparing them to promotions to identify areas of bias. Another tactic is to blind-screen resumes when selecting applicants for interviews. This can also help employers identify where to focus their efforts when it comes to improving gender balance in the hiring process. Gender parity won’t happen overnight, but leaders must hold themselves responsible for paving the way forward.

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.

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