The gender pay gap: How equal pay starts with hiring

The gender wage gap refers to the difference in earnings between men and women. Experts have calculated this gap in multiple ways, but they all point to the same conclusion. Women consistently earn less than men, the gap is wider for most women of color, and we have a long way to go. The gender pay gap affects women at every stage of their lives and even plays a role in retirement insecurity. We’ll likely need to make deeper changes to societal norms before we close the gap for good, but HR departments and companies can play a huge part in making progress. From equitable job posts to tracking pay inequity, Homebase is here to help your business do your part.

What is the gender pay gap?

The gender pay gap is a measure of what women are paid relative to men for the same work. In the United States, women make between 80 and 85 cents on the dollar compared to the average man. There’s a lot of debate about why the gender pay gap exists and how we can create change. Overall, two things are clear: women are consistently paid less than men, and progress on the issue has stalled. Awareness of the gender pay gap isn’t new. In the United States., women began demanding equal pay for equal work in 1860 with little success. In the 1940s, a bill prohibiting pay based on gender was introduced, but never made it through congress. 1964 finally saw the passing of the Equal Pay Act, which prohibited employers from paying men and women differently for equal work. However, the act came with so many exceptions that it didn’t do much to change the situation. Big strides were made in the 80s and 90s, when the gap was narrowed by 15 cents, but we haven’t made significant progress since.Gender pay gap fact: On average, women working full time, year round are paid 83.7% of what men are paid. This inequity is even greater for Black and Hispanic women.

Why are we hearing more about the gender pay gap now?

Following the #MeToo movement, there’s been a louder and more prevalent call for fairer treatment of women. With social media being a leading contributing factor, consumers are pressuring companies to find real solutions for sexual harassment, workplace discrimination, and to pay workers fairly. “We’re in this cultural moment. The trends have moved to put greater pressure on companies to address pay and equity,” says Maya Raghu, senior counsel and director of workplace equality at the National Women’s Law Center, which advocates for women and girls. “Millennials have helped bring gender fairness to the foreground because, as a generation, they’re focused on transparency, equity and diversity.” Additionally, corporations are finally starting to understand that equity is good for recruitment, productivity, and brand image.

Why does the gender pay gap still exist?

Even when you control for measurable factors like education, experience, and number of hours worked, the gender pay gap persists. This means that other factors must contribute to women earning less than men. Let’s look at a few of the things that make it tough to close the gender pay gap.

1. Competing with bias

Whether it’s conscious or not, employers tend to perceive women differently than men. They may see women as less efficient, assume women won’t put in as many hours, or favor men because they’re less likely to take parental leave. Because of these biases, women are offered fewer opportunities—even if they’re equally qualified. Black, Hispanic, or LGBTQ women face even more discrimination, making an additional 12% less than white women. While there are laws that prohibit this kind of discrimination, they’re not always easy to enforce.

2. Paying the motherhood penalty

After having a baby, women are typically paid less than employees who don’t have children. This may happen for a few reasons:

• New mothers are more likely to take parental leave than new fathers. When they return from work, they’re sometimes passed over for things like annual wage increases, which means it’s harder for them to catch up.
• New moms are less likely to strive for promotions—and less likely to get them. Women are often the designated at-home caregiver if a child is sick, and family commitments mean they may be less likely to attend after-work drinks or events. This can cause employers to falsely second-guess their commitment to the job; it may also cause women to reprioritize work and not apply for more responsibilities.
• Mothers are often perceived as being less committed than employees without children.

Unsurprisingly, there’s no corresponding “fatherhood penalty” for men. Even in countries with leading family-friendly policies, like Denmark, where the workplace culture is very supportive of families and fathers are encouraged to take parental leave, parenthood still has a significant impact on pay equity.

3. Facing societal norms and pressures

Cultural beliefs and stereotypes related to men and women’s abilities, like men being seen as more analytical, while women are perceived as more nurturing, can start shaping a woman’s career path from an early age. Have you ever heard of teacher bias? This is when teachers’ unconsciously assume girls are less capable than boys, especially in math. This early messaging about their ability may steer girls away from STEM-related jobs and into lower-paying fields. Women tend to dominate occupations that pay less than $30,000 per year, while men make up the greater percentage of higher paying jobs.

4. Doing more unpaid labor

Women still spend more daily hours on unpaid labor like housework, childcare, and caregiving compared to men. Shockingly, this is at a time when women hold the majority of jobs in the United States. Unpaid work can impede a woman’s ability to handle the long hours that come with demanding, higher-paying jobs, or it may dissuade them from pursuing these jobs in the first place. Unpaid responsibilities can also force women out of the workplace, leaving them with less work experience than men. This inequality is made even worse by lack of affordable childcare and support. To see the end of the pay gap, we’ll likely need to make deeper societal changes that affect how we value women’s time, and how men and women balance careers and family lives.

Gender pay gap statistics to know in 2023

While 80 cents on the dollar doesn’t sound like a lot, the gender pay gap has serious implications for women. Let’s look at how women are affected at every stage of their lives and how achieving pay equity would have a positive impact on humans everywhere.

1. Women are more likely to work in lower-paying fields for their whole career

The largest identifiable causes of the gender wage gap are differences in the occupations and industries where women and men are most likely to work. Two out of every 3 full-time workers in occupations that pay less than $30,000 per year are women. Meanwhile, women represent less than 1 out of 3 full-time workers in jobs paying an average of $100,000 or more.

2. The gender pay gap adds up over the course of a lifetime

The average female worker loses more than $530,000 over the course of her lifetime because of the gender wage gap. The average college-educated woman loses even more—nearly $800,000 (IWPR 2016). That’s enough money to retire comfortably in many parts of the United States. Considering many women in the country are facing retirement security, it’s no small problem.

3. The gender pay gap may play a role in the retirement insecurity of women

Women tend to work nine years less than men over their lifetime, which can reduce their retirement savings by 35%. Women retire earlier for a number of reasons, but the primary one is to take care of children or aging parents. Since women tend to have longer life expectancies and shorter careers (generally because of interruptions due to caregiving), they’d be more secure if they retired later than men.

4. The pandemic was tougher on working women

According to the Institute for Women’s Policy Research, the gender wage gap narrowed from 18.5% to 17.7% from 2019 to 2020. While that might seem like good news, it wasn’t due to women earning more. Instead, it was because a disproportionate number of low-wage female workers lost their jobs in the pandemic. Needless to say, this isn’t what’s meant by ‘closing the gap’.

5. Women work harder for less

Women are already shouldering the majority of unpaid work, like housework, childcare, and caregiving. On top of this, women need to complete one additional degree just to be paid the same wages as a man with less education. Plus, women often work more hours for less recognition. It truly doesn’t add up.

6. Pay equity could change the world

Closing the gender pay gap could decrease homelessness among women by 40% and reduce child poverty by 50%. Here’s a staggering statistic: children of homeless mothers are 40% more likely to be homeless themselves. Achieving pay equity could help break this terrible generational cycle.

HR’s role in fixing the gender pay gap

Equal pay starts with the hiring and recruiting process. Because HR departments are on the front line, they’re in the best position to look for inequalities and point them out to leadership. Here are 6 ways HR and companies can combat the gender pay gap.

1. Push for pay transparency

If a woman has no idea what her male colleagues are earning, how can she ask for equitable pay? Companies need to stop treating salaries like closely guarded secrets. Instead, they can publish the wage ranges for all roles, and stop barring employees from discussing income. Pay transparency is proven to level the playing field and close the gap.

2. Stop asking about an employee’s current pay

Not only is a person’s current salary irrelevant to a new position, asking the question in an interview just enforces the pay gap. If women make less than men to begin with, it’s likely they’ll continue to make less in their new role. Companies should set salaries using objective measures like market salary and internal pay data to ensure employees are paid equally. Ensure these guidelines are written out in your employee onboarding guidelines so new hires can understand how they’re being paid.

3. Complete regular pay audits

A pay audit looks at how men and women are paid for doing similar work. It measures everything from how a company brings in new talent, how it sets pay, and how it retains employees. Audits help companies find the reasons for pay disparity within their organization and make improvements. Pay audits should be done every year.

4. Look beyond wages

Companies should also examine other forms of compensation that may contribute to the gender pay gap. For example, look at bonuses, stock awards, promotion rates, whether women are overrepresented in lower-paid positions, and any other unfair patterns that may come up in pay audits.

5. Just say no to salary negotiations

Women are statistically less likely than men to apply for jobs with ambiguous salary information and to engage in salary negotiations. In fact, a recent study showed that when salaries are advertised as “negotiable” women applicants drop by approximately 45%. Many employers are skipping negotiations altogether and creating pay levels based on measurable factors like experience and skills. By including pay bands and clear expectations in the job postings, women and other marginalized groups get to avoid negotiating over a salary, and are more likely to be offered fair pay for their work.

6. Offer equal opportunities

Even when higher-paying positions exist, women may not feel like they have the opportunity to move up or don’t have as much support when it comes to growing their careers. Look at your company structure and identify opportunities to help ensure women have the same resources and support as men. This includes offering mentorship opportunities, training, and availability of high-profile assignments. Equal opportunities can also go a long way to helping avoid toxic work environments.

Homebase for hiring and HR management

Yes, tackling the wage gap is a complex issue—especially for small businesses who are dealing with a hundred other things. Homebase makes it simple to hire and keep the right people, and manage your team. Here’s how we can help you do it with pay equity in mind.

Easily make equitable job descriptions

In just a few clicks, you can make an inclusive job posting that doesn’t exclude potential hires based on race, gender, or sexual orientation. Start with our library of pre-written, customized job descriptions and be sure to include a few important things:

• Use inclusive, impartial, and non-gendered language. Opt for “you” instead of “he” or “she”, and “people” instead of “men” or “women”.
• Avoid highlighting job characteristics associated with genders, like empathy or analytical skills. Avoiding these personality traits is inclusive and avoids perpetuating stereotypes.
• Focus on essential skills to ensure an equal balance of male and female applicants. The more skills that are listed, the less women are inclined to believe they are qualified.
• Stay away from overly professional wording and jargon. Intimidating language may discourage people from applying, reducing your pool of potential hires.

Did you know? If you want an HR pro to review your job postings, we have a team that’s ready to help.

Share your salaries far and wide

Here’s your chance to lead the way in pay transparency. With Homebase, you can post to multiple job boards at once. Include the salary or hourly rate to ensure a wider, more equitable job pool. While the wage gap for hourly workers is lower overall, one of the largest employment sectors—food and beverage—has one of the largest wage gaps. Including pay bands in the job description is a great business practice to adopt. Plus, skipping it may mean an entire generation skips applying. A new survey revealed that 85% of recent graduates are less likely to even apply for a job if the salary range isn't included. With Gen Z hitting the workforce in droves, it's tech-savvy demographic you don't want to miss out on.

Find the best person for the job

With your inclusive job posting and transparent pay, hopefully you’ve attracted a good group of potential hires. Track your applicants in one place, schedule interviews within Homebase, and be confident you’re finding the best fit, regardless of their gender.

Show them you’re committed to equality

When you automate the onboarding process with Homebase, you can send a paperless welcome packet to new employees. They can enter their information online, review employee handbooks, policies, training documents, and more—they can even e-sign all your documents so everything’s entirely digital. This is also a great opportunity to let new employees know about your internal policies, incentive programs, and employee appreciation opportunities. If you can, mention the specific measures you have in place to help employees thrive at your company.

Go ahead and do that pay audit

74% of small business owners say they have specific pay equity practices in place; but studies show that women employed by small-to-medium businesses actually make 66 cents on the dollar—an even larger gap than the national average. With Homebase, you can easily compare wages, performance stats, time off, and other critical information and see if you’re paying employees equally. If you’re not sure where to start, Homebase has an extensive resource library, and a team of HR experts to review your policies, and help with your toughest HR questions.

Set employees up for success

Frequent and consistent feedback is important when it comes to creating equal opportunities. With Homebase, you can offer your employees real-time feedback through our built-in messaging app and make performance reviews productive, effective, and worthwhile.

Make transparency simple

When employees have easy access to information about pay, performance, and other important metrics, you’re less likely to have inequality in the workplace. Homebase allows you to create employee profiles where you can track certifications, share stats, communicate in real time, and more, so your employees have as much information as you do.

Follow all the rules

Even with the best of intentions, you still need to stay in compliance with labor laws. And when there’s no big HR team, the job falls to business owners. Homebase makes it simple to track breaks, calculate overtime, and store time cards to help you comply with federal, state, and city rules. You can also track necessary certifications and get alerts when they expire. Plus, we’ll notify you when labor laws change at the state or federal level. Did you know? It’s actually illegal to ask for past salaries in certain cities and statesThe gender pay gap is complicated and stubborn, and it won’t go away overnight. Companies big and small can play a huge role in closing the gap by being aware, listening to their employees, and by tracking and fixing workplace inequalities. If you’re a small business tackling it all and trying to make a difference, we’re here to make things easier. Together, we can do our part to eliminate the gender pay gap once and for all.

Gender pay gap FAQS

What is the gender pay gap?

The gender pay gap is a measure of what women are paid relative to men for the same work. In the United States, women make between 80 and 85 cents on the dollar compared to the average man. Wage gaps have been an issue as long as women have been in the workplace and continue to be a stubborn problem for women all over the world.

Is the gender pay gap real?

Yes, the gender pay gap is real. But there’s debate about how large the pay gap actually is and which gender wage gap statistics should be used to measure the problem. Because there’s always an alternative way to look at the issue, there can be a misconception that gender pay gap data is unreliable or blown out of proportion. However, the data is clear: no matter how you measure it, the gender pay gap exists.

Does the gender pay gap exist when you compare men and women working the same jobs?

Yes. Even when you compare men and women working the same jobs, the gender pay gap exists. However, it’s not as large. When all factors are accounted for—like job title, education, experience, industry, job level, and hours worked, women make 99 cents on the dollar. While a 1 cent difference may not seem big, women who are doing the same job as a man, with the exact same qualifications, are still paid less for no attributable reason, and that’s a big deal.

How can hiring processes combat the gender pay gap?

Equitable hiring processes can go a long way in combating the gender pay gap. Best practices say that companies should be transparent about salaries, stop asking potential hires about their current salary, and look for inequality in bonuses, promotion rates, stock awards, and other forms of compensation. Some companies are doing away with salary negotiations altogether and offering the market rate for their open positions. Companies should also conduct annual pay audits to find and correct pay gaps in their organization. Is your business struggling with addressing the gender pay gap? Homebase can help. Our modern tools make it easy to manage scheduling, time clocks, payroll, team communication, hiring, onboarding, compliance, and more. Get started for free