The pay gap is widening, and companies who wait awhile to fix it will end up paying more

The good news is that organizations are interested in changing their pay disparities. The bad news is that the longer they wait, the more it’ll cost them.

A release from advisory company Gartner says that pay gaps are increasing about 0.2 percent every year. The average cost to correct pay gaps increases by $440,000 annually, meaning that the longer a company waits to fix their pay gap problem, the costlier it’ll be. In three years, a business will end up paying more than $1.3 million.

Gartner says the pay gap has two different types: group-to-group and role-to-role. Role-to-role is what most people associate the gender pay gap with — where a man and a woman are paid differently for the same job, like a male nurse that earns more than his female counterpart.

For group-to-group, it’s where genders are separate based on who is taking what kinds of jobs, like female nurses and male doctors. Doctors make more money than nurses, and this type of gap shows an unfair level of expectations for what genders should be doing.

Since there are different levels of pay disparities, it’s important to realize that fixing the pay gap isn’t quick or easy. Even as inequality is growing among role-to-role gaps, Gartner says the best time to act for companies is right now.

“Role-to-role pay gaps are trending upward at an average rate of close to 0.2 percent per year,” Gartner says. “Ad hoc pay adjustments that fix current gaps will not hold over time, and they will leave organizations open to increasing legal, talent and reputational risk. Leading organizations have figured out ways to conduct equity audits as an ongoing process, rather than a one-off event.”

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The best time to achieve equal pay is right now, since many employees perceive there to be a pay gap where they work.

“When employees perceive a pay gap, regardless of whether their perceptions are correct, it has a direct, negative effect on employee retention in the form of a 16 percent decrease in intent to stay among both female and male employees,” they say. “That’s 50 percent worse than the typical impact of a pay freeze.”

Pay inequality is not new and there hasn’t been a huge fix in it, despite more attention on unequal pay. The gap isn’t closed in most industries, although there are some places where women earn a little less than their male counterparts, instead of a lot less. Oddly enough, the biggest pay disparity for women is in a job where money is the star: financial advisers.

Even for younger generations entering the workforce, the pay gap is still prevalent up to five years after graduation. That means for women that do the exact same work, with the exact same title, at the exact same job will not be paid equally as their male counterparts. It’s still a shorter timespan for women to hit equal pay, but that doesn’t mean the struggle is over. The United States won’t see complete equal pay for more than 200 years.

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Dori Zinn

Dori Zinn

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Zinn is a freelance journalist based in Fort Lauderdale, Florida.

Budgeting & Saving, Career and Business, News

income, office life

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Article last modified on January 8, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: It’ll Cost Companies More Than $1 Million to Fix Pay Gap Three Years from Now - AMP.