Why Pay Equity Matters

“Deloitte Settles Gender Pay Bias Charges,” “J.P. Morgan Settles Gender Pay Bias Suit For $9.8 Million,” “WNBA Players Get Compensation and Benefits Boost in Groundbreaking Deal.”

Many of today’s headlines trumpet the fact that society’s spotlight is now firmly on the pay inequities women suffer in the workplace. And frankly, it’s about time. Studies continue to show that women are compensated on average 18 percent less than their male counterparts.

However, that’s just the beginning of why pay equity matters.

Legal Liability

As the above headlines demonstrate, there is a lot of litigation happening around this issue. In addition to the actions noted above, the public library system in Baltimore, Maryland was found liable for $190,000 in back pay, as well as liquidated damages. Dell was also sued for alleged gender-based compensation disparities. 

In other words, the likelihood of a company finding itself in court charged with gender pay bias is higher than ever before. And male dominated fields such as construction, technology and architecture need to be particularly attentive. Especially so, should an employee express disquiet in this regard. Ignoring such complaints could get you into serious trouble.

Societal Benefits

The pay gap affects women negatively in a number of different ways. In most families with children at home, the majority of mothers work outside the home for pay. In fact, research shows64 percent of mothers are the primary, lone or co-earners of their families.

This means households are relying upon women’s wages to get by. As a result, the majority of children who live in poverty reside in homes headed by women. These moms also have more trouble buying houses and funding secondary education for their children. Eradicating pay disparities would go a long way toward resolving these issues.

Because women earn less over the course of their careers, the retirement benefits they receive tend to be more meager as well. In fact, nearly twice as many women over the age of 65 live in poverty than men of the same age. This is largely due to the fact those men were paid better over the course of their careers, so they could put more money away for retirement. Further, because they earned more, their Social Security benefit is more substantial as well.


Ultimately it comes down to fundamental fairness. People doing the same work should be paid the same amount of money, regardless of gender, age, or ethnicity. If they’re doing the exact same work, they should get the exact same compensation.

Committing to a pay equity policy and making it a core principle of your company will go a long way toward engendering loyalty among your workers. The morale boost it foments will have a positive effect on productivity as well. People are happier when they know they’re being treated fairly. This makes it easier to hold on to top talent.

What Employers Can Do

Mercer, a leading global managementconsulting firm advises clients to includepay equity analysis as a core aspect of their annual compensation reviews. Doing so can limit legal risk, proactively prepare disclosure and accelerate workforce diversity.

The company recommends using theirPay Equity Calculator™ (PEC) to review pay gaps by gender and ethnicity, as well as investigate pay distributions group-by-group. The PEC also gives you the ability to experiment with different adjustment approaches and create custom strategies for specific groups. With the goal of always keeping an eye on the bottom line, the pay equity calculator you choose should evaluate the impact of actions on pay gaps and budgets, review individual-level outliers and document special-case situations.

Understanding why pay equity matters positions your firm to become an advocate for eliminating gender-based disparities in compensation. As you can see, there are a number of benefits to doing so, both to your organization and society as a whole.