It’s an easy-to-imagine scenario: You are a hiring manager for a newly created position. You suspect this role might fall into a certain pay range within your organization, but are not entirely sure of the market rate. You have a rough idea of budget and a clear idea of the traits of a perfect candidate. Why not post the position, see who applies with your ideal qualifications, then match salary histories of well-qualified candidates to the closest pay grade?
Because in 20 state or local governments, it is now or will soon be illegal to ask candidates to disclose salary history during recruitment. Even in states like Michigan and Wisconsin where state law prohibits bans on asking the question, candidates may bristle at the question.
As the head of a trade association that represents almost 100 Connecticut employers—half with six or fewer employees—introduction of this legislation in Connecticut caught my attention. Small employers like the credit unions I represent use information from this question as market research to appropriately price new positions. Hiring managers from organizations of all sizes use this to screen candidates to save time for themselves and job seekers.
So… What exactly is the problem? Relying on salary history during the recruitment process has been found to perpetuate the gender wage gap.
Women today make about eighty cents for every dollar a white man makes, as reported in AAUW’s The Simple Truth about the Gender Pay Gap. For black women, the gap is higher: They must work 19 months to reach their Equal Pay Day, or the point where income equals what a white man makes in one year. While there has been significant progress over the past several decades, research shows that it will take until 2059 for white women and 2124 for black women to achieve pay equity. To put this in perspective: My elementary school-aged nieces could reach equality in the middle of their careers. Any granddaughters born to my son’s 2nd grade classmates might begin to earn equal compensation as they near retirement.
That is a very long time to wait for equality.
It is also a very long time for society to allow the economic distress of pay inequality to continue. This is not just an issue of fairness: Closing the gender wage gap would add $513 billion to the national economy and cut poverty among working women by more than half according to the Institute for Women’s Policy Research. As both employers and community organizations concerned with building strong economies, credit unions will benefit by committing to pay equality.
Here are three ways to position your organization as an ally in closing the gender wage gap that might also improve your culture for everyone:
- Support your claim that human resources are your most important asset. Organizational leaders often talk about how much they value employees. Is this demonstrated during salary negotiations, or is the object there to get the best deal on new talent? In states where inquiring about salary history has not yet been banned—or in the event a candidate discloses this information without your request—maintain the integrity of offering the appropriate salary, not the lowest you think might be accepted. If a candidate discloses a salary requirement below your predetermined pay grade, use that opportunity to explain your commitment to fair pay and the value you place on people when you make a slightly higher offer than the candidate hopes. New team members will begin their journeys feeling highly valued and in this hypercompetitive jobseekers’ market, your organization will earn an impressive reputation.
- Host a workshop that teaches effective salary negotiation. Successfully negotiating a slightly higher starting salary sets a new employee on a path to earn more than $1 Million more than those who do not negotiate. Groups like the American Association of University Women offer the opportunity for your organization to host salary negotiation workshops to help women get on track for better long-term earning, and many recent graduates (regardless of gender) would likely benefit from this type of training. Offering this type of workshop to your community can boost individual earning potential while enhancing your brand as a true partner in improving people’s financial lives.
- Encourage male employees to participate in paid family leave. There are a number of conflicting studies related to the degree to which offering paid paternity leave might positively impact the gender wage gap. Studies do not seem to conflict about this, though: Globally, the disparity in women’s income spikes after the introduction of a child to the household. It appears that even in countries like Denmark where parental leave can be divided equally between parents, the gender wage gap still grows following the introduction of a child. Offering paid leave is not enough to change the culture: Men must actually use the available leave. If your organization offers family leave but the culture subtly or blatantly discourages men from using it, reconsider how to influence different behavior. Can you create a culture where men are just as likely as women to take paternity leave after a new child enters the household? Senior leaders demonstrate acceptance by using the policy themselves. Human resources managers normalize the benefit when they proactively review the benefits available to new dads. Even informal moves like providing similar gifts, baby showers, or meal deliveries for both new dads and new moms may send the message that your organization supports the important role men play in parenting.
As the world of human resources shifts and employees demand more flexibility, stronger integration of personal values at work, and more work-life balance, competitive employers must do more than just stay above the law. How will your credit union create trust and demonstrate the value you place on every individual who drives your organization?