What Is Pay Equity?

Pay equity, often called equal pay for equal work, is the principle that individuals should receive equal compensation for performing jobs of equal value, regardless of gender, race, ethnicity, or other protected characteristics. The goal of pay equity is to work to eliminate disparities in compensation to achieve equal work for equal pay.

Even though compensation should be based on the role rather than gender or any other factor, that’s not always the case. Pay gaps can persist even when individuals hold the same job title and have comparable qualifications. 

With gender, the pay gap hasn’t changed much over the years. A Pew Research Center study reports that the pay gender gap has remained relatively stable in the United States over the past 20 years. In 2022, women earned an average of 82% of what men earned—an increase of only 2% from 2002.

In addition, the racial pay gap has increased over time. The Economic Policy Institute reports that the pay of a typical Black worker is 24.4% less per hour than that of a typical white worker in 2019, an increase from 16.4% in 1979.

Review information on pay equity and wage gaps, the laws regulating it, and what you can do to ensure you are paid what you deserve.

What is Pay Equity?

Pay equity refers to the concept of ensuring that employees who perform similar jobs and have similar levels of experience earn the same amount regardless of their gender, race, or any other personal characteristic. This means that if two employees perform the same job and have the same education level and experience, they should be paid the same amount.

Examples of Pay Inequality

Here are some examples of pay inequality in the workplace:

Tech Industry: In a technology company, a male software engineer and a female software engineer with the same experience, education, and job responsibilities might find that the male engineer is earning a higher salary. Despite performing the same tasks and having equivalent qualifications, the gender pay gap could arise due to biases in negotiation, performance evaluations, or promotion opportunities.

Legal Profession: In a law firm, a Black and a white attorney working in the same practice area and with comparable years of experience might discover a wage disparity. Despite their equal contributions to cases and clients, the white attorney could earn a higher salary due to assumptions about his potential for advancement or leadership.

Healthcare Professionals: In a hospital, physicians with the same specialty and experience could find disparities in their earnings. This could occur due to negotiation differences during contract discussions or stereotypes that attribute more value to white male doctors’ contributions.

Corporate Management: A male and a female manager overseeing the same department might experience a pay gap in a corporate setting. This could be due to differences in performance evaluations, opportunities for high-visibility projects, or biases in decision-making processes.

Pay Equity Issues

Despite progress, challenges related to pay equity persist. Factors such as negotiation skills, unconscious biases, and historical inequities often play a role in perpetuating these disparities. Addressing such issues requires a comprehensive approach that includes awareness, training, policy changes, and a commitment to fair and unbiased compensation practices.

Gender and Racial Disparities: Women and minority groups still face wage gaps in many industries, often due to historical biases and stereotypes.

Undervaluation of “Feminine” Jobs: Traditionally, female-dominated occupations tend to be undervalued and thus receive lower compensation, perpetuating gender-based wage disparities.

Negotiation Bias: Negotiation during salary discussions can disadvantage individuals who may negotiate less aggressively, which tends to affect women more than men.

Lack of Transparency: Some companies still keep compensation structures confidential, making it difficult for employees to gauge whether they’re being paid fairly.

Laws Governing Pay Equity

Federal Laws

In the United States, the Equal Pay Act of 1963 was the first law protecting against wage discrimination based on sex. This law requires that male and female employees be paid the same amount for doing the same job.

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating through compensation based on a protected class. There are also laws protecting job seekers and employees from discrimination based on age or disability.

State Laws

Many states have also passed laws aimed at addressing pay equity. For example, in New York, “Under state law, you have the right to equal pay for substantially similar work—regardless of your age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, genetic history, familial status, marital status, or domestic violence victim status.”

Company Compensation Policies

Many companies recognize the importance of pay equity for legal and ethical reasons and attracting and retaining top talent. 

They implement policies emphasizing transparency in compensation structures, conduct regular pay audits to identify disparities and make necessary adjustments to ensure fairness. These policies create a more inclusive and motivated workforce.

Improving Pay Equity

The goal of pay equity is to eliminate wage gaps that result from systemic discrimination and implicit biases. It focuses on evaluating job roles based on their responsibilities, skills required, and level of contribution to the organization rather than simply comparing job titles. 

This approach ensures that employees are compensated fairly for their work, regardless of whether they hold the same job title.

What You Can Do if You’re Concerned About Compensation

Pay can be complicated, and there are other reasons besides pay inequality why you may be paid less than your co-workers. Review these strategies for how to handle it if you’re concerned about compensation.

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