What Is the Difference Between Wage Equality and Equity?

The United States celebrated Equal Pay Day on March 12 this year. It is one of many initiatives intended to shed light on the unequal earning power for women, due to gender bias in the workplace. Pay equality, often used interchangeably with the term pay equity, has become a buzzword. But just because a term becomes more popular does not mean it becomes better understood. At Edgility, we often say that organizations must “act on equity.” We’re using this blog to clarify any confusion around equality vs equity and what it means to act equitably regarding compensation, and also to emphasize that there is no “one-size-fits-all” solution for every organization. 

 

Pay Equity vs Pay Equality: Answering the most common questions 

To start, we need to define equality and equity. Equality means providing everyone the same things: the same housing quality, education, resources, etc. Equity, however, is more akin to fairness and requires examining an individual or group’s circumstances to improve the likelihood of arriving at the same outcome

 

1. What is the meaning of pay equity?

Pay equity ensures that people are paid fairly based on experience, qualifications, and workload, regardless of gender or ethnicity. In contrast, pay equality means paying people the same amount irrespective of experience, qualifications, and workload. While pay equality seems reasonable, in practice, it often results in companies paying women and people of color less than their white male counterparts. The Pew Research Center has found that no one single factor accounts for this disparity. Rather, as far as research can determine, it is a set of factors related to societal norms and gender expectations that, over the course of a woman’s lifetime, lead her to earn roughly $11,000 less a year than her male counterparts – and it’s unfortunately even worse for women of color. Motherhood is one of the biggest factors that causes women to lose ground as many women either leave the workforce entirely or work reduced hours. It’s also possible that women and men pursue different types of work, leading women to enter less socially valued or chronically underpaid roles, such as teaching and housekeeping. 

 

2. What are the benefits of pay equity? 

Pay equity leads to fairer outcomes for all. When coupled with transparency, pay equity gives employees confidence that they are receiving fair pay, which can improve workplace morale and increase productivity. It is also a critical factor in employee retention. 

 

3. How do you achieve pay equity? 

Achieving pay equity is rarely as straightforward as we’d wish. It requires an organization-wide commitment and a willingness to examine your “best practices”: many traditional methods for improving pay equity rely on the same systems that created the inequity in the first place. It also involves looking at all levels of your talent management system, from acquisition to retention to overall compensation (vs just base salary). For many companies, doing this deep dive also clues them into their organizational culture, both what’s working and where there is room for improvement. 

 

Pay Equity Solutions: How to Put Equal Pay for Equal Work into Action 

Pay equity is a legal requirement, but loopholes in the law have allowed inequalities to persist for years – which is why women still make $0.84 for every dollar men make and the numbers are worse for Black and Latina women. Since the law contains as much gray area as it does, organizations committed to pay equity must educate themselves on achieving a sustainable, competitive, and equitable compensation program. Here is a simplified overview of the process. 

 

Ask the Right Questions

It’s important to know where you and your organization stands in regard to pay. We strongly suggest starting with our compensation pillars of equity worksheet, followed by the compensation philosophy toolkit. These free tools will help you figure out where you stand right away with simple questions like, “do you publish the salaries for every role” and more complicated ones like how your team understands and views salary growth. 

 

Do an Audit 

Either internally or with the help of a qualified partner, the first step in creating an equitable compensation program is to understand where your organization is starting from. You’ll need to gather data on every employee’s role, responsibilities, education, and pay. Pay should be equitable regarding responsibilities, experiences, work environment, etc.: you’re not looking for identical job titles but rather similarities in expectations for the role, overall organizational impact, and management scope. 

 

Create Written Standards 

If you already have an equity strategy for compensation, talent acquisition, and talent retention, you can move to the next step. But for most businesses, after they’ve completed their audit and determined where there’s room for improvement, they’ll need to create an official equity policy. This policy will likely be complex. Here is just a short list of factors to consider: 

  • Compensation, both salary as well as benefits 
  • How employees are evaluated and promoted (competency frameworks)
  • How to reduce and remove bias from hiring 
  • How to bring all employees to an appropriate compensation level and how the company will maintain this going forward
  • How will your organization check that its policies are working, and what is the process for reevaluating and making changes as necessary 

 

Communicate Your Pay Equity Plan 

Communication is a crucial factor in employee and potential employee confidence in your organization’s commitment to pay equity. Studies show that salary negotiation negatively impacts equity. Still, for applicants to feel confident that they don’t need to negotiate for a fair wage, your organization must communicate how you ensure equitable compensation for all. Internally, ensure employees know how you developed your compensation plan and its effectiveness in producing equitable pay. Understanding will lead to better buy-in, and better engagement in the processes you put in place. 

 

Communication can also improve the ease of rollout. No matter how interested or “on-board” employees are for your new plan, communicating transparently about compensation can lead to more—rather than fewer—questions. By thinking through your complete implementation plan, you ensure you make progress in the correct order, thus causing as little disruption as possible to daily operations and minimizing confusion to staff. 

 

Reevaluate Regularly 

Pay equity is not a one-and-done policy or practice. It requires ongoing spot-checks of compensation across similar roles, regularly updated job descriptions, and keeping up with market trends to know when an increase in compensation is warranted. As mentioned in step 2, part of writing your compensation policy should include the steps to reevaluate and adjust as needed to keep equity at the forefront of your compensation and talent management strategies. 

 

Pay Equity in Practice 

Edgility regularly works with organizations that prioritize equity for those they serve and helps them turn their equity lens inward to serve their staff and stakeholders. 

 

Enroot Education has an 80+ year history of serving low-income immigrant youth in the Boston area. In 2023, they worked with Edgility to reengineer their compensation structure and career advancement practices to increase transparency and boost staff morale. Read their full story

 

Mujeres Latinas en Acción empowers Latinas and their families through six services that promote non-violence, reproductive health, and leadership development in the Chicago area. They already had a solid organizational structure in place when they approached Edgility in 2022 to help them create a more robust compensation model with clear and transparent job levels and metrics for range placement and salary growth. Read their full story

 

Getting Started

Creating an equitable compensation program is a multifaceted process that has as much to do with salary as it does with how you hire and manage talent. While the steps above can serve as guidelines for getting started, each has several sub-steps, each of which could easily have its own blog post! Finding the right solutions that balance organizational needs while prioritizing equity will take time and often benefit from an external set of eyes. If you’re looking to work with a partner on designing (or redesigning) an organization-wide compensation program based on equity, contact Edgility to get started

 

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Put your values to work. Act on equity.

We believe equity isn’t a box to check. It’s a daily action. Someone’s unique identity isn’t something to overcome–when paired with the right opportunity, it becomes one of their greatest professional assets. We exist to empower social impact organizations to recognize and overcome unconscious bias, racism and sexism so they can build a workforce that reflects and strengthens the communities they serve.

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