Gender wage inequality is complicated, and numerous factors
contribute to the problem. Discriminatory practices (conscious and
unconscious), occupational choices, parental leave policies, and uneven access
to small business loans for women play a role. It will take a collective effort
if we ever hope to see the gender pay gap disappear.
Firstly, ask yourself:
- What factors contribute to the creation of the gender pay
gap?
- How does the gender pay gap affect you and your business?
- How can you and your business work to close the gender pay
gap?
- What measures can you take to raise awareness about the
gender pay gap?
1. Normalize talking about money.
Talking about money is one of the best ways that women can support other women and that men can support women too. For example, having conversations about business loans for women could help many women develop an understanding of this topic. Tori Dunlap, money expert and founder of Her First $100K, advocates making it normal to talk about salaries and specific income and earning numbers with others.
“I think talking about money and being as open and transparent as you’re willing to be is so powerful,” says Dunlap. “It allows us to feel less alone. It allows us to have these tangible things in terms of knowing I’m making less than this other person right now.”
Miranda Marquit, the co-founder of the Freelance Writer Academy, adds that being transparent is important for freelancers and small business owners too. “I once found out a colleague with less experience made 1/2 again what I did for the same client.” She was able to use that knowledge to fix an unequal pay situation that should have never occurred in the first place.
2. Get comfortable asking for more money.
Freelance finance writer Alma Smajlovic of Fort Wayne, Indiana, spent ten years working in accounting. But for the first seven years of her career, she never asked for a raise. Women negotiating salary should be encouraged and talked about. In hindsight, Smajlovic not requesting a salary increase was a mistake, and she shares her experience with other women in the hopes of helping them avoid the same blunder.
Smajlovic advises that women use written proposals to make it easier to ask for more money. “Many articles that I read…talked about the importance of having a face-to-face conversation—and I don’t disagree,” she says. “However, knowing my boss, bringing it up out of the blue would not work as well. Instead, I prepared a well thought out email asking for more money, including the new responsibilities I had taken on, which were worthy of more than the annual raise that we were used to every year.”
Smajlovic made sure the tone of her proposal was positive. She also closed by saying that she would like to continue the conversation. The two-step approach worked well, and it gave her boss time to consider the raise request instead of being thrown off guard.
3. Do your homework.
It's important to do your homework before you try to
negotiate the salary for a new job or a raise. New York-based financial lawyer
and founder of Tayne Law Group, Leslie H. Tayne, Esq., recommends that women
research the market value of the role they’re pursuing before they approach a
salary negotiation. Websites like salary.com, payscale.com, and glassdoor.com
can help.
When you have information about what constitutes a fair wage
for the work, you’re in a better position to evaluate an employer’s offer.
“Then, if a company tries to low-ball you,” Tayne says, “you can point to the
data and ask for more money.”
Tayne also says that women should consider that it’s not
just the salary they need to negotiate. Benefits, total compensation, and
preferred work environment are other areas where asking for what you’re worth
can make a meaningful difference in your life.
4. Standardize the pay scale.
Women need to speak up for themselves. But employers are the
ones who have the ultimate responsibility for making certain gender-related
compensation issues don’t take root on their watch.
Creating a standardized pay scale is one strategy Tayne
suggests that employers can use to combat gender pay imbalances. She recommends
making a scale for each position in the business. Numbers may vary based on
experience, education, and job description. Finally, the employer should audit
the compensation of their existing employees to make sure everyone is earning a
fair wage under the new salary structure.
“Don’t base your job offer on your applicant’s salary
history,” Tayne says to employers. “Not only is doing so illegal in many states
and localities, but you could keep a talented professional stuck in a low-paid
loop. Instead, offer a salary that compensates your new employee for the value
that they’ll bring to your company.”
5. Use the “under and over” rule.
Numerous experts recommend that being transparent about
earnings when fighting the gender wage gap. In reality, however, some people
might not feel ready for this approach.
If you’re speaking with others who are uncomfortable sharing
exact salary details, Dunlap recommends giving the “over and under rule” a try.
“If the person you’re talking to doesn’t want to give their direct salary,”
Dunlap says, “you can ask, ‘are you making over or under X a year?’ It takes
the fear and uncomfortability out of sharing a specific number.”
6. Managers need to step up.
As a woman, it’s important to advocate for yourself. But
management behavior also plays a key role in reducing the gender pay gap or
perpetuating it.
Kyle Landis-Marinello, author of Personal Finance and Investing, calls on managers to step up. He suggests that they do everything in
their power to address the undeniable problem of the gender pay gap.
"I work in state government, where all of our salaries
are public," says Landis-Marinello. "That helps employees find out if
they're not getting paid enough. But the responsibility ultimately needs to
fall on managers."
Landis-Marinello's approach to addressing pay inequity is to
ensure everyone on his team gets an annual review. "Research shows that
men are more likely to ask for raises than women," he says. "This
makes it crucial that managers initiate an annual review process for all
employees so that everyone has an equal chance of getting a raise."
7. Give families more support.
For working mothers in the United States, the gender wage
gap is even wider than average. According to the National Women's Law Center,
full-time working moms earn only 70 cents per dollar compared to working
fathers.
Kyle Kroeger is the owner of The Impact Investor. He
advocates for employers to provide more family support for childcare and
raising children. "This is a big challenge," Kroeger says, "but
it's not a challenge that's going to go away. The more support families have
for child care, the easier it will be for women to stay in work and earn money
throughout their lives."
According to Kroeger, men also need to take on more family
responsibilities—after all, they are half of the parent equation. Doing so can
make it easier for women to work outside of the home. Kroeger has a good
perspective on the subject as he now works from home with their daughter while
his wife is an in-office lawyer.
8. Increase paternity leave.
Another way employers can support working mothers is to
grant their employers longer paternity leave. Extending paternity leave sets a
precedent that parenting duties should be equal between mothers and fathers
alike.
Before he transitioned to a full-time entrepreneur, Kroeger
worked a demanding job in private equity. In that role, he was given just two
weeks off for paternity leave after his wife gave birth to their daughter.
“After going back to work so soon while my wife stayed at
home, it was completely mind blowing the expectations that the dad worker
should be back that much quicker than the mother,” says Kroeger. “It sounds
counter-intuitive but it’s very important. Without 50/50 support, women and
mothers are not able to put more time into their careers. There needs to be
better company and governmental policy to support this.”
9. Understand that money isn’t just a number.
Your salary isn’t just a number. In the workplace, money is
energy. Being underpaid says a lot about how your employer feels about you.
Amanda Claypool, writer at Millionaire by Next Year,
believes that understanding how much you earn (more or less) concerning
coworkers is critical. “Chances are if your employer is stiffing you on a fair
wage, they’re going to stiff you on opportunities for advancement too,” she
says. “Wage inequality isn’t just a statistic, it’s a red flag letting you know
that you work for a predatory employer. Get out of there ASAP.”
10. Start your own business.
There’s a clear gender pay gap in the United States. Yet
Rachael Burns, CFP and founder of True Worth Financial Planning, doesn’t feel
that women should be responsible for finding a solution to the structural
issues that cause unequal financial treatment in our country.
Instead, Burns suggests that the best way for women to
empower themselves is by becoming their own bosses—aka starting businesses.
“Entrepreneurship takes the subjectivity out of your personal 'value,’” she
says. “Your earning potential is not the opinion of some hiring manager; it's
determined by your hard work, creativity and grit.”
11. Lead by example.
If you’re a business owner a women entrepreneur or in a leadership role at your company, leading by example is critical. Vee Weir, the founder of Vee Frugal Fox and Weir Digital Marketing, talks about how you can do your part to fight gender pay inequality within your circle.
Weir says that closing the gender pay gap starts at a grassroots level. “I pay my independent contractors $50 an hour for their work,” she says. “I lead by example and advocate for not only equal pay, but a livable wage.”
Weir commits not to bring anyone new onto her team unless she can afford to pay that person a dignified wage. She takes both experience and economic circumstances into consideration to guide those decisions.
Looking forward
On a positive note, efforts to shrink the gender pay gap
appear to be making an impact. Four decades ago, in 1980, women earned 36 cents
less than men. Compared with the 16-cent pay gap in 2020, that’s progress. The
fact that 40% of businesses in the United States are now women-owned is likely
responsible for some improvement where gender pay inequality is concerned.
Accessing business financing can make a big difference in
the success or failure of new female entrepreneurs. Yet financing is another
area where women face inequality—a credit gap rather than a wage gap. A gender discrimination review by Bridgewater State University found that almost 80% of
women entrepreneurs are underserved or entirely unserved in this area.
If you’re a woman searching for business financing, finding
the right credit solution is a strategy that could help you. One business loan
source to consider is Biz2Credit. The financing platform allows you to complete
one application and get matched to multiple business loan
opportunities—including sources that focus on improving access to credit for
women-owned businesses.