27 September 2023

Public salaries reduce gender pay gap

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Jessie Tu* says a survey has found the gender pay gap reduces when salary information is publicly available.

Making salaries transparent is prompting organisations to minimise the gender pay gap, a new study from the U.S has revealed.

Researchers at the University of California San Diego’s School of Global Policy and Strategy assessed how universities in Ontario, Canada responded to a policy (implemented in the 90s) that required organisations to publicly release the salaries of individuals who made over $100,000.

The universities that disclosed the information increased their pay for female employees by roughly 4 per cent.

Universities who kept their compensation data private did not increase their pay for their female employees over the same 24-year period of the study.

Elizabeth Lyons, Associate Professor of Management at the School of Global Policy and Strategy, said the research contradicts previous beliefs that salary transparency creates more equal pay because it gave individual employees agency to negotiate for a higher salary.

“We find that when there is a standardisation process that makes searching for compensation information very easy, then organisations as a whole have an incentive to improve equality to reduce the threat of public scrutiny,” Lyons, who is the coauthor of the study, said.

“Universities most likely to anticipate higher scrutiny, such as top ranked institutions, responded more aggressively and quickly to improve gender pay equality by slowing the growth of male salaries as well as by increasing female pay.”

Earlier that month, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act was implemented into Australian law, making it a workplace right for employees to disclose their renumeration information should they chose to.

The new Act sees the amendment of the Pay Secrecy Clause, which had previously barred employees from disclosing, discussing and/or comparing salaries with one another.

Employees will also be entitled to make general protections claim if their employer takes action against them for disclosing their salaries.

The US research found that some organisations were reportedly concerned that enabling salary transparency could reduce worker morale.

Within academia, some departments are worried it may affect how donors or students perceive the institution.

The study compared the salary of 32,000 different university employees over 1,400 academic departments in Canada over 24 years, using a dataset from Statistics Canada.

Fellow co-author of the study, Laurina Zhang, said the research proves that salary transparency does influence gender pay inequality but not in the way we previously thought it would.

“We expected that salary transparency would reduce inequality because females were going to see what their male counterparts were making and try to negotiate for more equal pay, but the data did not reveal changes at the individual level,” Zhang said.

“The strategy seemed to work because we did not see high profile news stories about gender inequality on Ontario college campuses.”

Compared to the US, where salary information must be made public in many states including California, Florida, Texas and most recently — New York, the researchers added that Canadian organisations seem to be under less pressure to implement such transparency laws.

A few days before Christmas last year, New York Governor Kathy Hochul enacted the Senate Bill S9427A which requires employers with at least four employees to list salary ranges in job postings and advertisements.

*Jessie Tu is a journalist at Women’s Agenda and author of A Lonely Girl is a Dangerous Thing.

This article first appeared at womensagenda.com.au.

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