Looking Beyond the Numbers: Addressing the Real Issue of the Racial Pay Gap

Note: The author of this post, Akshita Sankepally, is not a Black woman, and she does not pretend to understand the struggles of Black women, especially as those struggles relate to the wage gap. The author wishes to be an advocate for closing the pay gap for Black women. Furthermore, it is not up to Black women to close this racial wage gap—we can only do this as a society by implementing legislative and policies changes on system- and organization-wide levels.  

When people discuss the racial pay gap, they often quote statistics that reflect the uncontrolled pay gap, which compares the median salaries of all workers by demographic categories (i.e., race, sex, age, etc.), regardless of occupation and industry. These are the uncontrolled pay gap facts: in the United States, Black women are paid 64 cents on the dollar, compared to White, non-Hispanic men. In contrast, White women make 79 cents on the dollar, compared to White, non-Hispanic men. Many would assume the pay gap is narrowing for Black women, and it is, but it is not narrowing at the same rate that it is for White women. Over the last twenty years, U.S. Census data shows the pay gap for Black women only closed by $0.06, while the pay gap closed by $0.15 for White women. These numbers may not seem large, but pay differentials add up over time. The driver for the uncontrolled pay gap is occupational segregation: this refers to Black women being overrepresented in frontline, low-paying roles and incredibly underrepresented in high-paying professions, industries, and positions.  

In contrast to the uncontrolled pay gap, the controlled pay gap “controls for”—or takes into account—job and qualifications when assessing pay by demographic group. When you look at controlled data, Black women make 98 cents on the dollar compared to White men in similar roles and with similar qualifications, whereas White women make 99 cents on the dollar across all levels, as well as Asian women. When you examine the salaries of executives, Black women make only 95 cents on the dollar compared to White men in similarly situated positions. The positive trend for the controlled pay gap for Black women is that the gap is narrowing: the controlled pay gap across all job levels was $0.97 in 2020 compared to $0.99 in 2022. If this trend continues, pay equality could be a reality in the next few years. Similar to the uncontrolled data, it would be interesting to analyze how the controlled pay gap has progressed (or widened) over the last few decades, but this data is difficult to find, specifically as it relates to Black women. This speaks volumes about the lack of focus on the racial pay gap.   

The uncontrolled pay gap statistics seem discouraging, while the controlled pay gap statistics seem encouraging for Black women. While this might seem contradictory, the reality is this: equal pay for equal work is closer to reality than ever—but Black women are massively underrepresented in higher-paying positions and industries. When it comes to promotions, only 58 Black women are promoted for every 100 men who are advanced to manager-level positions. Furthermore, while Black women account for 7.4% of the United States population, they only represent 1.6% of V.P. positions and 1.4% of C-suite positions. This data, especially in the context of our nation’s history, make one thing clear: Black women do not receive equal access to higher-level roles, jobs, and industries.  

It is incumbent upon all of us to change this. While countless groups and organizations are advocating for legislative change, we know the government can be incredibly slow at implementing those changes. In the meantime, organizations can step up for Black women to ensure that a racial and gender pay gap does not exist at their organizations.  

Executive leaders have an obligation to bring more Black women to the table; only by doing so can we begin to close the uncontrolled wage gap. On an organizational level, there are two steps executive leaders can take to close the uncontrolled wage gap:  

  1. Break occupational segregation and hire/promote Black women to executive levels. Organizations should evaluate the positions that Black women hold at their organization—are they overrepresented in low-paying jobs and underrepresented in high-paying jobs? If so, leadership has an obligation to hire more Black women in executive and high-paying positions. 
  2. Renounce the concept of a “culture fit.” Many hiring managers and executives have a desire for prospective employees to be a good “culture fit.” What does this desire mean for your organization specifically? Do you want, for example, for a prospective hire to be collaborative, be person-centered, and/or take initiative? By making this process more transparent, organizations will set up Black women for success, not failure.  

While organizations work on bringing more Black women to the table and hiring more Black women in higher-level jobs and industries, they must also ensure that organizations do several things to ensure Black women are being paid equitably.  

  1. Conduct an internal pay equity audit. Internal compensation equity refers to how individuals at an organization are compensated compared to colleagues doing similar work or with a similar level of responsibility. An equity audit analyzes how individual compensation relates to factors such as job level, tenure, age, race, gender, years of experience, and (for some positions) academic or other job-relevant credentials. Organizations that uncover inequities—for example, situations where a review of controlled data shows that Black women are being paid less than one or more other demographic groups—should acknowledge and address these. Furthermore, a study showed the pay gap widens for Black women as they enter higher positions. As noted above, executive Black women’s salaries fall to 95 cents on the dollar (from 99 cents on the dollar) compared to White men—so organizations should pay particular attention to pay equity at its top levels.  
  2. Conduct an internal promotions equity audit. Black women face discrimination in multiple aspects of life, and discriminatory lack of promotions is one of them. Organizations should understand how they promote staff members in their organization and how often people are promoted. More specifically, how often are Black women promoted compared to White, non-Hispanic staff members, once compensable factors such as years of experience, tenure, and performance are taken into account? Organizations need to compare these rates related to years of experience, tenure, performance, and other relevant factors. By ensuring Black women are being promoted fairly, organizations can ensure that Black women are being paid equitably.  
  3. Ban asking for salary histories. As of November 2022 (some laws effective as of January 2023), 28 states have enacted either state- or city-wide laws prohibiting asking about salary history. While this is a start, the practice is not yet illegal on the federal level. If you are located in one of the states without a ban on salary history asks (e.g., Indiana, North Dakota, or others), implement an organization-wide policy to ban them. A recent study shows that asking for salary history only perpetuates the wage gap.  
  4. Be transparent. Organizations should commit to a high level of transparency around pay rates—and adhere to it. While this depends on an organization’s compensation philosophy, organizations need to challenge themselves to commit to a high level of transparency in line with that philosophy, nonetheless. This transparency practice can include making the following information public: the process for determining salaries, salary bands for all levels, and/or the gender and racial pay gaps at the organization, among other relevant information.  

These are only a few of the many ways organizations can close the racial wage gap on an organizational level. To implement strategies, executives need to step up. According to the National Women’s Law Center, over the 40-year course of a Black woman’s career, she will miss out on approximately $946,400—far too high of a number for organizations to ignore. While “Equal Pay for Equal Work” may be close, this is not the true underlying issue with the racial pay gap: a lack of Black women in leadership positions and in high-paying positions/industries is by far the larger problem.  

Given the severity of the situation, organizations need to commit to implementing the six strategies named above to address both uncontrolled and controlled pay gaps at their organization. If you need support with design and implementation, contact one of our experts, Akshita Sankepally (asankepally@drgtalent.com). DRG Talent will work with organization leadership and staff to review salaries and conduct a thorough analysis. We also have expertise in executive search—contact us to learn more about our equitable hiring process and hiring BIPOC individuals.  

Akshita Sankepally, Talent Consultant

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