Salary Transparency Could Help Speed The End Of The Gender Pay Gap

The University of Toronto has to make salaries information public for employees earning over … [+] $100,000 (Pic: Getty Creative)

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Even though the struggle for equal pay between men and women has been raging in earnest for at least 50 years, it looks like the gender pay gap will be with us for years to come.

Women earn on average 82 cents for every dollar men make, and at the current rate of progress, it will be 2059 before the gap disappears.

Now a study on pay at universities points towards a way of closing the gap rather more quickly: salary transparency.

But this is not because, as many assume, transparency allows individuals to negotiate for better pay. Instead, the study found that it is because it pressures employers to close the gap as a way of avoiding public scrutiny.

The study looked at pay for staff at universities in Ontario over a 24-year period, after the province implemented a policy requiring organizations to publish salary information for public employees paid over $100,000.

Pay levels were compared with those at universities in other Canadian provinces which were not subject to a transparency policy.

Researchers anticipated that women’s salaries in Ontario would increase as women advocated for higher pay once they saw how much their male colleagues were getting.

But instead of individual female employees negotiating for better pay, the universities acted unilaterally to increase the pay of female staff and putting the brakes on the pay of male staff.

This is likely to be an attempt to pre-empt criticism around differential salary levels for male and female staff, according to researchers at University of California San Diego’s School of Global Policy and Strategy, who carried out the study.

“We find that when there is a standardization process that makes searching for compensation information very easy, then organizations as a whole have an incentive to improve equality to reduce the threat of public scrutiny,” said Elizabeth Lyons, associate professor of management at the School of Global Policy and Strategy and coauthor of the study.

“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,” she added.

Average pay for female staff at Ontario universities rose by about 4% over the period examined by the study, while there was no significant increase for female staff at universities outside Ontario where salary information remained private, according to the study, published in the Strategic Management Journal.

Researchers focused on universities in part because university faculty tend to have similar job titles across fields, and there is substantial variation in salaries between departments.

Critics of pay transparency claim it could damage morale and increase employee dissatisfaction, leading to reduced productivity and prompting some staff to agitate for higher salaries.

But the researchers behind the latest study say their findings suggest that a low-cost public monitoring of pay inequalities could motivate organizations to bring about changes.

“Importantly, salary transparency does influence gender pay inequality but not in the way we thought it would,” said Lyons.

“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.”