Villanova University Professor Breaks Down Wage Gaps as Equal Pay Day Approaches

March 24 marks Equal Pay Day, dedicated to public awareness of the difference in average earnings between men and women. This will be the 25th Equal Pay Day since it was created by the National Committee on Pay Equity.

David Anderson, PhD, is an associate professor of analytics at the Villanova School of Business, whose academic research focuses on how companies can measure and address gender pay gaps. (Along with his doctoral advisor, Dr. Anderson also started PayAnalytics, which helps companies measure and close gender and racial pay gaps. They've worked with companies that have from 40 to 100,000 employees to help them close pay gaps.)

He explains that there are two key numbers to consider regarding pay gaps: "The 'raw' or 'unadjusted' pay gap is the number when we say, 'women earn 77 cents on the dollar compared to men,'" said Dr. Anderson. "The second is the 'adjusted' pay gap, which is typically smaller, in the single digits of percentages. This is what equal pay for equal work laws usually target."

Anderson notes that these divides are calculated differently: "The unadjusted pay gap is a society issue in terms of who has access to education and opportunity, who gets promoted and which types of work are paid more or less money. The adjusted pay gap is calculated within companies and measures how much less women are paid on average compared to men with similar qualifications doing similar work. These are driven by such things as access to overtime, but also this is where bias comes into play—both individual bias and systemic bias."

The intersection of gender and sexuality poses additional influence on pay gaps (as well as other workplace discrepancies), and progress on addressing wage gaps is also changing due to our current world. "I think with COVID and the impact it has taken on women's careers, particularly on mothers, it is quite likely we are moving backwards right now," said Dr. Anderson.

So how do we combat these gaps? Dr. Anderson believes one step is instituting company regulations. "There's a ton of work on the adjusted pay gap, but very little on the raw pay gap. This is understandable—no one company can fix the unadjusted pay gap by itself, but they can be expected to meet equal pay for equal work requirements. The adjusted pay gap is a company-level responsibility, so it is a really nice target for regulations, while the unadjusted pay gap requires broader social changes, e.g., more flexible parental leave and more access to managerial positions."

For the future, Dr. Anderson predicts changes due to COVID: "I think on the domestic front the effects of COVID will definitely make things worse in the short-term. But I think equal pay is on the Biden administration's agenda, so there's probably going to be forward movement on that front on a national level as well as in states, such as California, Massachusetts and New York, that are passing and enforcing stricter laws which will start to have an impact as well," said Dr. Anderson.