Thorn in banks’ side pushes for disclosure of raw pay-gap numbers
Financial services and tech firms are falling short in the way they disclose the pay gap between male and female employees, the investment firm Arjuna Capital said Wednesday.
A few companies have voluntarily disclosed data on gender-based wage gaps at their organizations, but equal pay advocates say they are only showing the numbers that paint them in the best light and are not telling the whole story. The Boston-based investment firm said it has filed 11 new shareholder proposals urging large financial services and tech companies to disclose more raw data on the gender pay gaps at their firms.
“Pay transparency is a long-term commitment to create equality of opportunity and place more women in higher paying jobs,” said Natasha Lamb, managing partner at Arjuna. “Revealing the whole story of the gender pay gap is essential to create change and indeed, what gets disclosed, gets managed.”
One major point of contention by equal pay advocates is the metric that companies use to report pay differences between men and women, and this was the crux of Arjuna’s latest shareholder proposals.
Last year, Bank of America, Citigroup and Wells Fargo bent to pressure by the investment firm and disclosed their adjusted gender pay gap figures. Sometimes also known as equal pay for equal work, that figure adjusts for factors like job title and geographic location. Using that metric, all three banks said that women in their organizations made 99% of what men made.
But the median pay gap measures the pay difference between men and women across the organization, regardless of employees’ particular roles. Activists say this figure is critical to telling the whole story because it can indicate whether women are more concentrated in lower-paying jobs in that field.
Responding to a shareholder proposal from Arjuna, Citigroup voluntarily disclosed its own median gender pay gap in January, revealing that women are paid 29% less than men across the organization.
“The numbers are difficult,” Sara Wechter, Citigroup’s global head of human resources, said last month. “We should obviously be at 100% parity, and that’s what we’re striving for.”
Arjuna has filed similar shareholder resolutions with American Express, The Bank of New York Mellon, Bank of America, Wells Fargo, JPMorgan Chase and MasterCard, as well as Adobe, Amazon, Intel, Facebook, and Google.
During a news conference alongside the Equal Rights Advocates and the Closing the Women’s Wealth Gap Initiative, Lamb said three of those companies moved to block the shareholder proposal with the Securities and Exchange Commission. She declined to name those firms, but said she did not believe their challenges would succeed.
Last year, regulators in the U.K. started requiring companies with operations there — including a number of U.S.-based banks — to disclose their median gender pay gap metrics. Lamb and others want these companies to start doing this for their employees across the globe, too.
They stressed that a disclosure itself won’t close the gender pay gap right away, but maintained that it’s an important first step toward a longer-term solution.
“We know companies cannot fix what they do not measure and they cannot fix what they don’t report,” said Noreen Farrell, executive director of the Equal Rights Advocates. She cited a recent Harvard Business Review study that found that gender-based pay gaps shrink when companies are required to report them.
If a company understands that it has few women in leadership roles, it can then take steps to address issue. Often, women start out in lower-paying jobs and the gender pay gap only widens as they progress through their careers, Farrell said.
However, she identified one promising trend. California and a few other states have banned the practice of asking new hires about their prior salary so that firms don’t base their offers on what prospective employees had earned previously. That practice was believed to hurt women because they are often paid less than men to begin with.
“It does start with hiring pay,” Farrell said. “We know that that initial salary setting, the basement, impacts promotions and bonuses and causes a widening of the gap.”