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What Is Pay Equity?

Equity is a term that looks and sounds very similar to equality. However, it’s a different word that holds a different meaning. And when understanding DEI, it’s critical to know how these terms differ, especially when it comes to discussing pay equity at work.  

Equality refers to a group receiving the same resources or opportunities. Equity, on the other hand, is more complex. It recognizes that each person within the group may have joined the group under different circumstances and therefore, may need more (or different) resources and opportunities to be equal to their peers.

The National Committee on Pay Equity defines pay equity as “a means of eliminating sex and race discrimination in the wage-setting system.”

Why is it important?

Pay equity is important for numerous reasons. It benefits both employers and employees by:

  • Promoting fairness and DEI
  • Complying with equal pay regulations
  • Retaining talent and reducing turnover
  • Attracting new, diverse talent
  • Improving morale
  • Increasing creativity and productivity

How is it being addressed?

Two laws are in place to protect workers against wage discrimination. The Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 both were created to ensure equal pay.

For years, pay equity has been an ongoing struggle due to marginalized groups historically being compensated less. However, this is slowly changing due to initiatives such as recent pay transparency laws in states such as California, Colorado, New York, Maryland, and more.

Additionally, state and local governments are addressing such bans by prohibiting employers from inquiring about salary history.

How does one know if pay equity is being addressed within their workplace?

Because it is a complicated topic, the process of ensuring it within one’s workplace can also be complicated. Ultimately it is up to your employer to:

  • Complete a pay equity audit
  • Base raises and bonuses on merit
  • Make sure their pay is competitive in their industry
  • Be transparent about pay
  • Prohibit salary negotiations

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