Kenan Flagler professor finds possible new solution to gender pay gap

Through extensive research and multiple studies, scholars have come to accept the gender pay gap: the difference in wages earned between men and women, often for the same work.

Elena Simintzi, an assistant professor of finance at Kenan-Flagler Business School, along with three other professors from different universities, conducted the first empirical study on the impact of mandatory pay transparency and its effect on the gender pay gap. 

Governments and women’s rights advocates have proposed pay-transparency policies, meaning that employees know what their colleagues make, as a tool to close the pay gap.

In 2017, women were found to earn 80 percent of what men made based on calculations comparing the median annual pay of all women who work full time and year-round to the pay of a similar group of men, according to a report from the American Association of University Women.

The gender pay gap is worse for women of color, as well. While white women in the United States on average earn 77 percent of what white men make, African American women bring in 61 percent and Hispanic women earn 53 percent, according to the same report.

“I really look at the wage gap as an outcome of underlying issues that are really prevalent in our society,” said Taylor Lawing, secretary of UNC's Feminist Students United and a senior double-majoring in history and women’s and gender studies.

Simintzi said these gender gap statistics are not entirely caused by unfair firm practices since variables like the difference in experience, education and industry distribution between men and women have not been controlled. However, even after these factors are controlled, she said a gender wage gap exists that is a result of gender discrimination and bias.

“It is very telling because our society has always been fundamentally misogynistic, so it should come as no surprise, but it should also be challenged,” said Lilla Duffy, a first-year undecided major with an interest in social justice and women’s rights.

Simintzi's research examined wage statistics of Danish companies before and after the introduction of Denmark’s 2006 law that requires companies with more than 35 employees to disclose gender pay gaps. They then compared this pay data with information from similar-sized firms that weren’t required to release gender-segregated data. 

From this data, they concluded that pay transparency has an effect in reducing the gender pay gap as it holds companies more accountable and incentivizes them to adjust their compensation policies for pay equity, primarily through slowing the wage growth of male employees. 

“People don’t like to talk about money, so I think it’s an uncomfortable topic for a lot of employees and employers, but I think workers have the right to know if they are being compensated fairly or not,” Duffy said.

The study also suggests pay transparency can increase the number of women being hired and promoted within companies. However, the researchers did find a slight negative effect on company productivity due to pay transparency, but since overall wage bills decreased, profits were not impacted. 

Opponents of pay transparency believe the open disclosure of earnings could violate employee privacy and confidentiality. 

However, supporters of pay transparency argue that it will reduce the gender pay gap, as this study shows. 

“I am optimistic about the future given there is a discussion – there is action taking place by policymakers,” Simintzi said.

Lawing, who is about to enter the workforce, is slightly hesitant since she has no salary negotiation experience. Because of this, she thinks it would be beneficial if women were given salary negotiation training before entering the workforce, so she and other women can feel confident about obtaining equal pay. 

Fortunately, the Durham-Chapel Hill area has the most equal pay out of all metropolitan statistical areas in the nation, with women earning 92.6 cents to a man’s dollar, according to a report using 2015 U.S. Census data. Despite the progress locally, other locations continue to have drastic inequalities. 

The gender pay gap occurs in nearly every occupation, and if the pay disparity were closed, women would gain billions in earnings every year, according to the American Association of University Women.

“We have to give women equal opportunity to both enter the workforce and then have equal pay when they are in it,” Lawing said.

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