It’s well-known that on average, male employees earn more than female ones, even when controlling for employees’ job titles and qualifications. But thanks to new regulations, the public may soon have access not just to general gender pay gap statistics, but to granular pay data for individual companies. Back in 2018, the UK passed a regulation requiring all companies to disclose pay gap data on a publicly-searchable website, and earlier this year Illinois became the latest U.S. state to mandate that firms with over 100 employees must report employee pay statistics broken down by gender and race, also for publication on a state website. How will this increased visibility into firms’ pay equity impact both companies and their customers?
Research: Customers Will Reward Companies for Smaller Gender Pay Gaps
Over the last several years, new regulations have been passed in countries and regions around the world mandating that companies disclose salary information broken down by gender and other demographic data. How will consumers react as they gain visibility into the wage gaps of the companies they patronize? In this piece, the authors discuss new research suggesting that after a pay gap disclosure, consumers are more likely to post negative comments about a company on social media, and they’re less likely to buy the company’s products. Their studies further found that this effect is especially strong for female consumers: after learning about a wage gap disclosure, female participants’ interest in buying a company’s products fell by twice as much as that of male participants. Based on these findings, the authors offer several strategies to help companies get ahead of potential backlash after disclosing a wage gap, including both proactively addressing inequities (a good idea regardless), and crafting an open, honest communication plan that outlines a clear roadmap for improvement.