Dive Brief:

• Non-White employees make an average of 85.6 cents for every dollar a White employee makes, a report software company Visier released July 13 revealed. At the current rate of change, it could take 25 years to achieve pay parity. For Black employees, the situation is even worse; in 2020, Black workers made 66.7 cents per dollar compared to White employees — barely a cent higher than in 2017. "At this rate, it would take Black employees nearly 78 years to reach pay equity with their [White] counterparts," Visier stated.
• The report also pointed to a "manager divide," noting that employees from underrepresented groups have to work longer and harder to get promoted into a managerial role. "It takes 10 years longer for a Black employee to reach their career peak than a [White] employee," the report said.
• For its report, Visier relied on its database of anonymized, standardized workforce records, analyzing the years 2017-2020. It looked at a subset of 400,000 U.S. employees from a "wide range of industries," including healthcare, tech, financial services and insurance, energy and manufacturing. 

Dive Insight:

While federal legislation exists to prohibit pay discrimination on the basis of factors like gender and race, employers have continued to lag in achieving pay equity between groups. Experts predicted the Biden administration would redouble government efforts on pay equity, and the Paycheck Fairness Act passed the House in April — but it stalled in the Senate, and it focused on sex discrimination, noninclusive of race. Even in these situations, pay discrimination tends to pertain to "controlled" situations, referring to "equal pay for equal work."

Visier's report used an "uncontrolled" method to determine the pay gap, meaning it evaluated workers' race and pay only, irrespective of factors like job title, industry, job location, level of education and experience. A Payscale report HR Dive examined in 2020 found that in a controlled analysis — comparing men and women with similar job titles, educations and more — women in the controlled group made 98 cents per every dollar a man made, a significant jump from the 81-cents-per-dollar gap the survey found in its uncontrolled approach.

The factors contributing to an uncontrolled pay gap are more complicated, multifarious and hard to pin down, but may speak to a lack of advancement opportunity for the employees of color. In its report, Visier affirmed this analysis, attributing the findings to an "opportunity gap" caused by what it called the "manager divide."

"I think the main barrier to closing the pay gap is career progress," Lexy Martin, principal, research and customer value at Visier, told HR Dive. "[Underrepresented groups] have less opportunities, less pay, less opportunities to become managers. So there's pay gaps, wealth gaps. When promotions are happening, they're happening later in their careers. So they have less opportunity to accumulate wealth." 

Visier further analyzed the data, separating managerial from non-managerial positions (every employee profile is separated into one category or the other). This analysis showed that White workers more quickly made it into managerial positions; for those in the 25-to-30 age category, the manager ratio for White employees was 7.5%, compared to 3.7% for non-White employees. The managerial gap keeps widening until the age of 55, when it converges slightly, Visier found. As with the pay gap, the managerial gap between Black and White employees was larger still. For the 40 to 45 age group, 11% of Black employees and 25% of White employees were in managerial roles.

Employers who seek to provide pay equity can approach it in two ways, experts have said. First, conduct a pay audit to enable for both controlled and uncontrolled comparisons. Create a plan to address significant controlled pay gaps, occurring between employees with similar roles and experience but who differ in race, sex, or other superficial factors.

Second, explore diversity and inclusion strategies that give workers of color more internal workplace mobility and shrink the opportunity gap through efforts like mentoring, practicing allyship and providing training and reskilling opportunities.