The seventh annual Racial and Gender Pay Scorecard by Arjuna Capital, Proxy Impact, and DiversIQ highlights the efforts of companies in the U.S. regarding pay equity disclosures and commitments. Target and Starbucks stood out with perfect A+ scores for their comprehensive disclosures of median and adjusted pay gaps, as well as their commitments to conduct and publish pay equity analyses.
However, the report also revealed that a significant portion of companies, including well-known names like Alphabet, Berkshire Hathaway, Boeing, Coca-Cola, Costco, CVS, and Netflix, received failing grades for their failure to disclose racial and gender pay gaps.
The study noted a positive trend toward greater transparency, with a 12-fold increase in the number of companies reporting quantitative pay gap data since 2016. Still, there are disparities among sectors, with the financials/real estate investment trust sector leading in disclosure and sectors like industrial/materials and energy/utilities lagging behind.
The report underscores the significance of companies conducting thorough analyses of their existing pay structures and disclosing any racial and gender pay disparities. This disclosure should encompass both adjusted and unadjusted pay gaps, detailing pay components, the methodology employed in the pay gap analysis, and the policies and initiatives implemented to address these gaps. By providing comprehensive information in these areas, companies can demonstrate their commitment to pay equity and transparency, fostering trust among employees and stakeholders while working towards closing any identified gaps.
Addressing labor supply imbalances and biases or structural impediments in industries like science, technology, engineering, and mathematics (STEM) is crucial to reducing wage gaps. While pay transparency may help narrow pay gaps, it may not close them entirely, as other factors such as negotiation tactics can influence pay discussions during the hiring process.
