Rising inflation could exacerbate the stubborn wage gap, experts fear

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HR experts caution leaders to keep a close eye on the already stubborn wage gap during this time.
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Welcome to a special afternoon edition of The Broadsheet! Amber Burton here, lead writer for Fortune’s soon-to-launch CHRO Daily newsletter. Today, I’ll be filling in for Emma and exploring how inflation could exacerbate the gender wage gap. Sign up for my newsletter here for the latest HR-related insights.

Here’s what’s on tap: Asia’s richest woman lost half her fortune, Mayim Balik will stay on as Jeopardy! cohost, and high inflation could worsen efforts to close the gender wage gap.

– Equal pay’s second headwind. As inflation continues to tick upward, more companies are giving raises to help retain employees and offset the rising cost of consumer goods.

Microsoft and Walmart are among the corporations that have announced inflation-induced pay bumps, and a growing share of workers say they have or plan to request higher salaries. Some HR experts, however, caution leaders to keep a close eye on the already stubborn gender wage gap during this time. 

“Women are slower to negotiate for more compensation generally,” says workplace and leadership consultant Lauren Rikleen. “In the data we’ve seen for years and years, women don’t negotiate early enough and they don’t negotiate often enough compared to their male colleagues.” 

U.S. inflation hit 9.1% in June, a new 40-year peak. Add in fears of a looming recession and employee demands for higher wages, and you’re left with the potential for regression, Rikleen says. The pay gap between men and women in the U.S. was 22.1% last year, according to the Economic Policy Institute. That’s down from 23% in 2020.

While economists say inflation’s impact on women and, consequently, the wage gap has yet to be established, leaders are still on high alert for any adverse effects.  

Now is a good time for HR heads to check that their compensation systems support and promote pay equity for all employees, Rikleen says, so that the progress companies have made isn’t lost based on who steps into the negotiation room. “I always say that the issue is not fixing women and how women respond in the workplace. The issue is fixing the workplace and making sure there are systems in place that provide parity.”

So, what does that look like in practice?

Julia Taylor Kennedy, executive vice president of DEI research firm Coqual, recommends that leaders regularly conduct pay equity analyses, routinely emphasize the firm’s commitment to fair pay, and provide workers with pay transparency, especially lower wage employees who often feel the effects of economic turmoil the most.

“This is a second headwind for closing the gender pay gap after the pandemic, which already set us back in terms of making progress, as women opted out of the of the workforce or downshifted the acceleration of their careers in order to devote more hours to care at home,” Kennedy says. 

To ward off that possibility, some companies are doubling down on pre-existing strategies. Lori Castillo Martinez, executive vice president and chief equality officer at Salesforce, says the cloud-based software company is incorporating an equal pay assessment into its annual compensation process to identify and adjust any gender discrepancies globally. 

“This is a constantly moving target, and there will always be more work to do to ensure pay fairness,” she says. 

Similarly, Pinterest is still offering merit-based increases and regularly looks at market data, says chief people officer Christine Deputy. The company also examines its data to ensure pay parity exists within corporate ranks, an area women and underrepresented employees often fall through the cracks. 

Across sectors, more companies are experimenting with other incentives, such as providing workers with gas cards, expanding commuter benefits and green lighting remote or hybrid work, says Daniel Zhao, a senior economist at Glassdoor. But Rikleen points out that compensation is the only thing that can shrink the wage gap. 

“[Benefits] don’t solve that problem,” she says. “It still leaves women statistically far behind men, and one of the problems with the notion of trying to solve the wage gap through means other than more money in your paycheck is that it perpetuates the wage gap throughout your life.”

Amber Burton

The Broadsheet is Fortune’s newsletter for and about the world’s most powerful women. Today’s edition was curated by Paige McGlauflin. Subscribe here.


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