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Some Companies Fight Pay Gap By Eliminating Salary Negotiations

Women stage a protest demanding equal pay for women at a 2012 rally in Miami.
J Pat Carter
Women stage a protest demanding equal pay for women at a 2012 rally in Miami.

When it comes to negotiating salaries, the research is pretty clear: women are less assertive than men. It's one reason women who start their careers with a narrower pay gap see it widen over time.

Carnegie Mellon economics professor Linda Babcock, who studies the gender pay gap, says men are four times more likely to negotiate their pay. That keeps women at a disadvantage, though they're not always aware of it.

"The standard now is that people don't really know what each other earns, that some people negotiate and some people don't, and so there's tremendous inequities in salary," Babcock says.

"When women do negotiate, people often have a negative reaction to them."

Depending on the government statistics used, women today are paid between 5 percent and 23 percent less than their male counterparts.

Many people leapfrog into higher salaries when they switch jobs. But Babcock says the pay disadvantage follows women if their new employers use their old salaries as benchmarks, as is often done. She says in these instances, negotiating can even backfire.

"When women do negotiate, people often have a negative reaction to them," Babcock says.

At least one company is trying to put a stop to it.

Information-sharing site Reddit no longer negotiates salary when it recruits new talent. It's a policy that was instituted by interim CEO Ellen Pao, who last month lost a high-profile gender-discrimination case against her former employer.

Ariane Hegewisch, study director at the Institute for Women's Policy Research, says Reddit's policy is a novel concept for the private sector. But, she notes, salaries for most government workers are already set in a similar way.

"There is not a very large scope for negotiation," she says. "Whether it will work in the IT industry will be very interesting."

Reddit's policy is unusual. Most companies still embrace traditional salary negotiation.

Kelly Hastings, senior government affairs adviser for the Society for Human Resource Management, says policies that restrict a company's ability to adjust pay based on skill level or geographic location also limit the talent it can attract — one of the key, traditional mechanisms for recruitment.

"We really want employers to have complete flexibility to be able to pay people differently as they deem necessary," she says.

Author and career counselor Robin Ryan says it's not that companies do not want to see women rise through their ranks.

"Wanting to have more women promoted, now that [most companies] do care about, and that they have been showing a lot of interest in," she says. "That I'm seeing happening more and more and more."

But Ryan says that tends not to bridge the pay gap. Women are less aggressive on compensation, and that means women stay behind their male peers throughout their careers.

But now workers have access to sites like Glassdoor, which publishes salary information. HR consultant Amy Hirsh Robinson says greater transparency is forcing companies to change.

"Some of my clients are now making all of their salaries transparent, up to the executive level," she says.

That includes Elevations Credit Union, based in Boulder, Colo. The company sets salary level based on title, which it publishes online. So effectively, there is no salary negotiation during hiring or promotion.

Annette Matthies heads human resources and says Elevations did this after hearing complaints from employees. She says it also has helped with recruitment and retention.

"And that loyalty then increases profits for our company," she says. "The company's more profitable, they can then give back more to their employees, and so it's a symbiotic relationship."

In fact, Elevations' last salary audit showed women at the company earn 2 percent more than men. And, Matthies says, no one misses the negotiation process.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Yuki Noguchi is a correspondent on the Science Desk based out of NPR's headquarters in Washington, D.C. She started covering consumer health in the midst of the pandemic, reporting on everything from vaccination and racial inequities in access to health, to cancer care, obesity and mental health.