In my keynotes, I always say: “Every woman who wants to be wealthy, can be wealthy.” Then I pause and add, “If…she focuses on behaviors first.” Since, for most of us, our net worth comes from employment earnings, making choices that raise our salaries is an important place to start.
One excuse for the persistent gender wage gap is that, unlike men, behavior is a primary cause as women are less likely to negotiate for higher salaries and benefits. While this may have been the case decades ago, recent studies show that women are more likely than men to negotiate for higher pay and promotions, but they still earn less. Even women at the C-suite level who negotiate assertively are viewed in a negative way due to gender stereotypes, and, consequently, are subject to backlash and less likely than men to reach their desired outcome in the negotiation. Research shows that ambiguous situations, such as ‘black box ‘salary ranges, increase the gender pay gap.
Salary transparency is one way to solve this Catch-22 where, if a woman doesn’t speak up, she is not going get higher wages and promotions and if she does assert herself, she is likely to get pushback for stepping outside the status quo.
New legislation that came into effect in November in British Columbia now means that all advertised jobs in six jurisdictions in Canada have pay transparency laws. These include the federal government, British Columbia, Ontario, Nova Scotia, Prince Edward Island, and Newfoundland. Ontario is also the first jurisdiction in Canada that requires employers to disclose the use of artificial intelligence in the hiring process. Employers will also be prohibited from asking about a candidate’s pay history or penalizing employees who share their pay information with co-workers and job applicants.
Normalizing discussions around pay and benefits is an important step in closing gender pay gaps where women in their prime earning years from 25-54 still earn 89 cents for each dollar earned by a man. (In the U.S. women’s median salary is 84% of men’s median salary.) To date, none of the Canadian companies that report on their pay structures has closed the gender pay gap.
These gaps start as early as summer jobs, where girls earn almost $3 per hour less than boys, and they add up over a lifetime. Not only does lower pay make it harder to handle day-to-day expenses, it also penalizes women later in life when they retire with, on average, 22 per cent lower pension savings than men, yet have to fund longer lifespans.
Salary and benefit transparency is a win-win for both employers and employees. For employers, removing the ambiguity around wages builds greater trust in the organization which leads to higher employee retention and greater productivity. When job applicants know the expected salary, the recruitment process is more efficient and less subject to gender or racial bias. This is especially important as more than half of employers say they experience difficulty in finding the right candidates.
Getting a bump in wages, benefits, and bonuses is always good news. The key to building wealth is making your money work for you. If your income has increased this year, have a plan for what to do with the extra funds. Can you put some of that extra money aside in an investment fund? With rising interest rates, even ultra-safe GICs are paying a positive real return the likes of which we haven’t seen in a long time. Remember, make the power of compounding work for you, where you earn interest on your interest. If you save only $100 per month at 4% for 10 years, you’ll have almost $15,000 (before tax). It’s not magic. It’s the law of money. Make sure it’s on your side.