Gender Pay Equity In Retail: A Long Way To Go

By Natasha Lamb, managing director, lead filer of gender pay resolutions, Arjuna Capital

In the 1990s, the Saturday Night Live “Gap Girls” skit — featuring comedians Chris Farley, Adam Sandler, and David Spade — became an instant pop-culture classic. Spoofing a day in the life of retail workers was right on target then and, unfortunately, remains all too much on point now two decades later. As was true then, women continue to be overrepresented in low-paying, front-line retail jobs and underrepresented in in-store and C-suite management.

There have been some encouraging signs recently that the retail industry is moving ahead on gender pay equity, but there is still a long way for the sector to go.

Ironically, it was Gap Inc. that made history in 2014 by becoming the first Fortune 500 firm to publicly confirm it pays men and women equally for the same jobs. Amazon, Nike, Starbucks, and more recently Costco have made similar strides on gender pay equity, but more work remains to achieve true gender equity at these companies and across the retail industry.

In fact, the retail sector has a mountain to climb on gender pay. Fortune reports the wage gap is 70.3 percent for retail salespersons, ranking such positions at number 8 in their top 20 jobs with the highest gender pay gaps list. In other words, the retail sector ranks eighth worst in terms of woman making less than men. Despite holding over half of retail industry positions, women remain underrepresented in higher paying management positions and overrepresented in sales jobs, stocking products and checking out customers.

Across the wider spectrum, the median income for women working full time in the U.S. is reported to be 80 percent of that of their male counterparts. This $10,470-a-year disparity can add up to nearly half a million dollars over a career. The gap for African America and Latina women is 60 percent and 55 percent respectively. And at the current rate, women will not reach pay parity until 2059.

Retail investors can help spur action by taking a greater interest in how companies share wage data and policies to achieve gender pay equity. Following the examples of retailers Amazon, Starbucks, Nike, and The Gap, Costco took public steps in October, 2017 to be more transparent with investors about what it is doing to close the gender pay gap.

In response, my company, Arjuna Capital, withdrew a shareholder resolution, which had been co-filed with Zevin Asset Management, calling on Costco to produce a detailed report on measures to help achieve gender pay equity. This type of pressure is very effective because it provides real business incentive to take the steps necessary to change a corporate culture enabling gender bias.

With its announcement, Costco committed to provide wage data by the end of 2018 relating to the percentage of pay earned by Costco’s female compared to its male employees, including the various components of compensation (salary, bonus, and equity components).

The number of big retailers taking proactive steps to address the gender pay gap is growing, but far too small. That is why Costco and other companies that step into leadership on gender pay equity must be singled out, commended, and held up as examples to their peers.

In addition to Costco’s pledge to address gender pay, we encouraged the Company to provide disclosures across race and ethnicity; consider reporting on various levels of seniority including entry, mid, and senior level; and include information outlining the methodology employed in the analysis.

Setting shareholder pressure aside, retailers should start looking to the U.K. for more than fashion trends. By April, 2018 new laws in the U.K. will require businesses with more than 250 employees to disclose wage data — including figures regarding their gender pay gap.

And retailers are taking heed. HR directors at U.K. companies are scrambling to compile data on their gender pay gaps in lieu of the new regulations and publish the results. Companies are also developing programs to increase diversity in management. Some have launched female mentoring initiatives to accomplish the same goal of boosting the number of women in senior level positions. In the U.S., retail executives and business leaders should press lawmakers to reignite debate on the Obama-era rule crafted to mandate gender gap wage data collection here in our own country.

The Trump administration’s Office of Management and Budget (OMB) recently killed the U.S. version of the gender pay reporting rule that would have required businesses with over 100 employees to collect and report pay data by gender, race, and ethnicity to the U.S. Equal Opportunity Employment Commission (EEOC). At the time, Ivanka Trump said she was heavily influenced by arguments from business groups, which lobbied against the rule and argued it was ineffective and burdensome to employers. This is exactly the notion retailers must utterly reject and work to prove wrong, because it is.

When companies are transparent about paying women fairly, they are better able to attract and retain top talent and move them up the latter to higher paying jobs. As the research shows, more diverse leadership begets better corporate performance.

At Costco, senior executives were able to recognize the inherent problems of running a company in which 43 percent of employees are women and 53 percent are sales workers, but where women account for only 3 percent of executive leadership and senior level managers and 31 percent of first and mid-level managers. Agreeing to share the company’s policies designed to remove the bias against women wasn’t viewed as a burden or ineffective at driving the solution, nor was being transparent about the existing inequities. We need more retailers to come to this same realization, and let it be known all U.S. companies should be obligated to report wage data. This is how the industry can take a stand.

There are more challenges ahead. A new front for Arjuna Capital is retailing giant Wal-Mart, which we are engaging on gender pay disclosure this winter. Walmart employs 1 percent of the U.S. workforce and can have an outsized positive influence. With heightened awareness via the #metoo movement about how women are treated in the workplace and in general, the U.S. is poised to make historic gains through the shareholder resolution process to close the gender pay gap. This watershed moment in time should make 2018 the most productive year yet for investor resolutions advancing women’s rights.