- It may be time to review your organization’s pay policies. Start with a compensation study to see if there are earnings discrepancies.
- Publishing a report each year provides some accountability for the progress — or lack thereof — toward reaching pay fairness.
- Compensation transparency has another benefit — it helps build a culture of fairness within your organization.
- If a wage gap is identified, take proactive steps to address it. Implement pay equity adjustments to close the gap, offering equal pay for equal work.
Is the government wage gap hurting retention and hiring?
There’s a wage gap between the public and private sectors and it’s gotten wider in recent years. On average, government workers had been earning about 22% less than private sector workers in similar jobs, according to U.S. Bureau of Labor Statistics — but in 2022, the pay gap was up to 24%.
Wage increases for private sector workers exceed those of public sector employees in similar industries or occupations. In addition, state and local government employees’ paychecks aren’t just lagging the private sector, they also are not keeping up with the rate of inflation, the Bureau of Labor Statistics found.
Even governments with the budget to hire are having trouble filling positions. Some of the toughest positions to fill for municipalities are in health care, corrections, and highway maintenance. Some governments have responded to this difficulty by offering more remote work options, retention incentives, and expanding recruitment talent pools.
Highlighting and addressing wage gaps is crucial to promoting fairness within any workplace. Here are some steps public sector employers can take.
Review human resources and pay policies
Some public sector organizations still use old job classes and salary grades. In these cases, it can be challenging to raise salaries.
It may be time to review your organization’s pay policies. Start with a compensation study to see if there are earnings discrepancies.
Using outdated salary histories can often perpetuate pay inequalities, especially for women. Using an applicant’s last salary as a benchmark is likely to result in an offer well below market value when she re-enters the workforce.
Compensation should focus on the scope of the position, education level, skill level, and experience. Determine the value that person can bring to your organization and make a suitable offer.
Improve compensation transparency
When there is no accountability in an organization, there is no reason to change.
Publishing a report each year provides some accountability for the progress — or lack thereof — toward reaching pay fairness. Be transparent with employees but without infringing on employees’ rights to keep their salary information private.
- Be transparent about salary bands per job class and provide explanations to employees why they fall within a lower salary band.
- If there is no valid reason for a significant pay discrepancy, consider changing it.
Create a culture of fairness
Compensation transparency has another benefit — it helps build a culture of fairness within your organization. Employees are often uneasy about questioning their salaries and asking for pay increases. Being open and honest helps employees feel comfortable broaching this sensitive subject.
Implement pay equity adjustments
If a wage gap is identified, take proactive steps to address it. Implement pay equity adjustments to close the gap, offering equal pay for equal work. This may require adjusting salaries, reimagining compensation policies, or implementing pay bands based on the job itself instead of individual characteristics.
Monitor and review progress
Monitor and review compensation data to assess the effectiveness of your efforts in closing wage gaps. Measure progress and adjust as needed to verify ongoing fairness and equality.
Address broader systemic issues
Recognize that wage gaps can be influenced by systemic issues beyond your control. Engage in efforts to address systemic inequalities, support policies promoting pay equity, and collaborate with industry peers to collectively work toward fair compensation practices.
How we can help
By addressing wage gaps, employers can create a more equitable workplace where employees feel valued and respected. Addressing wage gaps also can help to attract and retain top talent, as employees are more likely to stay with a company that values their contributions and compensates them fairly.