More than half of top US companies earn ‘F’ in race and gender pay equity

By Meghan Holmes
Contributing Writer

In honor of Equal Pay Day on March 24, investment firm Arjuna Capital and Proxy Impact released their fourth annual racial and gender pay scorecard, finding that more than half of the companies analyzed earned an “F” grade.

In the wake of the #BlackLivesMatter and #MeToo movements, corporations are facing increased pressure from shareholders as well as the general public to become more inclusive and to close the wage gap; however, the quantitative analysis in this new report suggests that in some cases, the opposite is happening. Twenty-one of the 51 companies analyzed saw their scores improving while nine companies’ scores deteriorated, including Amazon, Wells Fargo, Intel, Google, Microsoft, Verizon, Expedia, Starbucks and Arthur J. Gallagher.

Investors have engaged with all of the 51 companies ranked in the report as part of the shareholder proposal process and asked that they improve their public pay equity disclosures.

“The world’s largest corporations are under intense pressure to close their racial and gender pay gaps in response to investor insistence, the #BLM and #MeToo movements, and increasing public policy and regulation. But despite a wave of corporate statements expressing solidarity with Black Americans and women, there are very few standout companies that actually provide an honest accounting of and commitment to closing racial and gender pay gaps,” said Natasha Lamb, managing partner at Arjuna Capitol.

The scorecard looks at four industries – finance, technology/communications, consumer and healthcare – as a way to provide a template through which to view corporate best practice, ranking companies based on quantitative disclosures (not qualitative assurances), commitments to report numbers annually, global coverage and goals to close racial and gender pay gaps. Five companies (Mastercard, Starbucks, Pfizer, Citigroup and Bank of New York Mellon) earned an “A” grade, while 26 earned an “F.”

The worst performers included Goldman Sachs, Colgate, AT&T, McDonalds, Walmart and Verizon. Eleven companies – Adobe, Nike, Progressive Insurance, American Express, Reinsurance Group, JPMorgan Chase, Apple, Cincinnati Financial, Bank of America, Wells Fargo and Intel – all earned a “B” grade.

“Racial and gender pay gaps at some of the world’s largest corporations are an area of increased concern and focus. Pay discrepancies have raised reputational, regulatory, financial and legal risks for companies. An increasing number of shareholders have asked companies to report on their analyses, policies and goals to reduce any racial and gender pay gaps. The global Coronavirus pandemic has only exacerbated racial and gender pay gaps and underlined the need for action,” said Michael Passoff, the CEO of Proxy Impact, a shareholder advocacy and proxy voting service for sustainable and impact investors.

Pay inequity persists across the United States despite increasing calls to close the wage gap, as well as evidence in a Citigroup study that doing so 20 years ago could have generated $12 trillion in additional national income and contributed 0.15 percent to United States GDP per year.

Currently, the average woman earns 82 cents on the dollar when compared to the average man, but it’s also more complicated than that. When broken down by race, Black women make 62 cents, Indigenous women 60 cents, and Latina women 54 cents. In general, Black workers make 75.6 cents for every dollar white workers earn. Black men make 87 cents on the dollar versus white men, while Latino men make 91 cents.

Pay gaps are not only reflective of women and people of color being paid less for performing the same jobs as men and white people, they also indicate a lack of opportunities in high-paying jobs. “Assessing if a company has pay gaps requires analyzing both equal pay and equal opportunity,” Passoff said.

Most corporations in the United States report adjusted “equal pay” gaps: what women and people of color are paid versus their direct peers, statistically adjusted for factors such as job, seniority and geography. The Department of Labor uses another measure called the unadjusted “median pay” gap, or the median pay of people of color and women working full time versus men working full time. The report’s researchers, and increasingly stockholders, want companies to disclose the latter figure, as it provides a more accurate measure of the opportunities for other groups compared to the white male majority.

The report also found that disclosures of racial/gender pay varied by sector, with two-thirds of financial companies improving their scores from last year, compared to only one-third of tech companies. Its authors recommend full, global disclosure of adjusted and unadjusted racial and gender pay gaps, including the methodology used to determine the gaps, as well as policies and actions to address the problem, and a full commitment to global pay equity.

This article originally published in the March 29, 2021 print edition of The Louisiana Weekly newspaper.