Why ‘median hourly rate’ analysis might not be enough to bridge the ethnic pay gap

Median hourly rate analysis, while commonly used to report gender pay gaps, has several limitations when it comes to reporting ethnic pay disparities.

• In gender pay gap reporting, the hourly rate analysis involves making the assumption that there are equal number of male and female in the population. However, the same assumption cannot be made about the ethnic groups.
• Organisations are capturing non-binary gender identity data at inconsistent levels and there is no significant representation of different groups at different levels to do such analysis without compromising the identity of the individuals.
• Hourly rate analysis fails to consider the occupational segregation where certain ethnic groups may be concentrated in specific industries or job roles that offer lower wages. By focusing solely on median hourly rates, this analysis overlooks the disparities in job distribution and fails to capture the full extent of ethnic pay gaps.
• Ethnic pay disparities can be influenced by variations in educational attainment and qualifications. Historical disadvantages and systemic barriers may impact the type and quality of education individuals from different ethnic backgrounds receive, which can subsequently affect their earning potential. Hourly rate analysis fails to consider these differences, leading to an oversimplification of the complexities underlying ethnic pay gaps.
• Hourly rate analysis often focuses solely on wages and overlooks the impact of unpaid work and benefits. Ethnic groups may have differing levels of access to benefits such as healthcare, retirement plans, and paid leave, which can contribute to overall disparities in compensation. By not considering these factors, median hourly rate analysis may underestimate the true extent of ethnic pay gaps.

In summary, while median hourly rate analysis has its uses, it falls short in capturing the complexity of ethnic pay gaps. Recognising the limitations is crucial to adopt a more comprehensive approach for reporting and addressing these disparities.

Drawing inspiration from the movie “Zootopia,” this section explores alternative methodologies that provide a more nuanced understanding of ethnic pay gaps.

Image credit: Forbes, Invisibility of race in gender pay gap

Intersectional Analysis

Just as Zootopia depicts a diverse society of anthropomorphic animals, real-world workplaces encompass individuals from different ethnic backgrounds, genders, and identities. An intersectional analysis of ethnic pay gaps would involve examining how various factors, such as ethnicity and gender interact to shape earnings disparities. This helps to address the structural components such as the factors that are being considered for rewarding higher performance and also the factors that has the most weightage while recruiting new employees.

For instance, the film’s protagonist, Judy Hopps, faces discrimination not only for being a rabbit but also for being the first of her kind in the police force – highlighting the need to consider multiple dimensions of identity when assessing ethnic pay gaps. As a result of her identity (not ability), she was also not given equal access to opportunities like taking on actual investigation work as a police, but being assigned task as a “Meter maid” which mirrors the real world scenario.

Adjusting for Relevant Factors

In Zootopia, disparities between “predators” and “prey” create a social divide that mirrors real-world dynamics. Similarly, when analyzing ethnic pay gaps, it is crucial to account for relevant factors such as educational attainment, occupation, and career progression. Just as the movie’s character, Nick Wilde, faces prejudices and limited opportunities due to his fox identity, individuals from certain ethnic backgrounds may encounter systemic barriers that affect their access to higher-paid positions. Adjusting for these factors allow for a more accurate assessment of the specific contribution of ethnicity to pay disparities.

Qualitative Research and Employee Perspectives

In Zootopia, the experiences of Judy Hopps and Nick Wilde shed light on the subjective realities of workplace discrimination. Qualitative research methods can provide valuable insights into the lived experiences and perspectives of employees from different ethnic backgrounds. By conducting surveys, interviews, and focus groups, researchers can uncover structural bias components, workplace cultures, discriminatory practices, and barriers to advancement that contribute to pay disparities. Incorporating these employee perspectives ensures that strategies for reducing ethnic pay gaps are informed by firsthand accounts and promote a more inclusive and equitable work environment.

While it might appear far fetched for organisations to conduct intersectional analysis and adjusting for relevant factors with limited capabilities, it is certainly possible for leaders to commission an ongoing and iterative process of gathering employee perspective to bridge the ethnic pay gap.

To learn more about the alternatives to median hourly rate analysis such as Ethnicity Pay Fingerprints, refer to this article.