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    • Sep 7
    • 6 min read

Closing the Gap: Addressing Gender Pay Disparities and Remote Work Taxation

By Jonathan H. Westover, PhD

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Abstract: This article examines persistent gender pay gaps across industries and job levels and provides recommendations for organizational leaders to promote equitable compensation practices and work environments. Extensive research reveals unexplained pay disparities remain between women, particularly women of color, and white men even after controlling for factors like occupation, education and experience. The shift to remote work during the pandemic also inadvertently caused higher taxes for some women working from home. To address these issues, the article recommends evidence-based strategies for leaders such as conducting pay equity audits; ensuring transparent, objective compensation processes; banning pay secrecy; supporting caregiving; addressing remote work taxation; collecting demographic pay data; and promoting women and minorities into senior roles and fields like STEM where they are underrepresented. Tailoring these approaches within industries like technology, healthcare, education and government can advance equity and inclusion, as closing gender pay gaps requires ongoing commitment across all sectors to achieve truly just workplaces.

Despite increased awareness and advocacy efforts, significant gender pay gaps persist across industries and job levels in many countries. Today we will examine the research on gender pay disparities and presents recommendations for organizational leaders to implement policies and practices promoting fair and equitable compensation. While remote work expanded opportunities for work-life balance during the pandemic, many women working from home unexpectedly faced higher taxes, exacerbating existing inequalities. After reviewing relevant studies on these interrelated issues, we will conclude by outlining specific, evidenced-based strategies leaders can adopt to build more inclusive and just workplaces.


Research on Gender Pay Gaps


Extensive research confirms that gender pay gaps remain prevalent globally. On average across OECD countries, women earn 14% less than men per hour worked (OECD, 2022). In the United States, women earn approximately 82 cents for every dollar earned by men (White House, 2021). This disparity persists even when controlling for factors like occupation, industry, education, and experience. Some key findings from studies on gender pay gaps include:


  • Unadjusted gender pay gaps are larger in higher-paying occupations and industries like science, technology, engineering, and math (STEM) fields, where women are underrepresented (Blau & Kahn, 2017).

  • Mothers face a disproportionate "motherhood penalty," earning about 4% less per child than women without children and controlling for other factors (Correll et al., 2007). No such fatherhood wage premium exists.

  • Implicit biases contribute to lower initial salary offers and smaller raises for women compared to identical male counterparts (Kamas & Preston, 2012).

  • Women of color face some of the largest pay disparities, with Black and Hispanic women earning just 63 cents and 55 cents, respectively, for every dollar paid to white, non-Hispanic men (National Partnership, 2021).

  • Pay secrecy norms prevent employees from discussing wages, masking discrimination and hindering enforcement of equal pay laws (Bamberger & Belogolovsky, 2010).


These findings point to systemic barriers facing women in the workforce that organizational leaders must proactively address through fair compensation and inclusive policies.


Challenges of Remote Work Taxation


The shift to remote work during the pandemic offered greater flexibility but also unintended consequences for some women. In particular, women residing in different tax jurisdictions than their employers faced higher income taxes while working from home. For example:


  • In the US, employees who perform work in a state other than their employer's face income tax obligations to both states under "convenience of the employer" rules, increasing their overall tax burden (Friedman, 2021).

  • In Canada, residents pay provincial/territorial taxes based on their place of work or residence. Remote employees faced increased taxes if working from home in higher-tax jurisdictions (Hill, 2021).

  • Similar issues arose in countries like Germany, Austria, and Switzerland where remote work triggered income and social security tax obligations in an employee's place of residence rather than origin of employment (KPMG, 2021).


While remote work expanded access and flexibility, uneven or unexpected tax consequences fell disproportionately on women who were more likely to work from home full-time during the pandemic (Fleming, 2021). This taxation of remote work exacerbated existing gender inequalities within households and the workforce.


Recommendations for Organizational Leaders


To advance gender pay equity and support remote female employees, organizational leaders should consider implementing the following evidence-based practices and policies:


  1. Conduct Pay Equity Audits - Analyze compensation data by gender and race/ethnicity within and across job categories to identify and remedy unexplained pay gaps (White House, 2016). Correct inequities through salary adjustments, backpay, or signing bonuses.

  2. Ensure Transparent, Objective and Consistent Compensation Processes - Rely on job analyses and performance reviews rather than negotiations that can mask bias. Establish salary ranges for consistent wages within grades.

  3. Ban Pay Secrecy and Discrimination - Communicate a policy prohibiting pay secrecy or retaliation for discussing wages openly. Conduct anti-bias training for all involved in setting or changing pay.

  4. Provide Support for Caregiving Responsibilities - Offer family-friendly policies like paid parental leave, subsidized childcare, backup dependent care, flexible scheduling. Communicate these benefits proactively to all employees.

  5. Evaluate Tax Implications of Remote Work Arrangements - For employees who work across jurisdictions, consult tax experts to budget for additional obligations and consider tax adjustments or reimbursements for higher costs incurred.

  6. Collect and Report Disaggregated Demographic Data - Publicly disclose representation and pay gap data by gender, race, and job level to benchmark progress and maintain accountability. Foster transparency around diversity, equity and inclusion efforts.


Implementing Strategies in Specific Industries


The most impactful approaches will consider the unique conditions and opportunities within different organizational contexts. Leaders in the following industries could focus on:


  • Technology - Promote women and minorities into technical roles and leadership through training programs, mentorship initiatives and sponsorship. Strengthen parental leave, flexible scheduling and childcare benefits crucial to retaining female talent in demanding roles.

  • Healthcare - Examine wage differentials between high-paying physician roles and lower-paid support jobs dominated by women like nursing. Implement wage adjustments or career advancement programs. Support predominantly-female essential frontline workers through hazard pay, mental health services and education benefits.

  • Education - Analyze unexplained gaps between wages of male professors versus female instructors or administrators with equal qualifications across disciplines and institutions. Provide leadership training, mentorship and networking events geared towards advancing women in academia.

  • Government - As a major employer, lead by example through equitable, transparent and market-based compensation practices aligned to job requirements regardless of gender. Address barriers for women entering public service through targeted recruitment and professional development.


Conclusion


While progress has been made, significant work remains for organizational leaders to achieve truly equitable and inclusive workplaces. The strategies outlined balance evidence-based policies recommended by experts with practical, industry-specific examples leaders can adopt. By conducting fair compensation audits, supporting caregivers, addressing remote work taxation and promoting women into senior roles and STEM fields - organizations can build cultures where all employees feel respected, valued and able to achieve their full potential regardless of gender or background. Closing persistent pay gaps and removing systemic barriers will require ongoing commitment across industries, but offer enormous economic and social rewards for diversity, equality and social justice.


References


 

Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.

Suggested Citation: Westover, J. H. (2024). Closing the Gap: Addressing Gender Pay Disparities and Remote Work Taxation. Human Capital Leadership Review, 12(3). doi.org/10.70175/hclreview.2020.12.3.1

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