The Snowballing Penalty Effect: Multiple Disadvantage and Pay

Abstract

This paper makes the case that the current single-axis approach to the diagnosis and remedy of pay discrimination is inadequate in the case of multiple disadvantage. While a good deal is known about pay gaps, particularly those affecting women, less is known about those affecting people in other disadvantaged groups and those in more than one such group. This analysis of multiple years of pay data, n = 513,000, from a large UK-based company shows that people with more than one disadvantaged identity suffer a significantly greater pay penalty than those with a single disadvantage. The data also suggest that penalties associated with multiple disadvantage exponentially increase. In other words, disadvantages seem to interact to the detriment of people at 'intersections'. The paper considers the implications for policies aimed at reducing pay inequalities. These currently take a single-axis approach and may be misdirected.

Multiple Disadvantage and Wage Growth: The Effect of Merit Pay on Pay Gaps

“…Rather less is known about the pay deficits experienced by people in more than one disadvantaged category, that is, those who are in dual, triple, or even quadruple axis categories (Browne & Misra, ). Recent research on multiple‐disadvantaged identity and pay (Woodhams et al, ) indicates that the more labor market disadvantages (i.e., in relation to gender, ethnicity, disability, and age) an employee has, the lower their pay is on average; in this study, the gap in median earnings was over £8,000 ($13,000) per year between the most advantaged and disadvantaged groups. These authors found that the effect of accumulation of disadvantaged identities on pay was in many cases greater than would arise from simply adding the pay penalties arising from single identities, and this effect tended to be more marked among multiple‐disadvantaged identity groups.…”

“…Our interest here is in how this might affect employees who have identities that combine more than one employment disadvantage (in relation to age, gender, ethnicity, and disability). In relation to pay levels, as opposed to pay growth, recent research (Woodhams et al, ) suggests that there may be an interaction effect that in some cases reduces average pay below what one would expect from simply adding up the pay deficits that people experience from being in a single‐disadvantaged identity category. Why this should be is not clear, and there are likely to be complex and multiple reasons.…”

“…This tradition requires complainants and employees with a grievance to tackle each strand of discrimination, whether about pay or otherwise, separately, using first the single strand of redress that has the most likelihood of success and, if necessary, following it with others. However, this sequential approach may not address the full extent of discrimination (see Woodhams et al, ), leaving many opportunities that lead to pay growth, such as training and development and applications for promotion, more difficult for people with more than one disadvantaged identity to access. Organizations, no matter how keen they are to promote best practice in equality, may overlook the inequality that employees with multiple disadvantages face.…”

“…It is well known that in Western societies people in disadvantaged groups experience, on average, a pay gap in relation to their more privileged counterparts (Green & Ferber, ; Longhi & Platt, ). Recent evidence from the United Kingdom (Woodhams, Lupton, & Cowling, ) indicates that multiple disadvantage is associated with lower pay: people with more than one disadvantaged identity are paid less on average than those with a single disadvantage, and the more labor market disadvantages someone carries, the lower (on average) is their pay. While there is evidence that the gender wage gap in the United Kingdom and elsewhere is declining (Blau & Khan, ; Green & Ferber, ; Office for National Statistics [ONS], ; O'Neill, )—though it remains substantial—less is known about the relative wage growth experienced by other disadvantaged groups (Brynin & Güveli, ; Malo & Pagán, ) and less still in relation to those with multiply disadvantaged identities.…”

“…These arguments would suggest that merit awards would be lower for disadvantaged groups, thus contributing to relatively lower wage growth and, ceteris paribus, a widening of pay gaps. The thrust of earlier research on multiple‐disadvantaged identities and pay (Woodhams et al, ) might also lead one to expect that those with dual‐ or multiple‐disadvantages would fare worse in this respect. While that research drew on cross‐sectional pay data, here we can draw on longitudinal data from a large private‐sector organization in the United Kingdom that operates a merit‐pay scheme to show whether pay progression is reinforcing (or indeed alleviating) the link between multiple disadvantage and lower pay.…”