Google's Equal-Pay Claim for Women Comes With an Asterisk

  • Highest-paid jobs, majority held by men, excluded from report
  • Shareholder calls analysis ‘incomplete,’ presses for more

People take pictures of a Google Inc. office building inside the Googleplex headquarters in Mountain View, California.

Photographer: Michael Short/Bloomberg

Following a handful of big U.S. companies in tech and finance, Google today said it found no significant difference in what it pays its male and female employees -- with one big caveat.

Alphabet Inc. said that for 89 percent of Google’s more than 70,000 global employees, there was no “statistically significant” pay gap related to gender or race. The other 11 percent, left out of the analysis because they belonged to job groups that were either too small or too imbalanced to meet Google’s standards for “statistical rigor,” included the company’s senior vice presidents and above.

Google’s disclosure follows a proposal by activist shareholder Arjuna Capital, which has been pressing tech and financial companies to disclose, and promise to close, the gaps between what their male and female employees earn.

“We find ourselves uncomfortable with its lack of breadth," said Arjuna Managing Partner Natasha Lamb, adding that she was “concerned that 11 percent of Google employees are left out of the analysis published today. We think there is room for improvement and can’t give a rubber stamp to an incomplete analysis.”

“We’re continually looking for ways to expand the percentage of Googlers included in our pay equity analyses, while maintaining the rigor of our analytics,” a company spokeswoman said. Though Google didn’t include the results for its full workforce, it analyzes compensation for everyone and takes steps to ensure fairness across the board, she said.

Lamb said she was not withdrawing her proposal, which asks the company to report on the risks it faces from emerging public policies on gender pay, “including reputational, competitive and operational risks, and risks related to recruiting and retaining female talent.”

Google’s disclosure is one of the first by a large U.S. company to include its methodology. While most of the companies have said they “adjusted” their numbers for employee seniority, location and job title, Google said in a blog post Thursday that it limited its findings to job categories with 30 or more employees with at least five men and at least five women. That excluded all employees with a rank above vice president, the company said.

Within the nearly 63,000 employees included, the company said it found 228 workers with statistically significant pay differences and increased their compensation, which cost the company around $270,000.

Google has spent the last year defending itself against accusations of pay discrimination, which is illegal in the U.S. The Department of Labor sued Google in early 2017 when the company refused to turn over specific pay data in a regular government audit. In related court testimony, an agency representative claimed they had found “systemic” compensation disparities against women. Google at the time maintained it had no gender pay gap.

In September, three women sued Google, claiming that they had been paid less and promoted more slowly than their male peers. A fourth plaintiff joined the lawsuit in January. Google denies the allegations.

Meanwhile, others have criticized Google for going too far in trying to increase the proportion of its workers who are not white or Asian men. James Damore, sued the company in January for firing him after a memo he wrote criticizing the company’s diversity policies sparked a public firestorm. Two weeks later, former YouTube recruiter Arne Wilberg sued the company, saying he had been wrongfully fired for resisting instructions to block candidates who were white or Asian men.

Analysts have been skeptical of recent, voluntary pay gap disclosures by U.S. tech and financial companies. Several banks -- as with tech companies years earlier -- said their pay gap hovered around 1 percent, when adjusted for job title, location, seniority and other factors.

These reported differences are notably small compared with banks in the U.K., where the government has mandated that all companies employing 250 or more report unadjusted average and median pay gap number. On Thursday, HSBC Holdings reported that, on average, female employees at the bank earned 59 percent less than male employees do.

The U.K. rules apply to foreign companies, too, so Google and other U.S. giants with a presence there will have to report their unadjusted pay numbers there by April 4.

Arjuna successfully pressed seven technology companies to disclose their gender pay gaps in 2016, but was rebuffed by Google and Facebook Inc., which remains a holdout this year. The Boston-based activist investor made a similar effort at U.S. banks last year, but all rejected its proposals.

In the current proxy season, Arjuna targeted Google and nine financial institutions. Lamb withdrew the majority after the companies, starting with Citigroup Inc., released information on their pay gaps.

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