Home
Back
Pay Parity Formula:
| From: | To: |
Pay parity refers to the concept of equal pay for equal work, regardless of gender or other demographic factors. The pay gap percentage shows the difference in average earnings between groups (typically men and women) as a percentage of the higher-earning group's pay.
The calculator uses the pay parity formula:
Where:
Explanation: The formula calculates what percentage less female employees earn compared to male employees. A positive percentage indicates a gap where women earn less, while 0% indicates perfect parity.
Details: Calculating pay gaps helps organizations identify potential inequities, track progress toward equality, and ensure fair compensation practices. It's a key metric in diversity and inclusion initiatives.
Tips: Enter the average pay for male and female employees in the same currency. The calculator will show the percentage difference. Both values must be positive numbers.
Q1: What does a negative pay gap percentage mean?
A: A negative percentage would indicate that female average pay is higher than male average pay in your data set.
Q2: What is considered an acceptable pay gap?
A: Ideally, pay gaps should be 0%. Many organizations aim for gaps less than 1-3% when accounting for legitimate factors like experience.
Q3: Should we compare median or average pay?
A: Both metrics are useful. Average pay is more affected by high earners, while median shows the middle value. This calculator uses averages.
Q4: How often should pay parity be measured?
A: Best practice is to measure at least annually, preferably when making compensation decisions or after major hiring/promotion cycles.
Q5: What factors beyond gender should be considered?
A: Comprehensive analysis should also examine pay by race, ethnicity, age, and other protected characteristics to ensure broad equity.