How to Value Your Diversity

Equal pay for women is a checkmate strategy.

There are two possible schools of thought when it comes to equal pay. One is that women are the same as men; the other is that women are different from men.

If women are the same as men, then they deserve equal pay. This is easy to understand: If women are the same as men with regard to their work, then if business is a meritocracy they deserve to be making the same amount for the same work.

I’m of the camp that women and men are statistically different. (By which I mean you can’t narrow down from the generality to say any one woman is a certain way compared to any one man, but on average women tend toward certain traits and men toward others.) Whether this difference is primarily the product of cultural expectations is irrelevant to the discussion at hand.

That women are different and therefore deserve equal pay goes back to my discussion of diversity and innovation. Innovation is recombinant, meaning it requires a diversity of perspectives, values, and opinions that can be synthesized and resolved in new ways, sometimes resulting in entirely new ideas. If women are different from men, this contributes value to the innovation process.

But there’s a problem with unequal pay and the relative value of the individual’s contribution. By setting one person’s pay lower than a peer, you are also setting the relative value of that person’s contribution.

This sounds counter-intuitive to anyone brought up on supply-and-demand economics, which say you’re paying less for the same resource. Yet we’ve seen time and again that the amount you pay for something changes its practical value. If you paid a hundred dollars a month to read my blog posts, even if the product wasn’t substantively changed, you’d be taking these words a lot more seriously. This blog would, in effect, become a different product in your mind.

The same behavior is at play in your employment, even where the actual amounts you’re paying each employee are hidden from each other. The behavior is subtle: management values this person’s views more than another’s; or a particular employee is bolder because he knows he is being paid on the upper end of his market range. Meanwhile, people who are being paid less than their contribution is worth may be holding back. Why should I be investing more in my employers than they’re investing in me?

Thus, by paying an employee less, you are actually making her contribution less valuable.

Thus it isn’t a matter of paying women equally, but valuing women equally. Women who move forward with the knowledge that they are paid equally, and men who encounter women with the knowledge that they are paid equally, will both value the contributions of those women more. And because these contributions add a diversity of perspective–and those perspectives are valued at the same level as their male peers–they contribute value to the end product.

Thus, equal pay is simply logical from a business standpoint. The same rationale applies to equal pay for people of other cultures, subcultures, or anyone who enters a business environment with a new perspective. Short-changing a perspective leaves it anemic; and starving an investment, like your investment in an employee, is bad business.