Context
In 1970, the Parliament of the United Kingdom passed the Equal Pay Act that prohibits inequal treatment between men and women in terms of employment (among which pay). Unfortunately, about 50 years later, men and women are not on an equal footing when it comes to pay: for instance in 2019 in Europe, women earned 14,1% less than men. To tackle this issue, since 2017, the United Kingdom compels employers with 250 or more employees to publicly disclose information about gender pay gaps. Rendering this information public may entice stakeholders (among them consumers) to put pressure on the firm to diminish the pay gap. In an article published in 2021 in the Journal of Consumer Psychology, Schlager, Mohan, DeCelles and Norton show that mandatory disclosure of gender pay gap information does have an impact on consumer behavior, especially when these consumers are women.
Research questions
The authors wish to examine the efficiency of public disclosure of gender pay gap information on consumer behavior. The authors believe that, women being traditionally more concerned with fairness issues and primarily concerned with sexism, their behavior towards firms should be more affected than men’s behavior by the exposure of gender pay gaps. Therefore, Schlager, Mohan, DeCelles and Norton ask the following research questions:
– Do consumers react negatively to the publication of gender pay gaps?
– Do gender pay gaps trigger as many negative reactions from consumers as other business transgressions?
– Do women react differently from men to these publications?
Method
To answer this research question, the authors conducted 6 studies:
– Study 1, 2 and 3 analyzed the impact of disclosing gender pay gaps on willingness to pay and purchase intention. In Study 1, 300 MTurk participants were provided information about Adidas, either disclosing the gender pay gap (18%) or not. Their willingness to buy from Adidas was then measured. Study 2 investigated the same impact in a real-world context. 800 MTurk participants were presented with a mock-up of Google News website. They had to read 4 articles related with Uber. The articles randomly included information about a gender pay gap at Uber. Participants were then asked if they would consider using Uber in several contexts. Finally, in Study 3, 812 MTurk participants were endowed with 1$ to bid on a 5$ Uber gift card. After reading a short text about Uber (disclosing or not gender pay gaps at Uber), they had to affect part of their 1$ allocation to the bidding.
– Study 4 compared the impacts of gender pay gaps on consumer behavior with those of other business transactions (child labor, illegal waste dumping, price-fixing with competitors, anti-family corporate culture, wasteful energy practices, discrimination while hiring, sexual impropriety). 801 MTurk participants were asked if they would consider buying headphones after reading a short text in which the producer was randomly assigned with a business transgression (or no business transgression).
– Study 5 consisted of two correlational studies meant to assess the impact of the legal obligation to publicly disclose information about gender pay gaps in the United Kingdom. In the first study, 93 627 tweets concerning 158 firms before and after the do-date to disclose their gender pay gaps. The follow-up study considered 500 tweets to distinguish between tweets posted by males and females.
Results
– When gender pay gaps are disclosed, purchase intent towards the firm diminishes, because consumers feel outrage and wage unfairness. The Twitter correlational analysis also shows that more negative tweets follow the disclosure of gender pay gaps, and that the higher the pay gap, the more negative the tweet.
– Gender pay gaps yield fewer negative reactions than child labor from consumers. However, consumer reactions towards anti-family corporate culture and energy waste are equivalent to reactions towards gender pay-gaps. Finally, there are more negative reactions towards gender pay gaps than towards price-fixing, waste dumping or harassment.
– Generally, women are more punitive than men in the case of a business transgression. In the specific case of gender pay gaps, women are significantly less willing to buy than men when a gender pay gap is disclosed. This is because changes in behavior are more likely to happen when the information is meaningful to the recipient, and women are more mindful of unfairness and sexism than men.
– If avoiding the firm disclosing gender pay gaps comes at an important personal cost, consumers will find way to rationalize and legitimate their choices. For instance, in case of a 90% probability of rain, all consumers – even women – are as likely to use Uber for a ride, whether they have been informed of a gender pay gap at Uber or not.
Why is this article relevant for researchers?
This article contributes to the literature about the influence of inequality on consumer behavior by showing how gender pay gaps affect consumer behavior, especially when consumers are women. This research thoroughly tackles the gender pay gap and addresses other types of business transactions. However, there are many other forms of inequalities that could still be discussed in terms of their impact on consumer reactions, such as race, disability, age, appearance, or even other gender considerations (involving transgender and fluid gender identities).
Moreover, this article shows that consumers may try to legitimate their consumption if avoiding the firm comes at a high personal cost. In the same vein, future research could study if finding out the firm has been engaging in business behavior or favoring certain types of inequalities has a lasting impact on consumer behavior. Does the effect still hold in the long run? Consequently, future papers could also find ways for firm to curb these negative effects on consumer behavior: for instance, do firms need to reduce gender pay gaps or can they engage in other activities that might compensate for the pay gap? Impacts in terms of employer brand may also be investigated.
Why is this article relevant for professionals?
This article is relevant to both professionals and activists. For professional, this research proves that disclosing information about business transgressions and inequalities in the firm can be harmful in terms of revenue and reputation. However, firms should bear in mind that all business transgressions do not all stir the same number of negative reactions. For instance, the scandal surrounding Nike’s sweatshops was a wake-up call for the fashion industry, and even though inequalities and business transgressions subside, Nike now tries hard to communicate on their efforts to fight forced labor, human trafficking and modern slavery. Regarding the specific gender pay gap issue, some companies have understood that they should communicate on their involvement to reduce inequalities. For example, Jigsaw admit guilt on their website for their gender pay gap results. This seems like a good strategy, particularly for a company specializing in womenswear, and therefore addressing a clientele who is particularly sensitive to sexism and unfairness issues. However, at the same time, the article proves that companies that have managed to be essential for consumers may not suffer from exposure of business transgressions – at least to a certain extent.
For activists, this paper shows that disclosing information about gender pay gap – even though it is not a legal obligation in several countries – can make a difference and raise awareness of inequalities among consumers. Although such initiatives as this Huffington Post video bring into focus the imbalanced treatment between men and women at the workplace, naming the culprits seems more likely to bring about change at a corporate level. For instance, the French TV program “Cash Investigation” chose to illustrate their episode about gender inequalities at work by putting Groupe BPCE on the spot.