Federal data consistently shows women working full-time year-round earning around 84 cents for every dollar men earn, with larger gaps for Black and Hispanic women. Racial wage gaps tell a similar story at the national level. For individual employers, the national numbers aren't actionable; what matters is the wage gap inside your own workforce, what it's made of, and which pieces of it reflect ongoing discrimination versus historical representation patterns that your company can address. Running a careful wage gap analysis is one of the most important compensation practices in 2026, both because pay transparency laws make the data visible and because the EEOC continues to enforce pay discrimination rules vigorously.
Raw Wage Gap vs. Adjusted Wage Gap The raw wage gap is the simple difference in average pay between groups: women's median pay divided by men's, or Black employees' median pay divided by white employees'. It reflects a mix of factors, including role mix (are women concentrated in lower-paying functions), tenure (does the group have different average tenure), geography, and pay decisions for comparable work.
The adjusted wage gap controls for legitimate factors using a regression: role, level, tenure, geography, performance rating, and any other factors that legitimately affect pay. What's left is the unexplained gap, which is the most direct measure of pay decisions that can't be justified by documented factors. Most employers have both a raw gap (often 10 to 20 percent) and a much smaller adjusted gap (often 2 to 5 percent) when analyzed carefully.
What Each Gap Tells You Raw gaps usually reflect representation. Women concentrated in HR, comms, and customer success while men dominate engineering and finance produces a raw gap at the company level even if individual pay decisions are fair. The fix for this type of gap is less about pay adjustments and more about hiring, promotion, and career development work that changes the representation mix over time.
Adjusted gaps usually reflect individual pay decisions. Two employees at the same level, with the same tenure, in the same location, doing comparable work, paid differently in ways the regression can't explain. This type of gap requires individual pay review and corrective adjustments where warranted.
How Big Does the Adjusted Gap Need to Be to Trigger Action? Most compensation teams act on unexplained gaps above 2 to 5 percent, with the specific threshold depending on workforce size and the regression's confidence interval. Smaller gaps may fall within statistical noise. Larger gaps are unlikely to be explained by any legitimate factor not already in the regression.
How Pay Transparency Laws Changed the Analysis More than 15 states now require posted salary ranges, and several require additional disclosures about actual pay or demographics. Companies operating in those states have to produce and defend salary range data publicly, which puts pressure on internal analysis that used to be private. A raw gap that looked manageable when nobody was looking becomes a real recruiting and reputation issue when it's visible.
The EEO-1 Component 2 pay data collection, which the EEOC has tested and paused multiple times, may return in some form and would require employers to report aggregate pay data by EEO-1 job category and demographic group. Employers who already run strong internal analysis are better positioned for whatever disclosure requirements land next.
Running a Wage Gap Analysis That Actually Changes Outcomes Four practices. Run the analysis at least semi-annually with a regression that controls for legitimate factors. Investigate unexplained gaps individually, not just in aggregate, because pay corrections happen one decision at a time. Share results with the compensation committee and leadership in a way that connects patterns to decisions (hiring, promotion, merit cycles). And track progress year over year, because wage gap work doesn't close overnight but should close steadily when the underlying practices are changing.
Pair wage gap analysis with pay equity audits, Equal Pay Act compliance, and compensation administration. Reference the BLS Current Population Survey earnings data for national benchmarks and the EEOC compensation discrimination guidance for the federal enforcement framework.
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