In December 2019, Starbucks became the second U.S. company to disclose the full story of gender and racial pay equity. The retailer disclosed both its “equal pay” gap and its “median pay” gap for women and minority workers. The headline here is that there was no gap on either basis in the United States—a rarity among companies. In fact, Starbucks’ median pay results stand in sharp contrast to the 20 percent gender pay gap for the U.S. workforce and the 30 percent gap for the retail industry.

For investors engaging with companies on this issue, understanding the difference between “equal pay” and “median pay,” and requesting disclosures on both measures, may determine just how much progress women and minority workers make in the next decade.

The definitions:

“Equal pay” gap: What women/minorities are paid versus their direct male/non-minority peers, statistically adjusted for factors such as job, seniority, and geography. Often referred to in the context of “equal pay for equal work” or “similar work.”

“Median pay” gap: The median pay of women/minorities working full-time versus men/non-minorities working full-time. This is an unadjusted raw measure used by the Organization for Economic Cooperation and Development (OECD) and Department of Labor.

Equal pay gaps measure whether women and minorities are being paid commensurate with their peers for the work they are doing today. Median pay gaps measure whether women/minorities are holding as many high-paying jobs.

Over the last four years, investors have filed more than 100 shareholder proposals on gender and racial pay equity at U.S. corporations. Arjuna Capital began this campaign with one company in 2015—eBay—and has since pressed 22 Fortune 500 companies to publish their equal pay data. But in 2019, Arjuna began asking for the other half of the story—median pay. The year before, many U.S. companies began reporting median pay data for their U.K. operations, as required by a new law, but not for global operations. As a result, Arjuna filed 13 proposals asking for median pay disclosures with companies across the technology, finance, and retail sectors.

Starbucks’ recent disclosure follows that of Citigroup—the first U.S. company to publish both equal and median pay numbers. In January 2019, Citi revealed a 29 percent median pay gap for women and a 7 percent gap for minorities—not flattering numbers, but an honest accounting of how pay and position fall across the bank. Notably, by January 2020, the bank had shrunk those gaps to 27 percent and 6 percent, respectively. In short, Citigroup created a baseline from which to measure progress and improved its performance.

Revealing the whole story of the gender and racial pay gap is essential to create change. The future of best practice disclosure should blend the approaches taken in the U.K. and the United States and apply it to 100 percent of global operations. More complete reporting will not only reveal whether women and minorities are paid equitably for the work they do today, but also whether companies are closing median pay gaps over time by moving those workers into higher paying positions.