What: Pay equity laws and requirements remain firmly in place despite federal DEI policy changes, requiring retailers to maintain fair compensation practices regardless of broader diversity initiative modifications.

Why it is important: The distinction between unchanging pay equity laws and evolving DEI policies creates a critical compliance challenge for retailers, who must balance legal requirements with shifting political pressures while maintaining effective workplace practices.

As retailers navigate the changing landscape of diversity initiatives, pay equity emerges as a distinct challenge that transcends political shifts in DEI policies. The data reveals persistent disparities, with women earning 83 cents per dollar compared to men in uncontrolled scenarios, dropping to 73 cents for working mothers. While companies like M&S and Costco respond with record investments in retail pay, the industry grapples with broader structural challenges, particularly in accommodating caregiving responsibilities. The Equal Pay Act and Title VII protections remain unchanged, requiring continued vigilance in pay equity regardless of DEI policy modifications. This legal framework, combined with state-level legislation in over 40 states, creates a complex compliance landscape that retailers must navigate while addressing both direct pay discrimination and systemic opportunity gaps. The situation is further complicated by the potential legal risks of dismantling DEI programmes that previously helped identify and address pay disparities, suggesting the need for careful consideration in how retailers approach workplace equity reforms.

IADS Notes: The retail industry's approach to pay equity has evolved significantly since late 2024, as evidenced by contrasting strategies in addressing compensation and workplace equity. In March 2025, M&S's record £95 million investment in retail pay demonstrated one approach to addressing disparities, while Costco's January 2025 move to raise hourly wages above $30 showed another. The emergence of the FAIR framework has offered retailers a new path forward, focusing on systemic changes rather than individual interventions. Recent data from March 2025 showing only half of major retailers meeting the 40% women in leadership target, combined with a 51% industry turnover rate, highlights the ongoing challenges. These developments occur against the backdrop of women controlling 75% of global discretionary spending, emphasising the business imperative of addressing workplace equity beyond mere compliance.

Amid DEI uncertainty, what happens to pay equity?