We’ve all heard the figures around the gender pay gap — that women earn 70-something cents on the dollar, depending on the data source you use, compared to men. A lot of what contributes to that gap is the variance in earning potential between the industries and job types that women and men dominate, with women holding more “caretaking” jobs (e.g. healthcare, social work, education) in our society while men hold more technical jobs (e.g. engineering, computer science). Another big factor is the lack of women in high-paying leadership roles: Only 4% of S&P 500 CEOs are women, according to Catalyst.
But what happens to that gap when we look at men and women doing the same work? PayScale, the compensation data and software company I work for, released a new study today titled “Inside the Gender Pay Gap” where we examine gender pay gaps based on the 1.4 million full-time U.S. employees who successfully completed our survey between July 2013 and July 2015. When we control for all factors that influence compensation outside of gender (i.e. job title, location, years of experience, education, company size, management responsibilities, skills, etc.), the gender pay gap for men and women overall shrinks to 97 cents on the dollar. However, the gap widens for certain groups of female workers, and not the ones you’d necessarily expect — executives, women with children, and women who hold higher degrees. For example, women with PhDs earn 95 cents for every dollar their male colleagues earn.
Many forward-thinking companies have put programs in place to support female employees, but even when all the right things seem to be happening — women are promoted, given management and leadership training, offered good professional mentors, and provided with flexible schedule options to care for children — the pay gap persists. Here are four of our most striking findings.
The gender pay gap widens as women advance in their careers. Every step up in responsibility increases the pay gap for women. While women at an individual contributor level only earn 2.2% less than men working in similar roles, the gap widens for managers/supervisors, directors, and executives.
Why this happens is harder to pinpoint, but knowing it does can ensure that companies evaluate pay appropriately by taking a look at market pay for the position as well as comparing internally to male colleagues in similar roles, particularly when a promotion is involved. One thing to keep in mind is that women tend to initiate negotiations four times less often than men and ask for about 30% less when they do negotiate, according to Linda Babcock and Sara Laschever’s Women Don’t Ask. This may happen because when women do initiate negotiations they pay a higher “social cost” than men for doing so.
Leadership training helps women increase earnings, but helps men more. As part of the PayScale gender pay study, we examined whether access to management and leadership training made a difference in terms of closing the gap. What we found is that both men and women who have been recommended for leadership training see a boost in earnings compared to their counterparts who have not, but men see a greater pay increase than women. In the end, the gap actually widens between men and women in the leadership group (3.3%) vs. those not in the leadership group (1.6%).
Women need professional advocates, not just role models. Another hypothesis we explored was whether women have less access to professional mentors than men. What we found, however, was that slightly more women than men reported that they have strong professional role models within their organization. However, male workers see a greater salary benefit when they have such role models.
One theory we have about why this gap exists is based on Sylvia Ann Hewlett’s argument that what women truly need are sponsors, not mentors, in order to advance their careers. She argues that “to get ahead, women need to acquire a sponsor — a powerfully positioned champion — to help them escape the ‘marzipan layer,’ that sticky middle slice of management where so many driven and talented women languish.”
Working mothers are getting the short end of the stick. That working mothers make less than working fathers isn’t likely surprising to most, unfortunately. What did surprise us in our study was that the more often a woman (regardless of whether she has a child) told us that she prioritizes home/family over work, the larger the controlled gender pay gap became — but that’s compared to men who say they prioritize home/family over work with the same frequency.
When we examined marital and family status along with the frequency with which employees prioritized home/family over work, the largest pay gaps existed between married mothers and fathers who tell us they prioritize family at least 1-4 times per year. No pay gap existed between single men and women without children who said they never prioritize home/family over work.
Clearly, something is amiss when mothers are suffering financially for occasionally making family a priority, but men who do the same are not. One revealing study at Boston University, by assistant professor Erin Reid, points to one possible reason for this discrepancy. “Reid found that women were far more likely to seek accommodations or ask for greater flexibility in order to help them achieve the work-life balance their personal lives demanded,” according to a summary of the research. “Men, on the other hand, were much more apt to find ways around the system without revealing that they were falling short of expectations. As a result, women didn’t advance professionally at the same rate as their male counterparts.”
So what now?
Addressing this issue isn’t likely a short-term fix or something you can do just once. But, there are steps companies can take right away to ensure their organization is being proactive and intentional about correcting gender pay disparities (or any pay disparities really).
- Conduct a review of compensation packages for employees at your company, evaluating and adjusting for the specific responsibilities of the job and the qualifications of each employee (i.e. all relevant factors that influence compensation from years of experience to specialized skills).
- If you identify any gender pay disparities at your organization, use real-time market data for your labor market to determine the correct pay for that employee and adjust pay accordingly to ensure everyone is paid appropriately.
- Consider a more transparent approach to discussing pay with your employees – share the data you use to set ranges, how you define your labor market, what the range is for a particular employee’s position, where they fall within that range (and why.)
In the end, a company’s ability to communicate clearly about compensation is one of the top predictor’s of employee sentiment, including “satisfaction” and “intent to leave.” And, women specifically are 18% more likely to believe they’re underpaid even when they’re not. And considering all the data above, can you blame them? Adopting some level of transparency around your compensation strategy and practices shows employees, regardless of gender, that you care about getting pay right.
Lydia Frank is Sr. Director, Editorial & Marketing for PayScale.com, a cloud compensation software company and creator of the world’s largest database of real-time salary profiles. She and her team work closely with PayScale’s data scientists to identify wage trends and insights around topics like the gender pay gap, underemployment, and economic mobility through education.
