28 Apr Deconstructing the Gender Pay Gap
Why aren’t women making the same money as men in 2015?
Deep in conversation with a new co-worker, Kathy Johnson* suddenly found herself struggling to breathe. Then the corporate director of marketing for a Fortune 500 company, she’d walked into the office of an indirect subordinate to welcome him into the company. The conversation started off casually, revolving around each other’s backgrounds and the benefits of working for the business. Then, he dropped a bomb.
“He said, ‘Yeah, the compensation is awesome. It is amazing to be making this much,’” remembers Johnson. “The figure he told me was $20,000 per year more than I was making. I couldn’t believe it.”
She cut the conversation short, nearly ran back to her office, and then shut the door. Her mind raced with how to deal with such a massive discrepancy. Had her company overtly discriminated against her because she is a woman, or was this an oversight? Had he negotiated more than she had? Was there something wrong with her?
A historical perspective
Johnson’s experience is not uncommon. On a national level, full-time female workers were paid 78 cents on the dollar in 2013, compared with men who worked the same number of hours, leaving a wage gap of nearly 22 percent. According to the US Census Bureau, the median annual income for women in 2013 was $39,157 compared with men, who made around $50,033.
Progress on the gender wage front has been startlingly slow, considering how long it has been a major topic in policy circles. One of the first times the issue came to light was in 1963, when President John F. Kennedy signed into law the Equal Pay Act that, in his words, “prohibits arbitrary discrimination against women in the payment of wages. This act represents many years of effort … to call attention to the unconscionable practice of paying female employees less wages than male employees for the same job.”
Back then, women working full-time made only 59 cents for every dollar earned by men, resulting in a wage gap of 41 percent, according to the National Women’s Law Center. “There would be ads in the paper for men and ads for women; it was that segregated,” says Evelyn Murphy, president of the WAGE Project, an activist organization working to end wage discrimination.
In 2009, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act, designed to make it easier for women to file complaints against discriminatory employers. But the gap remains. The Institute for Women’s Policy Research estimates that if the United States continues on the same rate of change from 1960 to now, it will take 43 years for the gap to close completely.
The story behind the gap
Why is the wage gap still in effect today? That answer depends on whom you ask, and the question evokes strong, often contradictory responses.
“It starts with a woman’s first job,” says Neena Newberry, president of Texas-based coaching firm Newberry Executive Solutions. “A woman may or may not negotiate before accepting the position, and there hasn’t been a lot of improvement on that front. You look at women and how often they negotiate relative to men. Men negotiate four times as much.”
Gozde Aksay, cofounder of Salary Fairy, a start-up that helps people determine appropriate salary targets based on experience and location, agrees. She says women often act with their emotions and worry about tarnishing relationships rather than asking for more money. Men, on the other hand, have no problem requesting high wages.
“Men have confidence built into them,” says Aksay. “If a man saw that a job’s range was $75,000 to $100,000, he would ask for $110,000.”
Aksay speaks from experience. In 2010, she moved to New York City from Seattle to take a job as a software developer. Online research said the salary range was $75,000 to $100,000. Thinking it was smart to ask for an average, she requested $90,000 and got it, sans negotiation.
“There was no back and forth. I was expecting them to come at me with a lower number,” she says. Aksay soon learned that what she asked for was far below—by at least $25,000—what her counterparts were making. She stayed for a few years and asked for raises regularly but didn’t get very far, she says, because every increase was relative to her starting salary.
While Aksay and Newberry may have solid points, Susan M. Adams is tired of the blame-the-victim argument.
“If it were just up to women, we would have fixed this by now,” says Adams, professor of management and senior director for the Center for Women and Business at Bentley University in Waltham, Mass-achusetts. “It’s a combination of many things, a lot of which are structural barriers within companies.”
To solve this problem, companies need to turn attention inward and do what she calls “a self-audit to figure out where the bottlenecks are. It takes someone at the top to make it a priority, to institute mentoring programs for women, to bring more women on boards.”
Adams argues that many businesses are structured according to the way men work and the hours men work. Women, she says, do things differently. And while there are definitely cases of overt gender discrimination against women, much of the prejudice is subtle and can be seen in social situations around work. “Maybe there is a celebratory dinner and the guys go out for cigars afterward, an activity that doesn’t include women but ends up furthering the careers of the men in attendance,” she says. “Or maybe a group of guys schedule a meeting when they know a woman will be picking up her kids from work.
“There are companies that have done self-audits and, all of a sudden, notice what they are doing. It is a big awakening for them, and many end up changing for the better.”
Structural challenges aside, Adams doesn’t give women a pass. She says they also need to “call it out” when they see discrimination in the workplace.
The WAGE Project’s Murphy says the only way to a solution is for women, employers, and the government to work together—a tall order. “If it was an easy issue, it would have been resolved a long time ago,” she says. “The gender wage gap is complex and deeply rooted in societal norms. It is far more complicated than a single piece of legislation.”
On a positive note, Murphy says the conversation is gaining steam as of late. Politicians are publicly discussing the wage gap more, and the issue is increasing in its relative importance.
“It is a far more politicized issue now because so many working women are the single heads of their households,” she says. “This is now a huge, integral issue for families.”
Standing up for equality
So what did Johnson do when she discovered that a junior employee was bringing in a salary that dwarfed her own? Once back in her office, she tried to control her thoughts and steady her breathing. Then she went home and spent three days contemplating her next move.
“I prepared a letter that explained my understanding of this guy’s position and that he was hired at a lower level than me and at $20,000 more than me,” she says. “I wasn’t going in for a raise—I was going in for equity. I didn’t walk in screaming. I did it in a businesslike manner.”
Her boss was stunned. The human resources department balked. But Johnson maintained her position, and a three-month investigation was initiated. In the end, her pay was raised $25,000.
“I explained that a company of its caliber can’t have something like this going on, that it isn’t in keeping with the company’s brand,” she recalls. “If it was happening to me, it may have been
happening to other people. I’m pretty sure the company took a closer look at its internal policies after that.” DW
The Parenthood Penalty
Negotiation prowess and structural issues aside, there may be another reason for the gender pay gap: parenthood. In a paper titled “The Fatherhood Bonus & The Motherhood Penalty: Parenthood and the Gender Gap in Pay,” Michelle J. Budig, a sociology professor at the University of Massachusetts, Amherst, argues that men make more after they become fathers, while new mothers bring in less money.
Mothers experience a wage penalty of 4 percent per child, but fathers often receive a more than 15 percent bonus in pay, she says.
“The only argument we are left with is that there is some discrimination against moms in the workplace or that they are less productive on the job than women without kids,” says Budig. “Neither of those is conclusive. But there is strong evidence out there that employers are less likely to hire women with kids and regularly offer them lower wages.”
As for men, some say they become more serious about work and put in more hours on the job after entering fatherhood. In her paper, Budig says, “Fatherhood is a valued characteristic of employers, signaling perhaps greater work commitment, stability, and deservingness.” — KM
Katie Morell is a San Francisco–based journalist who specializes in business, travel, and human-interest topics. Read more of her work at katiemorell.com.
* Name changed for privacy at the request of the source.