Gender payÂ inequities existÂ but the gap isÂ narrowing.
By Katie Bardaro
Gender pay inequities persist in 2019, but not necessarilyÂ in the way many people think. There is a lot ofÂ miscommunication and confusion about the genderÂ pay gap, so letâs set things straight. PayScale leveragedÂ pay data from 1.8 million employees to compare theÂ overall median pay for women to the overall medianÂ pay for men and found that women earn 79 cents forÂ every dollar earned by a man. When accounting for theÂ intersectionality of race/ethnicity and gender, this pay gapÂ ranges from 74 cents on the dollar (African American andÂ Hispanic women) to 93 cents on the dollar (Asian women).
However, these values do not truly capture a pay gap, butÂ rather an opportunity gap. What they show is that womenÂ are underrepresented in todayâs top paying fields. ThisÂ really breaks down in two ways:
- Women dominate lower paying fields like education,Â social work, and nursing while men dominate higherÂ paying fields like technology and finance.
- Women donât rise to higher job levels at the same rateÂ as men.
Given that men and women can be found in differentÂ roles, these overall statistics can obfuscate the actualÂ gap in pay. For this reason, PayScale also calculatesÂ a âcontrolledâ pay gap figure that accounts forÂ measurable characteristics such as job, level, education,Â skills, management responsibilities, location, and otherÂ compensable factors. When comparing men and womenÂ doing the same work, with the same background, at theÂ same type of employer, the national pay gap shrinks toÂ 98 cents on the dollar overall. It ranges from 97 cents onÂ the dollar for African American women to $1.02 for AsianÂ women.
So, the question asked upon seeing this might be: Is theÂ work done? The simple answer is no. While 2 percent mayÂ seem small, the impact compounds over the course of aÂ womanâs career, resulting in median lost wages of moreÂ than $75,000.
Further, gender still limits the opportunities to advance.Â PayScaleâs research examines men and womenâs careerÂ progressions in three career stages:
- Early stage: people who are under 30;
- Mid-career: people between 30 and 44; and
- Late career: age 45 and above.
The study found that by mid-career, men are 63 percentÂ more likely to be in vice president or C-level roles thanÂ women. And by late career, men are 131 percent moreÂ likely than women to be in a vice president or C-level role.Â On the other hand, women are more likely than men toÂ remain in individual contributor positions over the courseÂ of their careers. A sobering statistic from the Glass CeilingÂ Index finds that there are more Fortune 500 CEOs namedÂ James than there are female CEOs.
This divergence in leadership opportunity is even moreÂ pronounced when bringing race and ethnicity into theÂ analysis. Only 2 percent of women of color are in executiveÂ roles compared to 6 percent of Caucasian men. Overall,Â 72 percent of Asian women are individual contributorsÂ relative to only 56 percent of Caucasian men. It isÂ important to point out that while Asian women may haveÂ a positive pay gap when accounting for differences inÂ worker and position characteristics, their opportunities toÂ advance into leadership roles are more suppressed thanÂ any other race/ethnicity examined.
But the future may be different. When comparing theÂ overall median payÂ between women andÂ men over time, thereÂ is a shrinking pay gap.Â PayScaleâs first genderÂ pay gap report released inÂ 2015 reported a pay gapÂ figure of 74 cents on theÂ dollar. Today in 2019, thatÂ has increased to 79 centsÂ on the dollar, gaining anÂ improvement of roughlyÂ 1 cent per year. If thisÂ pattern holds, the genderÂ pay gap could close in theÂ year 2040.
What could potentiallyÂ be causing this change?Â In looking at the data,Â thereâs an increase inÂ female representation inÂ top paying occupations.Â For example, when itÂ comes to in-demandÂ positions in technicalÂ and mathematical fields,Â only 19.9 percent wereÂ held by women in 2014, compared to 23.2 percent inÂ 2019. Similarly, 43 percent of roles at the director levelÂ and above were held by women in 2014, but this numberÂ increased to 48.7 percent in 2019.
So, what can organizations do to address the gender payÂ gap? A good first step is to run a pay equity analysis. TheseÂ analyses can be completed in four steps:
- Gather any and all data that cover job characteristicsÂ (title, level, location, hours worked) and individualÂ characteristics (demographics, pay, tenure).
- Group employees who do substantially similar work in aÂ legally defensible way.
- Leverage the power of statistical modeling toÂ understand the unexplained pay gap and whereÂ remediation tactics are needed.
- Determine an optimal communication strategy thatÂ aligns with company culture and develop this for both anÂ internal and external audience.
The need for in-depth pay equity analyses will likelyÂ grow as a recent federal ruling requires organizationsÂ with at least 100 employees to report pay figures brokenÂ down by gender and race/ethnicity. Given that thisÂ federal reporting will focus on the overall pay gap andÂ not nuanced differences across workforces, rigorous payÂ equity analyses will be needed to ensure that leadershipÂ teams are committed to paying equal rates for equal work.
Pay equity analyses are not for the faint of heart andÂ will often require not only legal counsel throughoutÂ the process, but also a third party to help organizationsÂ correctly run and interpret the analysis results. Be wary ofÂ walkthrough guides online as the data and process neededÂ is frequently unique to each organization. Conducting payÂ equity analyses ahead of budgeting season helps createÂ an âequity reserveâ to make pay equity adjustments. And,Â remember it isnât only about pay: organizations need toÂ understand the causes of the inequities and how to putÂ strategic plans in place to avoid future problems.
Katie Bardaro is chief economist for PayScale.