Disturbing News from the Pay Gap Front

Despite periodic bits of good news (here and here) highlighting the progress being made in narrowing the gender pay gap, a new study just released by the American Association of University Women, "Behind the Pay Gap" (download executive summary of study here) brings some disturbing findings to light.

There is no denying that a gender pay gap continues to exist.  And, as the study points out, a certain amount of the difference in pay between men and women can be linked to choices of fields of study and professions:  Certain fields where women tend to concentrate, such as education, health and psychology, are associated with lower earnings than fields such as engineering, math and physics, where men are more dominant.  There is also the unfortunate fact that some of the life choices - such as taking time out or reducing to a part-time schedule to care for children or elderly parents - that women continue to face and take in greater proportion than men also have an impact on earnings.

If the circumstances highlighted above are the primary factors behind the wage gap today - as I have always assumed - then we should expect that pay differences among new college graduates (where family and/or parental responsibilities have typically not yet kicked in) within the same major or disciplinary field would be minimal or nonexistent.  The bad news:  They are not.

Just one year out of college, female full-time workers earn less than their male counterparts within nearly every field of study, as the details below illustrate.  (And, by the way, these women earned slightly higher grades than the men, on average.)

Average weekly earnings  of bachelor's degree recipients employed full time, by undergraduate major: female average earnings as a percent of male average earnings

• Humanities: 73%
• Biological sciences:  75%
• Mathematics and other sciences:  76%
• Health professions:  76%
• Social science:  81%
• Psychology:  86%
• Public affairs/social services:  87%
• Business and management:  93%
• Education:  95%
• Engineering:  95%
• History:  112%

As I believe this data demonstrates, gender pay differences cannot be easily dismissed as simply a matter of different choices.

The study report goes on to identify and put forth recommendations concerning other factors that may be influencing wage differences, including:

• Encouraging women to negotiate for better jobs and pay.  Researchers have found "that women expect less, see the world as having fewer negotiable opportunities and see themselves as acting for what they care about as opposed to acting for pay".  While sweeping gender generalizations like this do make me cringe, I have to admit that there is truth in this for many (but not all) women, and that these behaviors and attitudes can act to minimize women's pay.
• Rethink using hours as the measure of productivity.  Using long hours alone as a measure of productivity and the basis for promotions can put talented women - and men  - who seek a more active role in addressing the demands of their families at a disadvantage.

Finally, the study authors confirm the report's conclusion that the pay gap between men and women cannot be fully accounted for by the factors traditionally identified as causing wage discrepancies, and call for an end to gender discrimination.  Among their recommendations here is a call for strengthened national legislation, citing Minnesota's State Employee Pay Equity Act as a model for correcting marketplace discrimination.  Here in Minnesota, legislators and the Pay Equity Coalition of Minnesota are already working (and are already citing the AAUW study) to expand the state government's "comparable worth" system of pay equity, an internally based job and pay evaluation approach designed to remove gender bias generated both inside the employer and outside in the marketplace, to all private companies that do business with the state.

As the mother of a smart, talented and hard-working young woman, I am particularly dismayed by the results of this study, but I wonder whether addressing the issue through regulation will produce the best outcome.  (And, believe me, nobody would stand to benefit more from legislation of this nature than compensation consultants.)  Or, would mandating a pay administration approach which ignores or supercedes market practices end up being the "Sarbanes Oxley of compensation"?  Sarbox regulations, also born of good intentions, are now the focus of numerous studies which attribute much of the loss of American's dominance in world capital markets to this set of laws - or, as Jonathan Macey put it in his April 7 Wall Street Journal editorial "What Sarbox Wrought":

Indeed, the relative decline of U.S. capital markets since Sarbox has, or should, put to bed the notion that more regulation is always part of the solution rather than part of the problem.

If not a federally mandated solution, then what?

I'm not sure there is an easy answer, but I would like to put out this strong suggestion:  That we, as those who are in a position to manage, approve or influence pay practices, had better do what we can to watch for and ensure that pay discrimination (by gender and otherwise) is addressed, wherever it exists.  The consequences of our not addressing it could be significant, mandatory changes in how our pay programs are designed and administered, and a lot less future flexibility and agility in tailoring them to organizational needs and market demands.

Comments

[Frank Giancola]

Here is a recent post from Ryan Johnson, of WorldatWork, that is relevant to your post:

Comparable Worth Is Back

April 13, 2007—Sens. Tom Harkin (D-Iowa) and Hillary Clinton (D-NY) have introduced separate bills once again advancing the notion of "comparable worth," and the Senate HELP Committee had a hearing on the topic this week.