Women Earn Less Than Men, But Why?

In a recent project with Catherine Rampell at the New York Times Economix Blog, we examine the pay differential between men and women across a set of 90 jobs.

Numerous studies have looked at the gender wage gap, including the Bureau of Labor Statistics (BLS), the New York Times, and the Census. However, the question remains, why does the gap exist?

Examining national pay differences across men and women, even by job title, can be misleading. Men and women in a sample may be different in ways that employers could legitimately pay differently.

Using our unique dataset here at PayScale, we are able to control for many outside compensable factors (experience, education, specialty, company size, etc.) in order to provide a more apples-to-apples comparison.

This allows us to give one of the strongest answers to date to the question, "If a man and woman are doing the exact same job with the exact same qualifications, responsibilities, and employer type, is the man still paid more than the woman?"

In this post, I will look at what our data says, and address some of the questions and misconceptions Economix readers have.

Are you curious if you're paid what you're worth, no matter your gender? Find out with a free PayScale Salary Report.

Do Women Earn Less than Men? <$100,000

The simple answer is typically yes, women have lower salaries than men.

(Learn about the Paycheck Fairness Act and how it may help close the gender pay gap.)

With no consideration of job title or other factors, the BLS reports women working full-time earn 80% of what men earn as of 2008. This is down slightly from a peak of 81% in 2005.

However, the size of the gap varies dramatically as more legitimate outside factors (non-gender) are taken into account, and disappears for some jobs entirely at the national level.

Our first step was to compare the pay of men and women with the same job title for 90 typical jobs. The typical female worker across these jobs earns pay that is 90% of the pay for the typical male worker, on average. Hence half of the BLS gap can be explained by men and women typically having different jobs.

Once we control for outside factors that influence pay within a job, the typical woman earns pay that is 94% of that earned by men. Looking at jobs that pay below $100,000 per year, which is where most workers in the U.S. are, the salary gap narrows even further to 96%, on average.

Therefore, for most jobs, 80% of the original 20% wage gap reported by the BLS (16%) is caused by men and women not doing the same job, with the same levels of responsibility, qualifications, and for the same kind of employer.

Being paid 4% less is real money, but this is a dramatic improvement from the 1960's, when the equal pay for equal work legislation was first passed. Back then, women earned 60% of men's earnings, and Hillary Clinton wasn't allowed to be an astronaut because she was female.

Do Women Earn Less than Men? >$100,000

As seen above, even after controlling for outside factors, women still earn less than men on average. The biggest offenders are jobs that typically pay more than $100,000. In these jobs, women earn just 87% of what men earn on average (compared to 96% for under $100,000). The following table lists the 10 jobs with the largest wage gap between men and women:

Job

Male National Median Pay

Female Controlled Median Pay

Ratio of Female to Male Controlled Pay

Chief Executive Officer

$187,000

$132,000

71%

Hospital Administrator

$108,000

$82,900

77%

Vice President of Operations

$135,000

$107,000

79%

Sales Director

$132,000

$105,000

80%

Chief Operating Officer

$149,000

$119,000

80%

Chief Financial Officer

$142,000

$118,000

83%

Marketing & Business Development Manager

$90,700

$76,100

84%

General Sales Manager

$78,300

$66,200

85%

Finance Director

$131,000

$111,000

85%

Why is it that these jobs have such a large pay differential, even when controlling for outside compensable factors?

One possibility is that higher-paid jobs often have less concrete or quantifiable measures of productivity or duties. Performance and success in these jobs are relatively subjective. Therefore, men in these jobs may be compensated better for reasons other than their qualifications.

It is important to note that not all jobs with median pay >$100,000 suffer from large gender bias. For example, the highest paid job included on the list is Anesthesiologist, where females earn typical pay 93% of typical male pay. Another example are Senior Program Managers, IT – in this case women typically earn pay 102% of male pay.

Why Women Earn Less than Men: Main Arguments

At the end of the Economix Blog entry, Catherine poses this question to readers, "How would you explain why women at the top of the income scale earn so much less than their male counterparts, even when you control for outside factors?" Numerous responses were given: some witty, some insightful, some with incorrect conclusions, and some that were just downright sexist (in both directions).

In the rest of the blog post, I will discuss the common themes in the comments, as well as provide arguments for and against certain conclusions drawn.

The main arguments given in the comments as to why the wage gap exists, especially in the higher paid jobs, fall into several categories:

  1. Women lose time in the workforce in order to have and raise children
  2. Sexism/Discrimination/Good ol' Boys Club
  3. Men are overrepresented in higher ranking positions and may tend to hire applicants like themselves
  4. Women typically do not ask for raises or push for higher starting wages

Argument #1 is (mostly) controlled for in our comparison and thus does not explain the observed earnings differentials in the controlled sample.

For example, if women on average have less time in a career than men due to maternity leave and we assume more experienced workers are paid higher, the PayScale analysis would take account of that experience difference in comparing salaries of men to women. Therefore, losing weeks, months, or even years to raising children is controlled for in the sample and thus does not explain the wage gap.

However, if women work fewer hours per week to spend more time with their children, the analysis does not control for this (as discussed below) and it may contribute to the observed wage gap.

Arguments #2 and #3 are in part subjective and cannot be controlled for in this study. Furthermore, argument #3 is an explanation as to why fewer women are in high paying positions, not why they earn less in said positions.

In the academic realm, studies on callbacks based on resumes are used to root out discrimination in the hiring process. Names on otherwise identical resumes will be changed to represent different genders. The results of these studies do find evidence of gender discrimination in callbacks, but are unable to determine discrimination in job or salary offers.

Argument #4 is a valid point and has seen play in the media before, including this article on msnbc.com which claims poor negotiating skills by women is one reason for an existing pay gap. Typically women do not ask for pay increases, while their male counterparts do, causing male pay to rise faster and by more.

As another example, the XX Factor blog discusses a book written by Linda Babcock, a professor at Carnegie Mellon. According to her research on starting salaries, Professor Babcock found only 7% of women asked for more money than their initial offer compared to 57% of men. She furthermore shows the discrepancy between male and female starting salaries is ~$4000 on average. This turns out to be almost the exact same discrepancy between the starting salary of those who asked for a raise and those who didn't. Therefore, argument #4 appears to explain at least part of the wage gap.

Why Women Earn Less than Men: A Result of Fewer Hours Worked per Week?

A caveat to the PayScale Study is our analysis does not control for hours worked per week on the job for salaried positions. For example, if the typical male CEO works 60 hours a week and the typical female CEO works 50, this analysis will say they should be paid the same amount, ceteris parabis.

However, we are not aware of many CEOs who are explicitly rewarded for the number of hours they spend on the job. :-) In other words, to be a successful CEO one may often work above and beyond the normal 40 hour work week to complete necessary tasks. Successful completion of these tasks is why they earn a high salary, not because they work longer hours.

Not taking into account hours worked per week is likely a larger issue for jobs like Detective and Clinical Psychologist, where we see an above average wage gap. In these jobs, pay is often directly proportional to hours worked. Even when controlling for other compensable factors, it may be possible that men earn a higher typical pay than women in these jobs simply because they work longer hours during the week.

Another issue of not taking into account hours worked in the pay comparison is the proven trend that women with children work fewer hours per week than men with children. In other words, women may choose to work an 80% workweek (32 hours/week) and be paid an 80% salary for doing so.

This pattern of women working less hours has been proven for doctors. This fact together with women often choosing lower paid specialties may explain the wage gap observed in the profession.

However, in this study, we did only consider full-time workers (>35 hours per week), so the differences in work week that could lead to pay differences are not from women working part-time, but would be from men working overtime.

Although we are unable to control for all differing characteristics across genders, our unique database allows us to provide one of the strongest "apples to apples" comparisons to date.

In doing this we find the typical female pay is much closer to typical male pay than the oft quoted 77 cents to the dollar. The key is examining workers within the same job, while controlling for outside compensable factors (years of experience, budget managed, number supervised, skills, education, industry, etc.).

Once we do this, we find that women in fact earn on average 94 cents to the dollar across 90 common jobs. The remaining wage gap may be a result of sexism, working fewer hours per week, the failure of asking for a raise, limitations in our model for controlling for differences, or something else.

Need relevant market data to make a strong case when negotiating for higher pay? For powerful salary data and comparisons customized for your exact position or job offer, be sure to build a complete profile by taking PayScale's full salary survey.

Regards,

Katie Bardaro
Research Analyst, PayScale, Inc.

2 Comments

  1. 2 ff 08 Dec
    okay :/
  2. 1 nn 08 Dec
    no help

Comment




  1. Please prove to us that you're not a robot: