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Women in the Workforce are Proven to Increase Business Profitability

This piece is part of our series on sessions presented at Compference19. You can register or learn more about Compference20 here

PayScale Compference19 Highlights: Amy Nelson, Founder and CEO of The Riveter, on The Power Women Bring to the Future of Work

Women in the workforce correlate positively to company profitability, yet women are only marginally represented in the C-suite and on executive boards. Mothers in particular find it difficult to climb the corporate ladder, as women with children are frequently passed over for promotions, receive lower pay for equal work, and are obstructed in progressing their careers by a lack of reasonable flexibility and accommodations for mothers in the workplace.

At PayScale’s Compference19, Amy Nelson, founder and CEO of The Riveter, led a session on The Power Women Bring to the Future of Work: Closing the Wage Gap, which drew attention to the reality of gender inequality in leadership roles while also offering practical, attainable steps that almost any organization can take to attract, retain, and leverage the power and profitability of women.

The Impact of Women on Business Results

Women are good for business.

An extensive study by Pepperdine University followed 215 Fortune 500 firms over 19 years and showed a strong correlation between promoting women to the executive suite and a 18-19 percent increase in profitability over the median Fortune 500 firm.

A working paper by The Peterson Institute for International Economics studied 22,000 companies in 91 countries and found that the typical firm experiences a 15 percent increase in profitability when it goes from having no women in corporate leadership (C-suite, Board of Directors) to 30 percent female representation.

Unfortunately, women are still not well-represented in the C-suite for Fortune 500 companies. The Peterson Institute paper also showed that almost 60 percent of firms had no female board members, just over half had no female C-suite executives, and fewer than 5 percent had a female CEO.

During her session at Compference19, Nelson shared a statistic, originally from The New York Times, that there are more Fortune 500 CEOs named John than there are female Fortune 500 CEOs in total.

Let that sink in for a minute. There are more CEOs named John than there are female CEOS of any name, A to Z.

This disturbing statistic comes from research conducted by The New York Times on gender equality in American industries called the Glass Ceiling Index. First launched in 2015, the initial data found that for every female CEO there are four CEOs of S&P 1500 firms named either John, Robert, William, or James. An update in 2018 found that there are about as many CEOs named John as there are female CEOs.

Of course, John is a popular name. It is the second most popular name for males in the United States. But Johns still only represent 3.3 percent of the U.S. population. Women make up 50.8 percent of the U.S. population.

So, what gives?

Why Women Are Underrepresented in Business Leadership

One reason often cited to explain the lack of female executive leaders in large corporations is that women frequently drop out of corporate positions in order to have or raise children — often effectively ending their careers. One shocking statistic from the footnotes of Sheryl Sandberg’s best seller Lean In is that 43 percent of highly trained women ramp off after having a child.

That’s a remarkable number.

Nelson is one of these statistics. In her Compference19 session, Nelson discussed how she founded The Riveter — a modern day union of women and allies providing community, content, resources, and working and gathering spaces, all focused on equity of opportunity for working women — after she was passed over for a promotion because of her status as a mother. At the time, Nelson was a corporate litigator working on high profile trial cases. After returning from parental leave, Nelson applied for a higher-level position only to be told that they felt she would be unable to commit to the role given her family responsibilities. In response, she resigned and started her own business. She now has four children ages five and under and has raised more than $21 million in venture capital funds, opened ten locations in seven cities across the country, and built a team of over 80 employees.

Nelson shared some other startling statistics, including that only 4 percent of small business loans go to women and that only 2.2 percent of VC funding went to female-founded companies in 2018, with less than 1 percent going to companies founded by women of color.

What this shows is that the Glass Ceiling hasn’t yet been shattered. Sexism still exists in the workforce. Women in the workforce are qualified, and they can see opportunity, but they have not been successful in securing those positions, either because of sexism and discrimination or because of a lack of reasonable accommodation after they become parents.

Discrimination is particularly in force against mothers, who must fight the Maternal Wall as well as the Glass Ceiling. Women with children are 79 percent less likely to be hired than women without children. Women with children are offered an average of $11,000 less in salary than women without children. Women with children are 100 percent less likely to be promoted than women without children.

The underlying reason for these statistics is not terribly surprising. The 20s and 30s are formative years for building a career, when both men and women are trained in the skills needed for leadership roles. However, this is also the time period when most women have children. 86 percent of women in the U.S. are mothers by the age of 44. If 86 percent of women will become mothers and 43 percent off-ramp after having children, women in the workforce are an inherent risk for any business to invest in and promote.

Or are they?


Questioning Our Assumptions About Women in the Workforce

As previously shown, women are a boon to the bottom line. The data are incontrovertible, so shouldn’t the effort be directed toward figuring out how to retain and promote women in the workforce rather than strategizing how to shortchange them in anticipation of an event that may or may not occur and may or may not impact their value even if it does?

To grapple with these challenges, we must ask complex questions about our assumptions when it comes to women, mothers, family, and work. Why is having children considered a barrier to becoming an effective business leader? What cultural values perpetuate an expectation that mothers are distressed assets in the workforce? And if a percentage of women in the workforce really are unable to commit to a career after having children, does that negate their value in business entirely? Are we missing an opportunity to realize greater returns in business as well as offer fulfilling career opportunities for a large and critical component of our society?

When Nelson went to law school, she believed that she would practice law for the rest of her career. She believes now that it was considerably more expensive for her employer to replace her than to promote her to the higher-level position for which she applied and was more than capable of doing.

Of course, not all women are career-climbing supermoms. There are women who want to be full-time mothers. There are also women who want to cut down on their hours and responsibilities when they have children. This desire drives many women to choose career paths that will be the most accommodating to family needs, such as part-time work or occupations with flexible schedules. The result is more women working positions that pay less for their education and skills than they might otherwise be capable of occupying. This is a contributor to the gender wage gap when data are not controlled for differences in position.

Discrimination against women in the workforce and the gender wage gap is not just a women’s issue, of course. Men are birthed by women, work alongside women, and share family responsibilities with women. Most households today are dual income, and shortages in that income make a difference in overall prosperity. Men are also affected by Family Responsibilities Discrimination (FRD), such as when employers deny male employees leave to take care of children and family … while allowing it for women.

Leveraging the Power and Profitability of Mothers

The solution boils down to reframing the outdated way we think about the juxtaposition of child rearing and work. They are not opposing worlds. They are not — or should not — be controlled by rigid gender norms. At Compference19, Nelson proposed some simple steps that almost any organization can take to modernize its workforce expectations and tap into the power and profitability that comes with employing women and mothers. These include:


First, we must fundamentally change the way we think about child-rearing and caregiving as the responsibility of women rather than parents. Instituting and incentivizing paid parental leave for both mothers and fathers is one way to normalize parenthood, dismantle bias, and ensure that parents of any gender are provided with support to both work and care for a family.

In addition, we must expand the support we give. Currently, the U.S. is the only industrialized nation not to automatically provide paid maternal leave. Bulgaria offers 59 weeks of maternity leave paid at 90 percent salary. Chile offers 18 weeks at 100 percent paid salary. Iraq offers 14 weeks. Through the Family and Medical Leave Act (FMLA), the United States requires only 12 weeks unpaid maternity leave for mothers in companies with at least 50 employees—and that didn’t become law until 1992. France and the UK have been offering paid leave to mothers to keep them in the workforce since World War II.

In other words, we can do a lot better.


Second, we must redefine how work is evaluated, evolving to a project or value-based model rather than one tied to onsite desk time. Studies show that people tend to be more productive when working remotely than when coming into an office, and modern technology is making remote work both more feasible and more effective than ever before. With cloud technology, we can access files securely and efficiently from anywhere. We can conduct meetings via video. We can communicate and collaborate through Slack and other team-based productivity tools.

According to Nelson, the benefits to offering remote work options are many. These include reduced office costs, reduced staff turnover, a broader pool of skilled workers to choose from, and reduced sick leave. In return for work flexibility, employees also benefit from reduced costs in childcare, reduced costs associated with travel and commute, and increased job satisfaction.


Thirdly, modern workplaces can reduce employee churn by ensuring there are accommodations and support structures for mothers. These include mothers’ rooms for breastfeeding and pumping, allowing babes in arms in corporate settings where reasonable, and offering employee assistance programs to help new parents navigate parenthood challenges, identify childcare options, and provide other support.

Naturally, the resources that will be possible to provide will depend on the business, the industry and the job performed. Some employers will remain unable to accommodate certain measures, but with flexible and creative thinking, many of the barriers that prevent mothers from remaining in or re-entering the workforce can be mitigated or removed.

If these measures seem unrealistic or restricted to white collar corporate office environments, remember that they are not exactly new — not even in the United States.

After all, Nelson’s company, The Riveter, is an homage to Rosie the Riveter, the World War II icon invented by the U.S. government to persuade women to join the workforce and take on jobs that had previously only been done by men when those men were away at war. These included positions at ordnance shops, steel mills and shipyards as well as non-factory positions. To make this possible, the government offered extensive subsidized childcare. Through the Lanham Act, a national network of child development centers was funded in every state except New Mexico.

If we want to incentivize women to stay in the workforce and bolster the bottom line with their considerable talent, we just have to bring some of that old ingenuity back.

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Amy Stewart
Sr. Content Marketing Manager at PayScale
Read more from Amy

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