Gender Pay Gap

What Is the Gender Pay Gap?

What is the gender pay gap? The story you think you know—that women earn 76 cents on the dollar compared to men—doesn't paint a complete picture. PayScale's report, Gap Analysis: What Equal Pay Day Gets Wrong, is packed with data to help you learn the whole truth about women, work, and pay equity.

Tune in to our Facebook Live Broadcast at 11 a.m. PST on Tuesday, April 4—Equal Pay Day—as our panel of gender equity experts explores issues surrounding the Gender Opportunity Gap and Gender Pay Gap. You'll be able to submit questions and receive answers live, in real time. (If you missed the event, don't worry; we'll be posting the video and highlights once the event is over.)

The Uncontrolled and Controlled Gender Pay Gaps

The first thing to know is that, no matter how you slice it, there is a gender pay gap. Do men really make more than women? Yes. The gender pay gap is very real. But the best-known stat—that women earn 76 cents for every dollar earned by men (according to PayScale's latest data)—only tells part of the story. This stat is representative of the uncontrolled—or "raw"—gender pay gap, which looks at a median salary for all men and women regardless of job type or worker seniority. When looking at the uncontrolled gap, it is true that the median salary for men is roughly 24 percent higher than the median salary for women.

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But what often gets lost in translation is what the uncontrolled gap truly represents—that women are less likely to hold high-level, high-paying jobs than men. The more stubborn gap is one of opportunity rather than "equal pay for equal work." When we compare men and women who hold the same jobs, the median salaries are significantly closer and the pay gap becomes less substantial. But even then, there is a gap: the controlled gender pay gap. Nationally, when we control for job title, job level and other important influencers of wages (like years of work experience), women still only make 98 cents for every dollar earned by men.

There is some good news, however. In 2016, both the uncontrolled and controlled gender pay gaps shrunk, compared to 2015. Slightly. And that's a sign we're moving in the right direction.

The Opportunity Gap

As we mentioned above, women are significantly less likely than men to hold management roles. This "opportunity gap" is a major reason for the existence of the uncontrolled gender pay gap. Our data show that at the start of their careers, men and women tend to work at similar job levels, most often entering the workforce at the individual contributor level. Over the course of their career, both men and women move into manager- or supervisor-level roles, and eventually to director- and executive-level roles. But men appear to move into these roles at significantly higher rates than women.

Men are 85 percent more likely than women to be VPs or C-Suite Execs by mid-career, and 171 percent more likely to hold those positions late in their career. Conversely, by the time they reach age 60, more than 60 percent of women are still working in individual contributor roles, but less than 45 percent of men are still in this type of job.

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Workers in higher-level roles almost always earn a higher salary, so the lack of women in these roles means the average woman is almost certainly destined to make less than the average man.

Perceived Employer Action and Its Impact on Employee Engagement

Part of our survey examined whether employees, both men and women, thought their employers were taking steps to address the gender pay gap and make male and female salaries—and opportunities for promotion—more equitable. Overall, about 17 percent of men believe there is an issue and their employer is proactively addressing it, while roughly 10 percent of women feel the same. Again, education level plays a role in this perception; generally, the more educated a woman, the more likely she is to give her employer a low rating on addressing workplace gender inequality, with female MBAs and female PhDs reporting the highest levels of dissatisfaction; 37 percent of female MBAs reported little to no action is being taken by the employer, and 36 percent of female PhDs reported the same.

Here, we see another important difference between men and women's perception of workplace gender inequity. Male MBAs and PhDs were most likely to report that their employers were taking action to address the gender pay gap, with 35 percent and 37 percent feeling this way, respectively.

Concerningly, new PayScale research indicates employees are more likely to identify gender inequity issues at their place of work than are their managers or company leaders. Or, if the presence of issues is acknowledged by the company, employers are more likely than their employees to report that those issues are proactively being addressed.

Roughly 57 percent of employers said there is no gender inequity issue at their business that needs to be addressed, whereas only about 47 percent of employees felt the same way, a "perception gap"—or "corporate chasm"—of about 10 percent. When gender inequity issues were acknowledged, 16 percent of employers said that their organization was proactively addressing them, while only 14 percent of employees agreed, a gap of 2 percent.

And employers, take note: if your employees don't think you're doing enough to address gender inequity, they might already have one foot out the door. And that goes for women and men. For employees of both genders, the less perceived action being taken by their employer to close the gender pay and opportunity gaps, the more likely the employee is to plan on actively seeking a new job in the near future. If employees believe their employer is taking no action to address gender inequity, 71 percent of women and 74 percent of men plan to find a new job within six months.

Despite the existence of the gender pay and gender opportunity gaps, chivalry, it would seem, is not dead.

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How Education Influences Perception of the Gender Pay Gap and Opportunity Gap

Overall, when asked if they thought their gender had influenced whether they had been passed over for a raise or promotion, more than 18 percent of women answered in the affirmative; only 3 percent of men believed they had been denied a raise or promotion because of their gender. This difference is even larger among more highly educated employees; while only 13 percent of women with no more than a high school degree believe their gender has negatively impacted their career, over 32 percent of women with a doctoral degree believe so. And a staggering 36 percent of female MBAs believe they have been denied a raise or promotion because of their gender. In comparison, only 5 percent of male MBAs believe their gender has negatively impacted their career.

The Gender Pay Gap by Industry

Regardless of industry, both the controlled (median salary for men and women who have the same job titles) and uncontrolled data (the median salary for all men and women, regardless of job type) show that men make more money than women. But depending on the industry, the gaps do vary in size.

The industry with the largest uncontrolled gender pay gap is Finance and Insurance, in which the typical woman's salary is roughly 29 percent less than that of the typical man's salary. The smallest uncontrolled gender pay gap is observed in the Business and Support Services industry, where women make about 7 percent less than men.

The largest controlled pay gap is found in the Mining, Quarrying, and Oil and Gas Extraction industry, a historically male-dominated industry where women make about 7 percent less than men for doing the same job. The smallest controlled gap is in the Educational Services industry, where women earn about half-a-percent less than men on average.

It's worth noting that as women move more into historically male-dominated industries, the median salary tends to decrease, as reported by The New York Times. Conversely, as men move into traditionally female-dominated industries, the trend reverses, and the median salary tends to increase.

The Gender Pay Gap by State

Nationally, when exploring the uncontrolled gender pay gap—which compares the median salary of every working woman to the median salary of every working man, regardless of job title or level—men make more than women in every U.S. state. Wyoming has the biggest uncontrolled gap, with men making a whopping 29 percent more than women. Wyoming is also home to a big chunk of the oil and gas industry, which is the industry with the largest controlled gap, as reported above. The state with the smallest uncontrolled gender pay gap is Vermont. Still, even in the famously liberal Green Mountain State, women still make about 15 percent less than men.

The controlled gender pay gap data paints a more equitable picture; in a few states, women actually out-earn men when they have the same job title and we control for other wage influencers. In Vermont, Rhode Island, Connecticut, and The District of Columbia, women make more than men, when they're working in the same jobs. The controlled gap is worst in Louisiana, where men make more than 7 percent more than women doing the same work.

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Also interesting, when we asked our survey respondents whether they believe their gender has impacted their career progression, the highest percentage of women who said they were passed over for a raise or promotion because of their gender are in Utah (30 percent), Washington, DC (27 percent), and Alaska (25 percent).

Working to Address Gender Inequity Benefits Men and Women, Employees and Employers

Fortunately, working toward gender equality benefits employee and employer alike; employees who have faith their employers are working to address the pay and opportunity gaps are significantly more likely to be engaged, and significantly less likely to be seeking a new job. As our data shows, we seem to be taking small steps in the right direction; both the controlled and uncontrolled gender pay gaps shrunk ever so slightly between 2015 and 2016. At the current rate, the American Association of University Women predicts we'll achieve pay equity and close the uncontrolled gender pay gap by, oh, the year 2152.*

If we want to get there sooner, there are steps both employees and employers can take. Female employees need to advocate for themselves and make sure they're taking on roles and responsibilities requisite for career advancement. As Facebook COO and Lean In author Sheryl Sandberg advises, speaking up will keep women front of mind when opportunities for promotion arise. Women can also ensure they're being paid fairly by using the PayScale Salary Survey to find out what other employees with the same job title are making. Male employees, too, should advocate for female colleagues and help them advance their career.

PayScale Insight

As for employer actions, according to the Harvard Business Review, creating college recruitment programs focused on attracting female candidates, or mentoring programs for junior-level female employees have been shown to diversify management tiers within a number of well-known companies. Ensuring social accountability—via the hiring of a diversity manager or creation of a diversity task force—can also help; when managers who may be averse to the idea of promoting women are asked to explain their decision making, they're found to be less likely to act on bias. And publicly holding the entire company accountable, by releasing gender equity reports online, is another way to make sure your business is working to close the opportunity gap.

If you're manager or leader who's concerned there's a gender inequity issue at your company, read PayScale's whitepaper, Pay Equity Action Plan: Why Fair and Equal Aren't the Same Thing, which provides some great tips on how employers can solve gender inequity issues.

Bias in the workplace is a persistent problem. But solving that problem, and closing the gender pay and opportunity gaps, benefits everyone. And if that's not persuasive enough, it also benefits the bottom line.

Don't forget to tune in to our Facebook Live Broadcast at 11 a.m. PST on Tuesday, April 4 - Equal Pay Day!

*Though their predictions are similar, the AAUW does not use PayScale's data set.