Three-Quarters of a Man

05/25/2011 02:45 pm ET

That's what women in the U.S. are worth - economically speaking. On average, women earn 77 cents for every dollar a man earns. It's similar in other countries. In the United Kingdom, the pay gap decreased to 22 percent this year - that means women there earn 78 pence for every pound sterling earned by men. Interestingly, the only groups of employees wherein women earn more than men are part-timers. But in the financial services sector, a gender-balanced industry employing 4 percent of the workforce in the UK, the pay gap is enormous. According to a recent survey by the Equality and Human Rights Commission, women in the UK financial services sector earn an average of only 47 percent of men! If you look at "annual basic earnings" women earn 61 pence for every pound sterling earned by men, which is bad enough. But when you look at the bonus schedule, it's outrageous. In nearly all cases, women's performance-related pay was less than men's. On average, women earned 2,875 pounds against men's 14,554 pounds in bonus pay -- that's an 80 percent pay gap. Are women in this case worth only 20 percent of a man?!? How can such discrepancies continue to exist? I have some ideas:

  • First of all, women start their working careers earning one-quarter to a third less than men. Many studies have demonstrated that women don't ask for higher pay in their first jobs. Linda Babcock, a Carnegie Mellon University economics professor, says that men are eight times more likely than women to negotiate their starting pay packages. This gets compounded as women progress through their careers, since they consistently don't ask for raises, promotions, better job assignments and recognition. But men do.
  • Second, women take time off to care for children and/or adult relatives. This not only prevents them from keeping their swords sharp, but can also penalize them severely in the work force re-entry process.
  • Third, women are often clustered in low-paying jobs, a phenomenon known as occupational sex segregation. Certain jobs (think nursing, teaching, secretarial work) are predominantly held by women and the pay is correspondingly low. The jury is still out on whether the low status of a particular job causes fewer men to apply and more women to enter that occupation, or conversely, whether reducing the pay of a previously high-paying job causes more women to apply. In the finance sector, men hold two-thirds of manager and senior positions, while women tend to perform lower-level (and lower paying) administrative roles.
  • Fourth, lack of transparency in salary, bonus and promotion decisions severely hinders women's ability to advance. When salary and bonuses are discretionary - decided by one or a few people, usually men, using criteria and benchmarks that are often subjective - women tend to get the short end of the stick. Similarly, the mirror theory is often at work when it comes to promotion decisions. People tend to promote those who look, act and think like they do.
  • Fifth, certain "extreme" industries, like finance, investment banking and media, that require 60-plus workweeks, intense worldwide communications, the need to be "on" at all times and a love of the adrenaline rush, do not foster female-friendly working conditions. You can pretty much forget the idea of work-life balance. According to Silvia Ann Hewlett, who coined the "extreme jobs" term, 80 percent of extreme job workers are men and most of the remaining women do not have children. But a study published last month in the Academy of Management Journal shows that even women who do not have work/life conflicts are penalized in pay and promotion decisions because their managers perceive they have conflicts. [1]
  • Sixth, bias and direct discrimination are factors. Numerous studies over the past two decades have demonstrated subtle and not-so-subtle evidence of bias against women in (1) recruitment and selection processes, (2) promotion and pay decisions, (3) preconceptions and stereotypes about women's suitability for leadership roles, and (4) exclusion from informal communication networks. But how can you prove bias exists? One way is to see what happens when you eliminate the potential. Before 1970 less than 5 percent of musicians in U.S. symphony orchestras were women. In 1970 symphonies began to implement "blind" auditions whereby each candidate for a position would walk into the room in stocking feet and perform while hidden by a screen. Today, women musicians comprise one-quarter of the total.
Some say that the gender pay gap was mandated by a higher power and we should all just relax and forget about it. According to Leviticus (27:1-4) the Lord said to Moses that a man is worth 50 shekels of silver and a woman 30 shekels. In that respect, we've come a long way from 60 percent to 77 percent. But personally, I think we can - and should - do much better.

[1] "Bosses' Perceptions of Family-Work Conflict and Women's Promotability: Glass Ceiling Effects" by Jenny M. Hoobler, Sandy J. Wayne and Grace Lemmon. Academy of Management Journal, 2009, Vol. 52. No. 5, 939-957.