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Bridging the Gender Pay Gap


Last updated 10/27/2014

This article contains information that has become outdated. For more up to date information, read the AMA Playbook's report on the persistency of the gender pay gap since this article was published. Stay connected to the pulse of the business world with the AMA Playbook.

Some trends seem not just enduring but downright stubborn. A case in point is the earnings gap between men and women in the U.S. Although women made many strides in the latter decades of the 20th century—both in and out of the workplace—most research indicates that significant pay differences remain. As employers learn more about the causes of the gap, however, there's hope that it will be narrowed in the 21st century.

A study by the American Association of University Women (AAUW), published in April of this year, indicates that wage inequities start early and worsen over time. "One year out of college, women working full time earn only 80% as much as their male colleagues earn," wrote the report's authors, Judy Goldberg Dey and Catherine Hill. "Ten years after graduation, women fall farther behind, earning only 69 percent as much as men earn."

In reaching its conclusions, the AAUW analyzed data from longitudinal studies conducted by the U.S. Department of Education. Researchers controlled for a variety of factors—such as occupation, college major, work hours, and the like—that might affect earnings. Still, females earned less. Said the AAUW, "Ten years after graduation, the portion of the gender pay gap that remains unexplained increases from 5% [a year after graduation] to 12%."

Such findings are not unique. A 2005 American Bar Foundation/NALP (NALP is an advocacy organization for legal professionals) study found median salaries for female attorneys lagging behind those of their male counterparts by $14,000 at the two-years-in-practice mark. Federal government research conducted in 2003 by the General Accounting Office (now the Government Accountability Office) controlled for a range of factors that included education, marital status, race, parenthood and more. The study found women earned 80.3% of male pay in 1983 and 79.7% in 2003.

More recently, Vanderbilt University economist Malcolm Getz confirmed gender-based pay disparities of $16,000 or more in the finance and accounting fields. And a 2007 survey by executive career Website TheLadders.com found that 70% of business leaders it surveyed online acknowledged that men and women were not paid equally for similar jobs.

Many researchers have looked for the causes of the earnings gap. While long-standing social attitudes about women probably play a part, they certainly don't account for all of it. In fact, it appears that multiple factors are to blame.

The AAUW cites such variables as whether or not a woman opts for a college education, which college she attends, the major she chooses, the occupation she pursues and whether or not she has children. A 2006 article in Public Administration Review suggests that the continued existence of glass ceilings and the "segregation of women in certain 'female-dominated' occupations" are contributing factors, along with differences in work experience and skills.

University of New Hampshire professor Allison Churilla, coauthor of a report on earnings gaps by New Hampshire's Women's Policy Institute, notes, "We found that there are two factors contributing to women's poorer status compared to men: the family responsibilities they typically shoulder and the types of occupations women tend to concentrate in."

History can be a problem, too. Since starting salaries often are based on prior earnings, women tend to begin jobs at lower pay levels than men do. "Male employees' pay may edge higher because of past salaries, [and] they may network differently and be more vocal in asking for raises," adds a July 2006 article in Principal's Report ("How Widespread," 2006).

What can employers do to help address the earnings gap? Most sources agree that they could start with a comprehensive audit of their compensation policies and practices to ensure that discrimination—either overt or unintentional—isn't occurring. "Set compensation guidelines; put any bonus, commission or other similar program in writing; keep compensation records; and do your math early," say Sikorski and Mutch (2007).

Reviewing hiring practices may be in order also, with special attention paid to starting salaries: "Salary negotiation at the hiring stage is one time where lower-salaried women have a chance to make up the gap," noted Principal's Report.

Another strategy involves educating organizational leaders about gender pay gaps and encouraging them to support female career development by expanding women's networking opportunities and ensuring that projects designed to groom future leaders are assigned fairly. Offering flexible work arrangements and, if necessary, adjusting company culture accordingly is an approach mentioned by multiple sources and one that ultimately can benefit both male and female employees emotionally as well as financially.

Ultimately, the idea is to boost the productivity of organizations by ensuring that all employees recognize that compensation is based on performance and merit rather than gender.

For more information on gender-related issues, visit www.i4cp.com

Documents used in the preparation of this article include the following:

Alkadry, Mohamad G., and Leslie E. Tower. "Unequal Pay: The Role of Gender." Public Administration Review. ProQuest. November/December 2006, pp. 888+.

Dey, Judy Goldberg, and Catherine Hill. "Behind the Pay Gap." AAUW Educational Foundation, April 2007.

"Giving Women Their Fair Pay." Knight Ridder Tribune Business News. ProQuest. April 30, 2007, p. 1.

"How Widespread Is the Gender Pay Gap?" Principal's Report. ProQuest. July 2006, pp. 6+.

"Is the Gender-Based Pay Gap a Real Issue?" IOMA's Report on Compensation & Benefits for Law Offices.ProQuest. May 2007, pp. 3+.

Jordan, Charles E., Stanley J. Clark, and Marilyn A. Waldron. "Gender Bias and Compensation in the Executive Suite of the Fortune 100." Journal of Organizational Culture, Communication and Conflict. ProQuest. Vol. 11, no. 1, 2007, pp. 19+.

Larimer, Rob. "Although Gender Pay Gap Narrows, Officials Dispute the Reasons Behind the Shift." The Colorado Springs Business Journal. ProQuest. September 15, 2006, p. 1.

"Mind the Gap" [www.management-issues.com]. April 11, 2007.

Mowry, Matthew J. "Bridging the Pay Gap." Business NH Magazine. ProQuest. August 2007, p. 18.

Sikorski, John C. and Rebecca J. Mutch. "Equal Pay for Equal Work." BusinessWest. ProQuest. February 5, 2007, p. 27.