The Gender Pay Gap Is Also an Opportunity Gap

The current business climate has created a new focus, and even spurred new laws aimed at achieving equal pay, but not enough progress has been made. PayScale’s new research found that the gender pay gap still persists into 2018.

Looking at over 2 million people who took PayScale’s online salary survey between January 2016 and February 2018, we found that women earn 77.9 cents for every dollar earned by men across the entire labor market.

Why is the gender pay gap still so large? It’s because women face an opportunity gap.

Women are poorly represented at higher levels of the talent pipeline, and their pay reflects that reality. The typical 20-to-29-year-old woman earns 81.8 cents on the dollar compared to her male counterparts. The gap widens to 76.1 cents for women aged 30-44 and 69.1 cents for those 45 and older.

If employers care about closing the gender pay gap, they need to focus their attention on solving the opportunity gap.

Gap worst at the top

Our research shows that men move into more senior positions at significantly higher rates. By mid-career, men are 70% more likely to be in VP or C-suite roles than women. And by late career, men are 142% more likely to be in VP or C-suite roles, which are typically the most highly compensated positions at a company.

On the flip side, women over age 30 are more likely than men to remain in individual contributor positions. By the age of 45, 59% of women are in still individual contributor positions vs. 43% of men.

Career interruptions impact pay

Between November 2017 and February 2018, PayScale surveyed roughly 46,000 respondents evaluating new job offers and asked several questions related to their current employment status.

This research found that women tend to leave the workforce more often than men, and their breaks tend to last longer. Women who are returning from a period of unemployment are 7 percentage points more likely than men to have been out of the workforce for more than a year (17% of women versus 10% of men). Furthermore, women are five times more likely than men to take breaks from working to care for children. 

We found that when employees leave the workforce for one year or more, their pay upon returning to work is 7% less than an employee who is currently employed when seeking a new job. Since women tend to leave the workforce more often than men, and their breaks tend to last longer, they are disproportionately penalized with lower pay due to career interruptions.

The benefits of diversity

Our research suggests that if employers are serious about closing the gender pay gap, they need to go a step further to determine if women have the same opportunities for advancement as men at their organization. A disparity in the representation of men and women on executive teams and boards has a huge impact on the overall pay gap.

It’s well established that diversity of thought leads to better problem solving. When we collaborate with people of different genders, sexual orientations, ethnicities and race in our workplace, we make better decisions which produce better results. But that’s not enough, know that study after study for more than a decade have found  that having increased female leadership on your team or board leads to increased financial results.

What you can do

1. Audit your pay practices

If you think there aren’t problems with pay equity in your workplace, check again. PayScale found data showing that employers and employees don’t agree on whether there is a problem with gender equity issues in the organization. Or if they do agree that there is, they disagree about how well companies are addressing the issues.

You can’t improve what you don’t measure. It’s important to audit your pay practices. Look at your workforce, segment by segment (by department, by role, by location) to see if there’s disparity in pay between your male and female workers. Make sure that there are no inequity trends. To uncover gender bias in compensation, you can calculate the compa-ratio for men and women and see how they compare. A lower compa-ratio for women indicates that pay decisions are not being made equitably.

Once you’ve audited your pay practices, you’ll want to share this data with employees. By sharing pay data with employees and committing to addressing pay inequity, your workers will be more satisfied. Having a reputation of paying fairly and committing to equality is a positive for your diversity recruiting efforts. PayScale’s  Compensation Best Practices Report found that in 2018, 28% of organizations are planning to conduct a racial and/or gender pay equity analysis. 57% of organizations aim to be transparent with their employees about their compensation strategy and pay ranges.

2. Audit your talent acquisition pipeline

The state of gender equity in your organization starts with your recruiting pipeline. You’ll want to see how women are represented in your talent pipeline at key stages. For example, look at the application rate and conversion rate for your positions by men and women. If you find that women are underrepresented in the application stage, finding ways to source more female applicants will have a meaningful impact on gender equity in your organization.

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Cultivate female leaders in your talent pipeline

Next, evaluate the opportunities you provide to employees within your organization. What’s the ratio of women to men in leadership roles, for example? How about in your higher-paying job functions? You can grow your pipeline by changing your hiring and promotion practices, and by offering sponsorship programs, unconscious bias training, engaging senior management, and working with companies that specialize in helping those returning to work.

3. Make workplace flexibility the norm

Your employees, both women and men, want work-life balance. With advancements in technology, you can offer workplace flexibility, and make it the cultural norm for employees to take advantage of it. Similarly, think about policies that will help balance the responsibilities of caring for children  to alleviate the career and pay impact taking time off to care for them has on mothers and fathers. These options could include benefits such as paid parental leave regardless of gender, on-site childcare, or subsidized child-care.

By giving the parents in your workforce the flexibility they need to work either part-time or full-time, you will gain their gratitude and maintain access to a highly skilled workforce.

5. Make diversity a core value

Companies have come to realize that in order to compete, they must view diversity as an asset and create a workplace that accepts all individuals and encourages networking and life-long learning. In fact, a few companies have already publicized their diversity statistics and some have even set gender diversity targets. To make diversity part of your company DNA, it’s important to engage senior leadership to improve diversity. Cultural change comes from the top down.