Women Make Less Than Men: 5 Things HR Needs to Do Right Now to End Pay Inequality

Posted on Monday, April 23, 2007 by Frank Roche

Unexplainable Pay Inequality in 2007
Women make less than men. In 2007. When controlling for all factors. How is that possible? Do you know anyone who actively and consciously pays women less than men? Well, it happens.

Women Earn on 80% Of What Their Male Counterparts Earn Right Out of School
The American Association of University Women released a new study that shows that women make less than men right out of school, continue to fall further behind as their career “advances,” and it’s not pretty. The AAUW reports:

In the report, Behind the Pay Gap, the AAUW Educational Foundation found that just one year after college graduation, women earn only 80 percent of what their male counterparts earn. Ten years after graduation, women fall further behind, earning only 69 percent of what men earn. Even after controlling for hours, occupation, parenthood, and other factors known to affect earnings, the research indicates that one-quarter of the pay gap remains unexplained and is likely due to sex discrimination. Over time, the unexplained portion of the pay gap grows.

This seems like an issue that HR should have solved a long time ago. How can it possibly be in the days of discrimination testing and pay surveys that gender pay differentials are still so large (or different at all)? It’s astonishing.

It’s Time for HR To Take a Stand on Pay Inequality
You know, I can practically understand how there could be gender pay inequalities in composite (for non-normalized data). Men don’t take time off for having babies, they tend to not be the primary caregivers, and for that, they stay in the workforce and get more promotions and money. But it just doesn’t reconcile when it starts out with inequalities right out of college. How in the hell can that be?

5 Things HR Needs to Do Right Now to End Pay Inequality
It’s time for HR to take a stand. To stand up and say “It’s our responsibility to provide equal pay for equal work.” That it’s not acceptable to pay women less than men right out of school. To think it’s just okay that men make more. Here are 5 Things HR Needs to Do Right Now to End Pay Inequality:

Do a normalized study of pay equity in your organization. Find out if your organization’s results mirror the AAUW findings. If they do, be afraid, be very afraid.
If you’re paying women less than men for equal skills and experience, then fix it. Today. Don’t pull that “We need to reconcile this over years” BS. You have to fix it now. Best time to plant a tree? Ten years ago.
Put gender-based pay inequality on the discussion for each and every pay strategy session that you have with other senior managers.
Ask yourself, “With all the data and testing that we do, how could it be that women make less right out of school?” Think about the culture of your organization. If you talk the talk about diversity, do you walk the walk and pay fairly?
Scream from the rafters that you won’t tolerate gender-based pay inequality, make it a much-discussed policy, and fire people who think it’s okay to pay men and women differently for the same job.

The Equal Pay Act of 1963 (U.S.) and 1970 (U.K) is decades old. Maybe it’s time to just get with it and comply. Doing the right thing is always the right thing to do.

User Comments

Steve Wilson

Apr 24th, 2007

I’m glad that you pointed out the effect of composite data over time (men work more hours, etc) because that does have a significant impact on salaries over time.

As for starting salaries, most companies do not have a fixed salary for a position, but rather a range. That range can sometimes be several thousand dollars. The initial offer is usually not at the top end of the range, meaning that companies leave room to negotiate salaries. In his book “Compensation” (McGraw Hill Irwin, 2005), Milkovich cites research that suggests that men are more likely to negotiate for a higher salary.

Thus, one possible explanation for the gender difference among recent grads is that men simply ask for more money.
Frank Roche

Apr 24th, 2007

Steve, that is an excellent point…and maybe some advice for newly-graduating women: Ask for more. Well said.
Joe smith

May 8th, 2007

I completely disagree here… The reason women make less than men is not due to some “conspiracy” to hold women down. It is simply a supply demand issue. Because most women leave the workforce at some point, or have other items that they consider important, the workplace compensates them differently. There is no one in the back room trying to make women make less.. The is such a stupid think to think…..

Let the free market work. Do not add another worthless law or policy that will accomplish absolutely nothing longterm…
Cielo Heart

May 14th, 2007

Wow Joe Smith, you are a complete idiot.
Kat

Jan 29th, 2008

Look, women negotiate less because for a given position, because for most jobs, especially traditionally male jobs, if it came down to a man or a woman with equal credentials, the man would be hired, no questions asked. Both male and female managers do it.

Therefore, in order to make herself more desirable for a position that she knows has competition, a smart woman would probably not push the issue of money as much as a man would. It is a free market economy, and free markets are not always fair.

I can speak from experience because although I went to a top-10 school, with a degree in engineering and very respectable grades, I was unable to find an engineering job for 5 years. Granted, the economy has been bad for manufacturing, and I saw many people get laid off, but I had to take lab jobs and sales jobs to pay rent. Even then, when I replaced a man in one job, I found out later that he had made an extra $0.50/hr from the get-go. That’s what they had offered him.

Believe me, when I finally had some serious interest from a potential employer, I wasn’t about to push for a measly extra $2-3K/year, and risk losing the job altogether. I took the attitude that I would be rewarded when I had paid my dues and proven myself capable.

Unfortunately, large corporations tend to give small, incremental raises to everyone, regardless of the marketplace, so I am looking again.

Still, now that I have some experience, I feel that I can be choosier on my next job, but is my salary even close to what my male peers from college are making? Not on your life. In fact, on at least two interviews when the salary question came up, I quoted a very reasonable, well researched range for the geographical area, and the tone of the interview changed. I could tell they weren’t going to call me back.

Companies get away with this because the people who they don’t hire don’t have information about the process. People who they do hire are discouraged from sharing salary information with their colleagues. Even then, if you notice any differences, you assume that it was something in the other person’s background that earned them higher pay. But if they really valued their female employees, they would make sure to pay them what they are worth.
McArthur

May 3rd, 2008

It is very probable that difference in entry level jobs is due to the willingness to negotiate. 2-3K may not seem like a lot at the time, but the difference is accrued over raises/promotions of your career with that company, and don’t forget the difference it makes to your retirement fund.

This also applies a few years in the job, when pay compression starts kicking in. Men are still more likely to negotiate about money. Companies are not going to voluntarily do anything like offer women more pay unless they are under the minimum in the pay range (green circle pay). Assess the situation and see if you have any leverage to negotiate for a raise. Unfortunately men are still perceived to have an advantage in a negotiation situation, therefore negotiation skills can be critical for women to close the pay gap.
kapeters02

Oct 22nd, 2008

I have really found the above comments interesting. As a small business owner, and previous recruiter to some very large (fortune) organizations, in my experience 98.9% of the time there is roughly 3-8k wiggle room when it comes to an offer. However only 5% ask for more after an offer is made. Organizations are “in it” to get the best person at the rate they deem reasonable with some flexibility.

I think most people are uncomfortable negotiating anything, and therefore don't ask for a higher salary when an offer is made. If an organization wants, they typically won't withdraw an offer if you negotiate compensation in a professional way. I would say that a lot of “bickering” over compensation will make the future employer wonder if your in it for the money, or the job. No one wants to hire someone just in it for a bi-weekly paycheck. If your able to explain why an increase is justified, you may get a return phone call from HR with an increased offer.

Additionally, a good human resource rep or recruiter sets a “stellar” candidate up to accept an offer during the first conversation. The interviewer knows how much is available for the opening, and sets the tone of future conversations by addressing compensation right off the bat. Don't get me wrong, if you hear “we can't offer that kind of compensation” they typically can't. But what you aren't hearing is that they may have some flexibility. You may not realize it, but compensation is being addressed during every communication you have during your interview process.

Kristin Bolinske
Frank

Oct 23rd, 2008

Good points…it's the wiggle room that matters….and people need to know how to negotiate. And women need to know this even more because starting out behind means they will fall behind even more as time goes by. Even up early and get what's coming to you.
Miami Catering

Nov 2nd, 2008

The American Association of University Women released a new study that shows that women make less than men right out of school
cvharquail

Jan 29th, 2009

Frank — this is a great post, not only because you put organization-wide Pay Equity as part of HR's responsibility but also becuae your action steps make sense.

If HR managers want to be influential in corporate strategy and in helping the organizai5ton achieve its mission, then HR should take system-wide responsibility for all pay, promotion, training, recruitment, efforts — and pay equity is a big part of that.

In addition to pay equity, HR managers should also keep track of how assignments are distributed… my own research (many years ago) demonstrated that pay differences were due to unconscious differences in assignments. Male and Female managers at the same level were systematically assigned to different 'quality' accounts– The men got Tide detergent, and the women got Banner bath tissue (ever hear of that brand? no?)

Remember that pay differences, even when based on 'fact' like faster increase in sales, often also depend on other decisions, like assignments, training programs, mentoring, etc., that are subjective and subject to gender bias.

The action steps are great, though. Have you seen any HR depts. put these into action and make a difference?
Frank

Jan 30th, 2009

Hi….I went back and re-read this…and it still makes my blood boil to think people aren't doing something like this. With Ledbetter being enacted, I say don't do it at your peril.

Thanks for your excellent thoughts on this. Interesting take about assignments…not something I considered, but will now. Very good thinking. I appreciate that!
Steven R

Mar 10th, 2009

Do some research and then come back and write something as dumb as this. Young men do make more money then young women. The stats are these for every $.92 cents a woman makes a man makes $1.

Instead of looking at the superficial level. Take a look at the actual facts. For example take a look at young doctors on average a young male doctor works 500 more hours, yes I repeat 500 more hours than young woman doctor.

Why because the fact is men work for longer hours and stay at jobs longer. So, if it starts an a young age for men and women are getting off to a slow start it’s no wonder why men make more money.

Most importantly women are happy with the money they are making. They feel like they earned that money and a majority stated they were fine with their salary. The question that needs to be asked is why is what someone makes so importnat? When it’s a fact that money does not equal happiness?