Will the Gender Pay Gap Shrink in the Future?
Will the Gender Pay Gap Shrink in the Future?

Will the Gender Pay Gap Shrink in the Future?

Around the time when women have children, their pay decreases an average of eight cents below a man’s, but can the U.S. make steps to change this prejudice?
October 20, 2016
8 mins read

The Next Step for the U.S.

Around the time when women have children, their pay decreases an average of eight cents below a man’s, but can the U.S. make steps to change this prejudice?

By Lindsey Davis, Iowa State University

America has made great strides over the decades to make society more equal and fair, gay marriage rights being a recent example, but the country still has a long way to go.

It’s 2016, and women still face unequal treatment and pay in the workplace. To baby boomers and those who were alive during the time when women were expected to stay at home and take care of her children, this may not come as a surprise. But to younger generations and millennials like me, the thought of one gender being paid less than another just because of differences in genitalia is exacerbating.

Visier is a company based in Vancouver that provides workforce analytics to businesses, and they recently concluded a yearlong study on the gender wage gap using anonymous data from its customers, mostly Fortune 1000 companies. The detailed report was based on an analysis of Visier’s workforce database that contains information on 165,000 employees from dozens of U.S. companies.

Josie Sutcliffe, vice president of marketing at Visier, was part of the core research team that looked at the issue of pay inequality in the workforce. She said that customers who invest in Visier want to have a complete picture of pay equity within their organization.

“When companies come and buy our solutions, they’re basically wanting to enable this datafication and they’re wanting to make more informed, more insight-based decisions,” Sutcliffe said.

According to the latest U.S. Bureau of Labor Statistics, when all full-time salaried women are compared to all full-time salaried men, women earn an average of 82.5 cents to every dollar earned by men. At all ages, women earned less than men. Yet, Visier’s findings showed a unique piece of evidence that illustrates why such a profound wage gap exists in the workplace.

From age 32 onwards, the gender wage gap grew.

Women earned 90 cents to every dollar up until their early 30s, but after that, the wage gap expanded to 82 cents on the dollar by age 40. Why such a change?

Visier found that around the time women have children, there is an underrepresentation of women in manager positions. This study is the first to show that the manager divide does exist, and it relates to the exact time a woman starts to have more responsibilities with children and at home.

“When you make a decision to have a family, you are more likely to be impacted by that decision in terms of perhaps having less opportunities to become a manager than a father would be,” Sutcliffe said.

On average, managers make two times more salary than a non-manager. Through their 20s, women hold the same amount of manager positions as are their male counterparts. Yet, from their late 20s onward, around the time when women have children, the manager divide grows and finally stabilizes around age 40.

“If women are suddenly not getting as many opportunities to become managers, then their ability to make more money over their careers in diminished significantly,” Sutcliffe said.

The report also discusses how in the 1970s, Sweden became the first country to change its maternity leave to parental leave, meaning leave was available for use by both mothers and fathers. However, the share of fathers taking the leave stalled at six percent until 1995, when the country introduced “daddy leave.” This initiative created a monetized incentive for fathers to take parental leave. More fathers began taking leave because of this. As a result, for each additional month that the father took of parental leave, mothers made almost seven percent more in their future earnings.

The United States is the only developed country without mandatory paid parental leave, although some states do implement it on their own. If legislature looked to Sweden as an example, the gender wage gap in America could potentially narrow. Having a more balanced childcare system between father and mother could help women begin to earn more.

At the end of the report, Visier offers suggestions for companies, and really society in general, to help combat the gender wage gap. One of these suggestions is that paid parental leave should be available to both men and women.

Promoting more social acceptance for fathers to take this leave would also help.

Further proposals include implementing blind screening of resumes, using the Rooney Rule (for every manager position open, consider one woman and one underrepresented minority in the slate of candidates), support programs that increase quality, affordable childcare and start teaching children at a young age to eliminate gender bias and social taboos associated with career choices.

Sutcliffe notes that there is a real movement happening around equal pay right now.

“In fact, this has been a hot topic at the White House for the past few years. There’s new pay equity reporting laws that are going into effect next year that will require employers of a certain size to report on pay to ensure pay equity,” Sutcliffe said.

The state of Massachusetts already passed a law that makes it illegal to ask how much an employee candidate made at their previous position. This aids women especially because they may already be experiencing either intentional or unintentional pay bias. By making it illegal to ask how much they made, some of this bias is eliminated.

Many American businesses and legislature need to continue, or start, making improvements to combat the gender pay gap. Companies that use Visier’s solutions show that people do really care about the issue and seek to make changes, which is a promising development.

Lindsey Davis, Iowa State University

English and Journalism

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