Women, money and the pay gap

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You’ve probably heard the staggering statistic: Women working full time in the United States typically are paid 80 percent of what men are paid, a gap of 20 percent. That means for the same work, women make 80 cents and a man makes $1. According to the American Association of University Women (AAUW), the pay gap can also be calculated for each state. In 2015 in Maine, a male’s median annual earnings was $46,934, whereas a female’s median annual earnings was $36,841—giving us a 78 percent ratio, which falls short of the national average.

Despite the gains women have made in the workforce, the pay gap persists. And the pay gap is worse for women of color. The AAUW research study, “The Simple Truth about the Pay Gap,” states among full-time workers in 2015, Hispanic and Latina, African American, American Indian and Native Hawaiian and other native women had lower median annual earnings compared with non-Hispanic white and Asian American women.

So what are the reasons behind the pay gap? Some theories blame wage secrecy and blatant discrimination, but other researchers point to lack of confidence (in negotiating) and the negative stigma associated with women discussing finances. According to a Fidelity Investments Money FIT Women study, the majority of women hold back when it comes to talking about money. Eight in 10 women claimed they have refrained from and felt uncomfortable discussing their finances with friends and significant others.

There is also an observation, as noted recently by Sallie Krawcheck, the former president of Global Wealth and Investment Management at Bank of America, that women simply don’t ask. In their book, “Women Don’t Ask,” Linda Babcock and Sara Laschever highlight multiple studies that demonstrate women’s reluctance to negotiate. In one example with male and female masters’ students, the female students were likely to accept the first pay offer, while the male students were eight times more likely to attempt negotiating a higher starting pay. Furthermore, in a recent Glassdoor study about salary negotiations, “68% of women accepted the salary they were offered and did not negotiate, a 16-percentage point difference when compared to men (52%).”

When discussing this topic with a friend, she said to me, “But weren’t we brought up this way? To not push back? To be thankful for having a job at all [after the financial crisis]? I was told it was rude to discuss money and finances, so how was I supposed to learn to fight for my salary?” I couldn’t agree more. Truth be told, I didn’t negotiate my starting salary, so now I’m playing catch up and trying to spread the word to women everywhere: ask questions, do your research and negotiate. But some societal norms about the genders need to change along the way.

There has been a social media push to take back the word “bossy.” When a young boy takes charge, he is called a “leader,” yet when a girl exhibits the same behavior she is branded “bossy.” It gets worse as women climb the corporate ladder. According to a Harvard Business Review story, high achieving women experience social backlash when they hit career milestones because their successes—and the behaviors that often come with it, like assertiveness or competitiveness—violate societal expectations about how women are supposed to behave. If a woman isn’t acting within the female norm— kind with her communication, nurturing, patient, etc.—she is disliked. And for most, discussing money is considered more masculine, so it’s not a shock that women shy away from discussing a topic (i.e. negotiation) where they fear backlash.

So what can be done to help close the pay gap? The Fight for Fair Pay initiative urges companies to conduct salary audits to proactively monitor and address gender-based pay differences. For individuals, AAUW offers free online negotiation workshops for salary, benefits, and promotions, and websites such as the Daily Worth and The Muse offer practical advice. Last but not least, if you’re interested in this topic at the federal level, the Paycheck Fairness Act would improve the scope of the Equal Pay Act (which hasn’t been updated since 1963). Read more at: fightforfairpay.org.

Negotiation is key to closing the pay and value gap in the workplace. If you have one takeaway from this article: men think they deserve it and they ask for it. So should you.

Katie Shorey is a Maine Women Magazine advisory board member.

1 COMMENT

  1. The foundational article is flawed (AAUW) – the study does not control for time in workforce and choices in occupation. You avoided obvious economical truths in your argument. This is a classic apples to oranges debate based on emotional biased data selection. When you control for age, degrees, and time in the workforce you’ll find there is no discernible wage gap. This is not a hard concept – if I as an employer could hire 4 women who can do the same job as 5 men (80% rate), of course I would do that because I’m in the profit business, but, this is not a market norm and fundamentally not true. Please tell me you understand this. If you are interested in the studies, let me know and I’ll supply. Note: I’m an economist – articles like this kill me – you may be out of your academic swim lane here.

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