Is Pay Inequity The Result Of Individual Choices? Yes And No
Welcome to my weekly Q&A roundup. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. So each week, I pick one question that I believe others would find most instructive and publish my response to it here.
The purpose of this weekly tradition is transparency and inclusion.
Transparency: a behind-the-scenes look at my day-to-day.
Inclusion: bringing others along on the journey.
What Causes The Gender Pay Gap?
I know women face obstacles and discrimination that most men don’t, but at the end of the day isn’t the gender pay gap mostly a result of individual choices?
The pay gap is a tangible expression of years (decades, centuries, actually) of pent-up inequity. And at the end of the day, we can’t use a single determinant to fill the margin between men’s and women’s median earnings. That’s why you might have heard people, including myself, call pay inequity a “systemic issue.”
Before I explain some of the mechanisms that drive pay inequity, I’ll share with you this instructive parallel from a book I read while on vacation last week. Atomic Habits by James Clear—have you heard of it? Here’s what James says about how our milieu influences who we become:
“Environment is the invisible hand that shapes human behavior. We tend to believe our habits are a product of our motivation, talent, and effort. Certainly, these qualities matter. But the surprising thing is, especially over a long time period, your personal characteristics tend to get overpowered by your environment.”
The parallel: context matters. It matters because it shapes our values, our beliefs, and yes—even our individual decisions. Our environment ultimately shapes who we become. In other words, we commit the fallacy of oversimplification when we examine individual choices in a petri dish.
We need to take a context-based approach to explain the pay gap. Here is one way our environment modulates our decisions and creates the pay gap.
Context Matters When Talking About The Gender Pay Gap
Society (still) links a woman’s purpose to motherhood. Two-thirds of Americans believe that kids with two parents fare better when one parent stays home, with 45% saying the better option is for mothers to stay home. Only 2% say the better option is for the fathers to stay home. This expectation creates a feedback loop:
1. Workplaces undervalue women’s potential because they’re seen as less committed to their jobs.
“She could make a great director, but she’s newly married and likely to have kids soon.”
Nearly 70% of working Americans believe moms in the workplace are more likely to be passed up for a new job than other employees. Moreover, women job applicants who appear not to be moms are twice as likely to get an interview compared to women applicants who appear to be mothers.
2. Caretaking and household demands inhibit professional dynamism.
“I’d love to take on a high-potential project, but I’m not able to travel to meet project stakeholders because I need to be home at night with my kids.”
During the pandemic, 26% of men with children compared to 13% of women with children received pay raises while working remotely. And moms with young kids lost their jobs at three times the rate of dads with young children.
Was this because moms were less committed to their jobs? Or was it because their careers have been rendered less valuable and thus it was economically advantageous for them to drop out of the workforce? Evidence points to the latter: working moms are the most productive employees in the workforce over the course of their careers.
The symbiosis between gender norms and perceptions of one’s capability translates into an aggregate earnings gap of $18,000 per year between working moms and dads. And yes, the size of the gap changes when intersected with race and ethnicity. The annual wage gap for Latina mothers, for instance, nearly doubles to $35,000.
P.S. Ever wondered why more than 30% of all women-headed families, 38% of all Black women and Latina-headed households, yet “only” 17% of all men-headed households live in poverty? The wage gap is one reason why.
Here Are A Few Other Facts You Should Know About Pay Inequity
→ At current rates of progress, the aggregate pay gap won’t close until 2111. For Latinas, it won’t close until 2197. For Black women, it won’t close...ever. (You read that right.)
→ The higher women set their educational aspirations, the greater the pay inequity they’ll experience. Women with bachelor’s degrees earn 71.4% of what men with bachelor’s degrees earn, and women with graduate degrees earn 69.1% of what men with graduate degrees earn.
→ Men with associate degrees earn the same as women with bachelor’s degrees.
→ After controlling for college major, occupation, number of hours worked, months unemployed since graduation, grade point average, industry, undergraduate institution, age, geography, and marital status, there is still a 7% earnings gap between men and women college graduates.
→ Ten years after graduation, the earnings gap between men and women increases to 12%.
→ 25% of women compared to 5% of men have earned less money than other genders doing their same job.
→ As much as 51% of the gender pay gap is attributable to occupational segregation. Women-dominated fields pay lower wages than men-dominated fields even though the jobs require the same amount of effort, experience, and education.
→ A 30-year-old woman making $60,000 a year who steps out of the workforce for 3 years will lose:
$180,000 in wages
$198,913 in potential wage growth
$160,317 in retirement assets and benefits
Tip: Use this calculator to determine the lifetime cost of taking time out of the workforce based on your age, salary, years out of the workforce, anticipated retirement age, and 401(k) contributions.
Final Thoughts On The Pay Gap
If you started investing $500 per month at age 20, you’d be a millionaire before your 57th birthday (assuming an annual 7% return on your investment). A relatively small, consistent investment grows over time. That’s the magic of compound interest.
Except that it’s not magic. It’s math. In the same way, seemingly innocuous, even invisible instances of bias and inequity grow over time to create the gender pay gap.
Key takeaway: The gender pay gap is the compound interest of bias, social norms, and public policy. It’s an external representation of the internal inequities that influence the systems governing our society.
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© 2021 Katica Roy™, Inc.