Gender pay gap for educated women is the same as it was 20 years ago

Profile picture for user ddpreez By Derek du Preez August 22, 2016
We at diginomica have a strong focus on equality in the workplace. New research suggests that the pay gap is not improving for women that have an education and have children.

If you feel like progress is being made in closing the pay gap between women and men in the workplace, you are largely mistaken.

According to the latest research from the Institute for Fiscal Studies (IFS), women that are either mid-educate or highly educated, are over 30 years old, or have had a child, or all of the above, will continue to trail behind men’s wages.

In fact, the only pay gap that has closed over the last 20 years is for women that didn’t pursue higher education (A-Levels or higher). There is still a gap for the lowest educated women, but it has been declining - for which the answer to is likely to lie in the convergence of lower wages and the introduction of the minimum wage.

The current gap in average hourly wages between male and female employees has fallen from 28% in 1993 to the current gap of 18%. However, despite women now being more highly educated than men for the first time in history, the gap has pretty much stayed the same for those women that attained A-Levels or higher.

Want more money? Stay childless

What’s more interesting, is that the gender wage gap is relatively small or non-existent when men and women enter the labour market, and only begins to widen after women turn around 25 years old. This gap then opens up more and more from around the late 20s and gets gradually wider over the next 20 years of the life cycle.

The report states:

This is because male wages continue to increase, especially for the high-educated, while female wages completely flatline on average.

The IFS states that this is likely to do with the arrival of children. The figures show that the gender wage gap widens dramatically in the years after the arrival of the first child. Whilst the gap is around 10% up until the arrival of the first child, it remains fairly stable up until this point. However, after a women has one child there is a gradual and continual rise in the wage gap until it reaches a plateau of around 33%.

Simply put, it pays for women NOT to have a child. Something women have argued is the case for a long time.

Robert Joyce, Associate Director at IFS and an author of the report, said:

The gap between the hourly pay of higher-educated men and women has not closed at all in the last 20 years. The reduction in the overall gender wage gap has been the result of more women becoming highly educated, and a decline in the wage gap among the lowest-educated.

Women in jobs involving fewer hours of work have particularly low hourly wages, and this is because of poor pay progression, not because they take an immediate pay cut when switching away from full-time work. Understanding that lack of progression is going to be crucial to making progress in reducing the gender wage gap.

A solution?

A separate report out today, released by the Chartered Management Institute and XpertHR, also finds that male managers are 40% more likely than female managers to be promoted into higher roles. Salary data of more than 60,000 UK employees found that in the past year, 14% of men in management roles were promoted into higher positions compared to 10% of women.

According to the report, even allowing for staff turnover, men continue to be promoted ahead of women in management roles. The data found that managers that have stayed with the same employer for the last five years, 47% of men were promoted compared to 39% of women.

Essentially, all data suggests that even if women aren’t having children, they’re still worse off than men. And if they have children, they are significantly worse than men.

Watching the comments being shared across the national press today is very interesting too. There has been suggestions that the figures are simply down to women taking time out and therefore losing out on higher wages due to reduced labour experience.

There have also been suggestions that women need to simply get better at asking for promotions and higher wages - with the implication being that women are generally bad at asking for what they want.

As ever, women are being told that if they ‘lean in’ they will eventually get what they want. Try harder, make tough decisions about having children, and generally be more like men (well, that’s what I hear anyway).

Which by and large, I disagree with.

Whilst I recognise that as a white male I have little understanding of what it means to be a female employee, I have spent a lot of time thinking about this issue and the problem of equality in the workplace.

I would argue that there are other things that would greater benefit women in closing the gender pay gap, whilst still giving them the opportunity to raise children.

If we make the assumption that a company will operate more effectively if it better reflects the diverse society we live in (plenty of research to suggest that this is the case), there is a monetary incentive there for a business to encourage women into work and into higher positions.

Therefore, companies need to be proactive in addressing this gap. It won’t happen naturally, as there have been cultural forces at play for generations that suit the status quo.

Take a look at Salesforce, for example. As a company, Salesforce spent $3 million addressing the gender pay gap internally. This resulted in balancing of wages for both men and women, but it took the CEO to explicitly request for an internal analysis to be done on any pay disparity.

And it required money to be spent. Changing this requires investment and companies need to be willing to invest in their female employees.

Secondly, I know that in the UK one of the main reasons that women find it difficult come back to work and balance raising a child with the demands of a job is because the cost of childcare is so ridiculously expensive. If you’re looking at childcare for 40 hours a week - which isn’t unrealistic - then you’re looking at over £800 a month in childcare costs per child. That’s significant.

How can employees make this easier on parents? That may come in the form of providing childcare for employees, or it may mean that women aren’t penalised for spending more time working from home. Again, culture often means that the person there in person will likely be seen as the person ‘working harder’.

Given that for many jobs working from home is completely viable with technology, a focus on outcomes should really be the driver. But from experience, I can tell you that that’s just not how companies are operating.

Also, companies could put more onus on fathers in organisations to take time off when they have a child. We in the UK have the option of shared parental leave, but barely anyone is taking their workplace up on the offer. Why? People argue it is because it still makes financial sense for the mother to have more time off than the father, but this would be less of an issue if the pay gap was reduced.

Finally, this often needs to be driven from the very top of the organisation. As with Salesforce and Marc Benioff, the CEO needs to recognise the value in creating a fair and balanced company. And once that directive has been introduced, it needs to become a collective responsibility.

My take

More work needs to be done. I don’t buy that this has to remain the case. However, if organisations aren’t willing to rethink the way they operate, then we will see this pay gap persist for the next 20 years.

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Disclosure - At the time of writing, Salesforce is a diginomica premier partner.