Women are winning the numbers game in the workforce. They now fill almost half of the country’s managerial jobs. In 1999, about 60% of females, 16 years of age or older, worked outside the home, up from 20% at the turn of the century.
Source: Business Week
Despite equal representation among the ranks of wage earners, however, women continue to come up short in their paychecks. For the past two decades, optimists could take solace in the narrowing wage gap. For every dollar earned by a white man, a white woman now earns $.78. This figure represents a big improvement from the $.63 white women earned relative to white men in 1975.
Source: US Department of Labor
But recent trends give us reason for concern. The rate of improvement has slowed dramatically. Working from a lower base, white women made up $.11 in the 1980s, but only $.04 cents during the 1990s. And the statistics are worse for minority women: An African-American woman earns $.67 for every $1 a white man earns, while her Hispanic sister earns only $.56.
Source: US Department of Labor
The government’s General Accounting Office reports that in seven out of ten industries the gap has actually started to widen. Some gains have held. By 2000 women almost reached parity in educational services, taking home 91 cents on the dollar, up from 86 in 1995. But the big picture is hardly rosy. Over the same period, for example, a female manager in the entertainment and recreation services earned 62 cents for every dollar a male manager made, down from 83 cents in 1995.
Given the data, it’s surprising to discover that by a good margin most female managers think they have reached wage parity with their male colleagues. The statistics are sobering: 70% of female executives think they’re paid as much as males; 78% of men agree. The facts, however, show that women in management take home only 62.7% of what male managers earn (Source: Gallup, American Management Association).
Realities and Myths Behind the Persistent Wage Gap
Like all entrenched patterns, the gender gap in wages is supported by both myth and reality. Some of the realities behind the differential require policy changes at the highest levels.
The myths, however, operate under the surface and color the perception of the wage gag—among men and women.
- Gendered notions of the value of work
Traditional "women’s work" tends to be in the helping and support professions. These jobs are not yet considered comparable in worth to the work that men do.
To the degree that women are clustered in lower paying positions, they may not think that they have much bargaining power in bridging the gender gap in pay. They compare their salaries to what other women are making, not to what the job should command. In negotiations, when you don’t think you have much clout and are in a low-power situation, you can be overly reluctant to push for what you are worth
- Interrupted careers
Women are also more likely than men to work part-time, take time off for family reasons, and to be the primary caregivers for their children or aging parents. This affects not only their take-home pay, but their career opportunities as well. Childless women, for example, currently earn 90% of their male counterparts’ salaries.
- Work is seen as a choice for women, a necessity for men.
Forty-one percent of working women head their own households—they are single, divorced, separated or widowed—and 28% have dependent children. Yet American culture still buys into the myth of the male breadwinner.
- It’s easier to say no to a woman.
People—men and women—assume that a woman will sacrifice her own needs for the sake of a good relationship and not push for what’s important to her. When a woman is perceived to be accommodating, it’s harder for her to get others to take her demands seriously or, in parallel, all too tempting to take the path of least resistance and not make them.
- Money is not a high priority for most women.
Money may be only a factor for women in salary negotiations, not the determining one. They may value other elements in a benefit package—time, ability to telecommute, etc. That does not automatically correlate to the prevalent assumption that women don’t care about being paid fairly for the contributions they make.
The Cumulative Price
Contrary to folk wisdom, women are just as likely as men are to negotiate compensation. The problem is, they don’t realize the same results from their efforts. When men negotiate an entry salary or a raise, they achieve on average a 4.3% increase from the initial figure. By contrast, when women negotiate, they realize only 2.7% more. This gap adds up.
Over the span of a career, the lag translates into about a 35% wage differential that can be traced back to starting salaries. According to a recent study, if current wage patterns continue, a 25-year-old woman, who works full time, will earn $523,000 less than the average 25-year-old man will by the time they both retire at 65. That’s a lot of money.
But the discrepancy affects more than a bank account or financial security. Salaries are important. They are a good index of the value an organization puts on your skills and contributions. In turn, they shape an individual’s notion of self-worth.
Narrowing the Gap
What can an individual woman do when she bumps up against the wage gap? Plenty.
- Take stock
Know precisely what skills, talents, and experience you bring to the table. Pay as much attention to your assets as your weaknesses. Once you identify your weaknesses, don’t dwell on them; consider ways of overcoming them. Get additional training where your skills could use some shoring up; figure out what strengths provide a counterbalance to a perceived weakness. Tie those skills and talents directly to what people are looking for.
Women often begin negotiations without the solid information about comparable salaries and pay scales that would allow them to be confident the demands they are making are both legitimate and realistic. Instead, they tend to compare their salaries to those of the other women in their field or organization and not to the full band characterizing the field.
Find out what your experience and talents command in the marketplace generally—don’t just swap stories with other women. Salary figures are readily available across a wide spectrum on websites like monster.com and hotjobs.com and in university placement offices. Talk widely to others in the industry. Tap your informal networks to find out about a specific company, whether you are thinking about joining its ranks or are up for a performance review. The more you know, the more easily you can defend a salary demand. When you can’t figure out your worth, your chances of getting it are slim.
- Develop alternatives
When you must accept what a prospective employer or a superior puts on the table, you are pretty much at his or her mercy. But if you have the possibility of another job offer or opportunities in other sectors to explore—even if they are not exactly what you want—you still have the luxury of choice. You are not held hostage to another person’s generosity.
Aggressively pursue those options; they give you greater flexibility, a better sense of the marketplace for your skills and experience, and confidence in what they are worth. When you meet challenges, this knowledge will help you push back.
- Set realistic and defensible goals
Worries about encouraging unrealistic expectations for future performance can prevent women from setting their goals high and pressing those claims. For a variety of other reasons, women tend to bargain themselves down even before they open discussions. Instead of mentally whittling away at your demands, set the goals high and then test whether they are defensible, whether they can be supported by performance records and other informational resources.
- Demonstrate value
Especially when the playing field is uneven, you must be prepared to position yourself to advantage. Going into a job interview or a performance review, know what you bring to the table and what you have accomplished. Lay out in specific terms what that experience could or has meant to the company and attach a price tag to it. Think of alternative ways of being compensated, not just a high base salary. Suggest a bonus contingent on performance, for example.
Be prepared to defend that number with supporting facts
and don’t be surprised when a prospective employer or superior wants to bargain lower.
The gender gap in wages will not be closed overnight. As recent events show, the current backsliding must be stopped. Individual women, knowing what they are worth and ready to defend that value, can move to reverse the once-again widening gender gap in salaries—one interview and one performance review at a time.
© The Shadow Negotiation, LLC.
About the Authors:
Deborah M. Kolb is professor of management at the Simmons Graduate School of Management and founder of its Center for Gender and Organizations. She is also a senior fellow and former Executive Director of the Program on Negotiation at Harvard Law School. She holds a Ph. D. from MIT.
Carol Frohlinger is the founder of Crossell, Inc., a consultancy focused on advancing women in business. She has worked with major companies to identify and solve performance management problems. She has designed, developed and delivered training courses on negotiation, sales, sales management, leadership and team building. She holds a JD from Fordham University Law School.
Judith Williams is the founder of a not-for-profit corporation dedicated to the study of organizational change and how women can promote it. She has worked in publishing and investment banking and holds a Ph. D. from Harvard University
Kolb and Williams co-authored the award-winning book The Shadow Negotiation, named by the Harvard Business Review as one of the top books of 2000 - and the expanded paperback edition, Everyday Negotiation: Navigating the Hidden Agendas in Bargaining, published by Jossey-Bass.
In 2001, Kolb and Williams teamed up with Carol Frohlinger of Crossell, Inc., a consultant in corporate training, to form theshadownegotiation.com. The site offers the first courses on negotiation designed by women for women. The interactive courses, available online or in CD-ROM format, feature practice cases taken from real-life situations. To learn more about current research or the challenges and opportunities women face at the bargaining table, visit the authors’ website.