50% of the workforce, 80% of the value

A story appearing n the June 29, 2010, edition of the Post-Bulletin – “Women’s pay, power still lag” – discussed a report by the University of Minnesota Humphrey Institute’s Center on women and Public Policy. The report found that women’s pay for equal work remains significantly less than men’s. In Southeastern Minnesota the gap is narrowest at 80%. Though that is an improvement in the situation, there is still a long way to go.

My research on women’s equality has focused on glass ceilings in American business and uncovering the real causes of the barriers that keep women out of corner offices. At present there are 82 men for every 100 board seats in America’s boardrooms on the elite list of America’s 100 companies. Women hold 12% of all S&P 500 corporate board seats. 15 Fortune 500 companies have female CEOs. Less than 10% of CEOs in either the Fortune 500 or Fortune 1000 are women. These figures show us glass ceilings have created and sustained barriers that keep women out of upper executive positions. However, the more telling numbers are these:

40% of women financial executives perceive a glass ceiling, but only 10% of their male counterparts do. 66% of female financial executives said women face one or more obstacles to success in finance, but only 38% of male financial executives said women face such difficulties. 70% of female executives and 57% of male executives believe an invisible barrier – a glass ceiling – prevents women from getting ahead in business, according to a study of 1,200 executives in eight countries, including the United States, Australia, Austria, and the Philippines. 73% of male CEOs believe that the glass ceiling is no longer a problem for women, while 71% of women trying to break through glass ceilings said it is.

In the context of women in executive positions, there exists a profound “perspective gap”. Beyond the lack of women in upper executive positions there also exists a considerable pay gap. Globally, women make 78 cents for every dollar earned by a man. The pay gap is not simply a matter of gender bias, though that does play a role. The other factors that play a part in the pay gap are women opting out and women accepting less than what they’re worth.

Women who opt out of the workforce – even temporarily – do so because they want more balance in their lives or because the cost of rising to the top is too high. Women today are challenged, too, with being single mothers who have to balance both the public and private skies and have to make hard choices regarding which sky gets priority at a given moment. In 1975, 45% of women in the workforce had young children, compared to 70% by the year 2000. In 1975, 33% of young women with children younger than three were employed compared to 45% being employed in the year 2000.

Women who take time off from their careers to have and raise children find themselves at a competitive disadvantage when they decide to resume their careers. During the time women are away from the workplace to have and raise children, their male counterparts continue on their journey uninterrupted. Women coming back after time away find their peers have passed them on the way up the corporate ladder and on the pay scale. Women who choose a circuitous career path are often penalized for doing so.

Beyond gender, one of the biggest challenges for women is to figure out what they’re worth and stop taking less. For years, the disparity in pay was due to built-in biases but, in some cases, women are accepting less than they deserve. For example, let’s say Bob is Vice-President of Marketing at XYZ Widget Company and he retires, creating an opening for his job. Bob’s yearly salary was $92,500. The company decided to fill Bob’s vacant position by promoting Rita. This is Rita’s first opportunity at an upper executive position. The company offers her a yearly salary of $85,000. This is more than a $20,000 bump in pay so Rita accepts the position and the offered salary. The company has saved itself $7500 in salary for the same position and Rita undervalued herself in the process, not earning the same salary her predecessor did. This is not uncommon for women in business who are so eager for the opportunity that they shortchange themselves financially in the process, without knowing they’re doing so or being reluctant to negotiate a better salary in fear the job offer might be rescinded.

There are some encouraging signs in the battle for equal pay. In 1979, women brought home only 68 cents for every dollar earned by a man. By the year 2000, women 25-34 earned 82 cents for every dollar earned by a man on average. One of the factors in this generational increase is attributed to the fact that, in 1975, 18% of women ages 25-34 had completed four years of college. In 2000, 30% of women 25-34 completed a degree. Furthermore, the Paycheck Fairness Act is now circulating through Congress.

If signed into law, the PFA would replace the Equal Pay Act of 1963. The Paycheck Fairness Act would update the previous law, creating stronger incentives for employers to follow the law, empower women to negotiate for equal pay, and strengthen federal outreach, education, and enforcement efforts. If passed, the law would also deter wage discrimination by strengthening equal pay violations. Many argue the new law is needed because, almost 50 years later, the Equal Pay Act of 1963 has failed to live up to its billing. When the Equal Pay Act was signed women were making 59 cents on the dollar in comparison to men. In the 47 years since the law was passed, women have only narrowed the gap by about 20 cents! While the Paycheck Fairness Act is another step toward leveling the playing field, we cannot rely on legislation alone. Women and men must work together for equality in the workplace, whether it is the number of women in executive positions or their compensation. Action is needed now so that our daughters, granddaughters, sisters, and nieces will not have to bear the legacy of unequal pay for an equal day’s effort.

Women should not have to wait an additional 50 years for another 20-cent raise.