Are Women to Blame for the Gender Wage Gap?

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Despite the complexity of the gender wage gap issue, there is one simple thing that every woman can do to minimize this issue–negotiate their compensation.

We have been hearing a lot in the news lately about the gender wage gap.  The reality of business today is that men are paid more than women…A LOT more.  By latest estimations, for every dollar a man makes, a female makes $0.79.  This is becoming such a hot topic that governments are starting to intervene.  Last month, President Obama moved ahead with plans to require that companies disclose to the U.S. federal government what they pay employees by race, gender and ethnicity.  The U.S. is not the only country to attack pay disparity head-on; Britain, Austria and Belgium are doing the same.

It is easy to point a finger at big business or blatant gender discrimination as the root of this problem that is plaguing efforts towards fair and equitable compensation.  But the gender wage gap is a much more complex issue.  There are many reasons that could explain the disparity between men and women’s pay.  Occupation segregation can explain the gender wage gap since women hold a larger proportion of lower-paying positions.  In addition, another explanation for the pay gap is that some women self-select out of certain positions and even promotions due to family obligations.

The problem with explanations like these is that they do not address why studies show that when occupations are separated by job class, the numbers show that a man is still paid more than a woman to do the same job. Claudia Goldin, a labor economist at Harvard, found that women one year out of college earn 6.6% less than men who are hired to do the same job.  After examining the salaries of female doctors and surgeons, she found that the females earned 71% of what their male colleagues made.  Females in finance made just 66% of what their male colleagues earned.  These statistics are compelling enough to expose that the gender wage gap is a real issue that we need to address.

Despite the complexity of the gender wage gap issue, there is one simple thing that every woman can do to minimize this issue–negotiate their compensation.  Linda Babcock, an economist at Carnegie Mellon and co-author of the book “Women Don’t Ask” has done extensive research on the gender wage gap and has found that men are four times more likely to negotiate their pay.  And she found that even when women do negotiate their salary, they ask for 30% less than men.  And not negotiating salary can be a costly mistake.  She found that failing to negotiate a first salary can lead to an overall loss in excess of $560,000 by age 60.  Other research shows that a woman can be leaving $2 million on the table over the course of their career if they do not negotiate their salary.

Rather than relying on the government to fix the salary inequities among genders, women can make enormous strides to close the gender wage gap now by taking charge of negotiating their salaries.  If you are unfamiliar with how to successfully negotiate, here are some strategies to help:

  1. Have a healthy view of negotiation. Negotiation is a normal part of any business agreement, especially in high-dollar transactions.  No one expects to pay the sticker price on a car or the list price on a home; instead, people accept that negotiation is all part of the process of arriving at a fair price agreed upon by both buyer and seller.  In the same way, people accept that negotiation is a normal part of the employment process.  No sales person can ever be successful when they feel guilty about soliciting someone’s business.  Similarly in negotiation, it is so important to have first convinced yourself that salary negotiation is normal and expected before you can be successful.
  2. Do your homework. Understand what the going rate is for your line of work and where you fall compared to others in your industry based on your experience, education and skills.  We are fortunate to live in a time where there is so much information at our fingertips through resources such as Glassdoor and Salary.com to adequately prepare before going into a salary discussion.  The more facts you have at your disposal when coming to a negotiation, the better prepared you will be to feel confident in your position and to support your position in the course of the discussion.
  3. Before going into the discussion, decide what your desired outcome will be. How much would you like to be paid?  In negotiation, an employer always enters the discussion knowing what the salary floor and ceiling are for the position they are offering as well as what other terms (i.e. vacation, sick time) are negotiable.  Since employers come to a salary discussion armed with this information, similarly you must come to the table with a desired outcome of the discussion based on your research.  Have a number in mind that is your target goal.
  4. Understand that the first number on the table is significant. The first real number tossed in the ring in a negotiation is the jumping off point.  Whether this first number is put forth by you or the employer, it is important to understand that this number is the basis off of which your discussions take place.  So choose this number wisely.  Or if the employer has put out a number first, choose your response wisely.  A low initial offer does not require a counter that is lower than you would like to make.
  5. Understand your floor and be willing to walk away if it is not met.  Your floor is the minimum you would be willing to accept as a salary offer.  This is the lowest you would go while still accepting the offer.   Your floor is of course based on your research, and it is important to be comfortable walking away from the offer if this minimum is not met.  While walking away may seem daunting, it is important to not settle!  From the perspective of an employer, I can tell you that far too many women accept less than what they were hoping for without ever asking for what they wanted.
  6. Negotiate anything. While an employer may not have unlimited negotiation room for salary or annual bonuses, there are a whole host of other things that are much easier for an employer to agree to that will make the position more attractive to you.  Negotiating sick time, vacation time, work hours or a remote working arrangement are all very common, and are all ways to help you to feel satisfied with the all-in value of your work arrangement.  Many companies today are getting even more creative with job perks based on what is important to employees; transportation costs, professional development, and phone bills are also examples of things you can negotiate.

As one woman to another, I urge you – understand your value.  It is important to negotiate during the employment process and to learn to do it well.  Do not confuse negotiation with being perceived as pushy or aggressive; if you come to the table with facts supporting your salary requirements, this just builds a case to establish your value.  This is so important because if women do not negotiate to earn what we are worth we are actually contributing to the gender wage gap issue.  For the sake of yourself and for women everywhere, ask for what you are worth and do not settle for less.

 

This piece is based on a talk I gave last week to the talented networkers of PVD Lady Project at their 4th anniversary celebration in Providence, Rhode Island.  Lady Project is described as an “’Old Boy’s Club’ for fabulous women” co-founded by Sierra Barter.  The movement has rapidly grown to 10 chapters across the U.S. in counting.  Learn more about Lady Project at http://www.ladyproject.org.

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