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Study: Global Gender Pay Gap Has Narrowed but Still Exists

Here are some reasons why the difference between what women and men earn is shrinking

A man is standing on top of a stack of gold coins.

There's good news and bad news about the gender wage gap, the difference between men's and women's average hourly wages across an employer's workforce.

The good news: The pay gap has narrowed slightly in the United States, the United Kingdom, France and Australia since 2016, according to a new, multicountry study. In the U.S., the gap is smallest in biotech and pharmaceuticals and education, and the health care and insurance industries have seen the most improvement. 

The bad news: Significant pay gaps persist between men and women around the world, even after adjusting for worker and job characteristics. The adjusted pay gap ranges from a high of 6.6 percent in the Netherlands to 3.1 percent in Australia. Among 22 industries in the U.S., the gap is largest in media and retail sectors. 

The findings in Progress on the Gender Pay Gap: 2019 are based on more than 500,000 base-pay reports that employees in eight countries shared over the past three years on the employer review site Glassdoor. The U.S. sample contains 426,512 salary reports from anonymous full-time workers.  

The Mill Valley, Calif.-based company also is one of the world's largest job and recruiting websites. The study looked at both the unadjusted and adjusted pay gap for workers in Australia, Canada, France, Germany, the Netherlands, Singapore, the U.K. and the U.S. 

The unadjusted gap is the overall difference in average pay for men and women. The adjusted pay gap takes into consideration an employee's age, education level, years of work experience, occupation, industry, location, company and job title and the calendar year of the reported salary. But even after applying statistical controls for worker and job characteristics, wage gaps remain. 

Possible Factors for the Shrinking Gap 

Nearly two-thirds of the U.S. adjusted pay gap can be attributed to occupational sorting and differences in worker characteristics, such as age, Glassdoor said. Women ages 18 to 24 experience a smaller gap than women ages 55 to 64, as older women are more likely to face job discrimination and to have taken time off for childbearing.

"Occupational sorting" refers to women gravitating to or being primarily recruited for certain jobs that have different pay scales and require different levels of education and experience. This segregation is not purely by choice, said Daniel Zhao, senior economist for Glassdoor.

"Women and men may be pushed into different industries or jobs by a variety of factors, such as an employer's lack of paid family leave," he noted. "Occupational segregation is not the woman's fault; it's not the responsibility of women to solve the pay gap on their own. People should be able to work in whatever industry or job they want and expect to be paid equally." 

So what factors may be contributing to the narrowing pay gap? 

1. Legislation promoting transparency. In Europe, the gap reduction may be attributed in part to new laws. On April 4, U.K. employers with more than 250 employees will have to publish their second annual gender pay gap reports. The U.K.'s Government Equalities Office has issued guidance on reducing the gender pay gap, and companies have taken different approaches to doing so, such as offering returnships, mentorships and sponsorships.

In the U.S., there has been growing public and shareholder pressure on companies to disclose gender pay gaps, and it's an issue that has gotten increased attention since a record number of women were elected to Congress in 2018.

2. Shrinking differences in education and experience. The percentage of the pay gap explained by differences in education and experience shrank from 14 percent to 7.9 percent since Glassdoor's 2016 study as women made up an increasing share of university students and workers gaining experience in the labor force.

3. Women entering male-dominated fields. Women's participation in the labor force has grown faster than men's in recent years. That, along with a tightening labor market leading to more women entering traditionally male-dominated industries, are factors in narrowing the gap, according to Glassdoor. The New York Times reported that women in sectors that are at least two-thirds male are seeing faster employment growth. 

However, only 11 percent of women work in male-dominated sectors; in those fields, women are not necessarily entering the same jobs that men are occupying; and median earnings for women working full time in traditionally male jobs were lower than men's earnings, the Times reported. 

4. Women asking for more money. A 2019 study by Hired—a global tech employment marketplace based in San Francisco—says women are starting to ask for better wages. Its findings are based on salary and job-offer data for tech jobs in the U.S., Canada, France and the U.K. and a 2019 online survey of 2,600 tech workers in those countries.

In 2019, women are asking for 4 percent less money than men—a 2 percent improvement from 2018, Hired found. The data suggests, the report noted, that is in part because women are beginning to ask for their market worth.

[SHRM members-only toolkit: Managing Pay Equity]

"Women are being offered less because they are asking for less. Once we account for a candidate's asking salary, the wage gap essentially disappears," said Nina Roussille in the Hired report. She is a doctoral student in economics at the University of California Berkeley Opportunity Lab and is using Hired's data to research wage inequality in the tech industry. 

Glassdoor found, however, that when job applications from equally qualified men and women seeking similar jobs are compared, the gap in pay expectations is minimal—less than 1 percent. 

Tips for Employers 

Here are some ways employers can help close the pay gap:

1. Share salary information early. Sharing salary information directly with candidates can be a powerful cultural differentiator for employers looking to attract talent in a tight labor market. Employers can start by revealing pay ranges in job descriptions online, during the interview and with existing employees.

This transparency helps with retention as well as recruitment, Zhao said.

"People have options, and if employers are not careful about fostering a positive and inclusive employee culture, they risk losing the great talent they have," he said.

2. Re-evaluate the hiring pipeline. Employers should consistently examine their recruiting sources to ensure they are attracting, hiring and retaining a diverse workforce.

"If you're relying on [employee] referrals, generally your employees are going to refer people who are like them, and that can perpetuate the existing culture," Zhae said. Additionally, make it clear to recruiters that you want them to look at more diverse talent pools and post job openings to attract diverse applicants.

3. Promote empowering policies. Have policies that allow flexibility in work hours or paid family leave to ensure that both men and women can balance work and family responsibilities.

4. Pick the right auditing approach for your company. The most important thing to know about the pay gap is that there is no best way to measure it, Glassdoor's chief economist, Andrew Chamberlain, Ph.D., wrote in a 2017 report, How to Analyze Your Gender Pay Gap: An Employer's Guide.

"There are different ways to measure pay gaps, each with their own pros and cons," he wrote. "As an employer auditing your gender pay gap, it's important to understand the differences between different measures, and pick the approach that's right for your company."