‘Missing’ Female Managers Widen Wage Gap

Pay inequity linked to fewer women in managerial jobs during child care years

By Stephen Miller, CEBS Jul 11, 2016
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Mothers in the U.S. continue to pay the price in career advancement and wages for starting a family. New research shows that women are underrepresented in managerial positions from age 32 onward, which is linked to a widening of the gender wage gap at large U.S. employers.

The Visier Insights: Gender Equity report, published in June by San Jose, Calif.-based data analytics firm Visier, uncovers a direct correlation between the "manager divide" and a widening of the gender wage gap. The report finds that eliminating the manager divide, which coincides with the years in which women typically have children, would cut the gender wage gap by nearly one-third.

"It turns out that gender inequity is not just a compensation issue, it is a problem of unequal participation of women in the higher-paying managerial jobs," said Visier CEO John Schwarz. "Having a child shouldn't undermine the earning potential of women, but it still does."

Based on analysis of a workforce database representing dozens of large U.S. enterprises, the study found that:

  • There is a pronounced dip in the percentage of women in the workforce between the ages of 25 and 40, the same age range in which women commonly have children. This dip recovers after age 39, around the same time most women with children would enroll them in primary school.
  • The difference between the proportion of men who are managers and the proportion of women who are managers grows as female representation in the workforce drops and during the key years for increased child care demands—after which time the manager divide stabilizes.
  • The gender wage gap widens at age 32, starting with women earning 90 percent of the wages of men and decreasing to women earning 82 percent of the wages of men by age 40. The timing of this widening gap aligns with a pronounced dip in the ratio of women in the workforce.
  • Manager wages are, on average, two times that of nonmanager wages.

Extrapolating from these findings, "Eliminating the manager divide during the years in which women typically have children would cut the gender wage gap by nearly one-third," reducing the gap to 10 percent across all age groups, said Josie Sutcliffe, Visier's vice president for marketing. Furthermore, eliminating the manager divide and ensuring gender pay equity in manager positions would reduce the gender wage gap by almost one-half for workers over age 32.

Closing the Manager Divide

There are a number of steps employers can take to make meaningful progress toward closing the manager divide and reducing the gender pay gap. Among the recommendations in the report:

  • Support meaningful paid parental leave that is equal for both men and women.
  • Ensure that it is socially acceptable for both men and women to take time off to care for their children and that it is socially acceptable for both mothers and fathers to make use of flexible working time arrangements to care for children.
  • Support programs that increase the availability of quality, affordable child care for all parents.

A 2015 Harris Poll survey on behalf of consultancy Ernst & Young found that 50 percent of working mothers said they took a career break to raise a child, compared with 22 percent of working fathers, the report notes.

In contrast to the parental leave situation in the U.S., Sweden's "daddy leave" policy, which was introduced in 1995 and offers financial incentives for fathers to take parental leave, has resulted in a 7 percent increase in a mother's future earnings for each additional month of parental leave a father takes.

"Given that most leave is taken by women in the U.S., the playing field is uneven for men and women," Sutcliffe said. "A clear solution, therefore, is to level the playing field for men and women and introduce paid parental leave—available equally to mothers and fathers."

A recent survey by WorldatWork, an association of total rewards professionals, showed that 82 percent of respondents offer new parents only the unpaid job-protection leave mandated by the Family and Medical Leave Act (FMLA) and any state or local laws, while 18 percent exceeded FMLA requirements and offered more family-friendly time off or paid parental leave (see the SHRM Online article "Labor Demand Gives Push to Paid Time Off Benefits").

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