Current Perceptions on the Gender Pay Gap

Current Perceptions on the Gender Pay Gap

The idea that a “gender pay gap” exists is nothing new. It is a hotly debated topic which has gained the increasing attention of employers across the U.S. in recent years. The frequently-cited statistic says that the average women’s salary comprises 75-80% of men’s earnings – but is this really the case?

In order to objectively measure and assess this phenomenon, we must use valid, accurate data. Until very recently, this data has not been available to us, but times are changing. Now, we are better able to apply robust and effective quantitative metrics to the gender pay gap.

Equal Pay Day

On April 10th of each year, Equal Pay Day brings awareness to the gender pay gap. It is representative of the 100th day of the year, and 100 divided by 365 equals 27%. The gender pay gap is commonly understood to be equivalent to this magnitude (though it is typically presented as 75-80%). It is concluded through the following line of thinking: Compare the average annual pay of all working women with that of all working men, and we find that women’s pay is roughly 75 to 80 cents to the dollar of men’s.

A Closer Look

The aforementioned figure has drawn criticism within recent years. Publications such as Fortune, Time, and American Enterprise have called to attention some of the oversights of which this formula is guilty. What, in particular, is missing from the approach?
For starters, gender has only very recently been factored in as a data element in employer-based compensation surveys. For another, comparing all women’s annual pay to all men’s annual pay fails to address components such as education, experience qualifications, and matching against precise job descriptions. A more comprehensive and sophisticated approach is needed if we are to derive conclusions on the gender pay gap from hard data.

Many sources have aimed to deconstruct the raw pay gap by factoring in elements such as education, job levels, and experience. The findings are varied, but show that the actual pay gap is much smaller than the raw pay gap. Specifically, the new wave of compensation surveys is now shedding light on some of the inconsistencies between men and women’s pay. Findings show that there are far fewer women than men holding executive and board positions, and that a pay gap still exists at these levels. With that said, the findings are often consistent in showing a more significant raw pay gap and a much smaller adjusted gap.

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