According to the World Economic Forum, there is no country on earth where women make as much as men for the same work. In their 2016 Global Gender Gap Report, it is estimated that, at current rates, it would take another 170 years to close the global pay gap between men and women.
The pay data for Australia certainly isn’t bucking this trend. It doesn’t matter which way you look at it, there is consensus that the gender pay gap exists. Even though the overall gap in Australia has reduced slightly over the past two years, according to data from the ABS women still make 16.2% less than men.
Yet, somehow, talking about the pay gap can still be controversial.
Too often in my job, I am called on to counter arguments about the gender pay gap being a “myth”, or that “the gender pay gap figure isn’t real; it’s a manipulated, oversimplified figure that doesn’t represent real situations”.
Earlier this month the organisation I lead, Diversity Council Australia, released an important report together with KPMG and the Workplace Gender Equality Agency (WGEA). Called She’s Price(d)less – the economics of the gender pay gap, it presents a picture of the economics underlying the gender pay gap.
We asked KPMG to decompose the factors that make up the pay gap so that we could understand exactly why it persists and what we can do about it.
The resulting report counters the myths and provides the evidence that refutes a whole range of other “reasons” put forward about women earning less because they “choose” to work part-time or take time out of the workforce to care for family members.
And my hope is that, with this evidence in hand, we can have a rational conversation based on data, sound research and with the facts in mind.
So here goes.
Women are paid less because they ‘choose’ to work part-time
Our report showed that there has been a significant decrease in the impact of part-time employment on the gender pay gap. It has actually declined from 14% to 4%, in part because of an increase in higher-paid part-time roles for women. This is good news as it means that much of the hard work that has been done on improving flexible work options is starting to pay off.
The idea of “choice” becomes questionable, however, when one considers that overwhelmingly it is still women who take on the bulk of unpaid caring roles within families. There are a number of reasons for this (historical and social norms playing a significant part) but, given that men are paid more than women, for many families it just does not make financial sense for men to work part-time as it will result in a bigger cut to the family budget.
Women are paid less because they ‘choose’ lower-paying jobs
Our report showed that industrial and occupational segregation continue to be significant contributing factors to the gender pay gap. But while occupational segregation is decreasing (i.e. the different types of roles men and women do), the impact of industrial segregation (i.e. the different industries that men and women work in like mining or healthcare) has increased.
Women are not “choosing” to work in lower paying industries but, when large numbers of women start to work in an industry, they all get paid less. As Rhaina Cohen explained in an article in the Atlantic:
A study [by the sociologists Asaf Levanon, Paula England, and Paul Allison], which examined census data from 1950 to 2000, found that, when women enter an occupation in large numbers, that job begins to pay less, even after controlling for a range of factors like skill, race and geography. Their analysis found evidence of “devaluation” – that a higher proportion of women in an occupation leads to lower pay because of the discounting of work performed by women.
So, in other words: 50 years of data proved that the more women join an industry the less everyone gets paid.
If that’s not convincing enough, Cohen also pointed to a study showing that higher the percentage of women in an industry the lower its perceived “prestige”; and a study from 2007 that found that even where men’s low-wage jobs demand far less in terms of skill, education and certifications than women’s low-wage jobs, the male-dominated ones usually command higher hourly pay.
Women don’t have the same levels of education as men
Despite women reaching higher levels of educational attainment, there has not been an associated decrease in the pay gap between women and men. This graph from the KPMG report makes it clear:
The pay gap figure is bogus because it does not reflect ‘like-for-like’ pay gaps for employees in the same or comparable roles
It must be said that while it is illegal to pay women less than men doing the same jobs, it is still happening. WGEA’s annual report shows that, even in their first year in the workforce, male graduates earn more than female graduates entering the same roles. Recent estimates from Australia suggest that for partners in top firms, the like-for-like gap is up to 5%.
Women don’t negotiate for better pay so it’s their fault if they’re paid less
Again, it’s not true to say women don’t ask for raises. They just don’t receive them at the same rate as men. And there is evidence that when women do negotiate, they are actually penalised.
A recent study from Cass Business School, the University of Warwick and the University of Wisconsin shows that women ask for wage rises just as often as men but men are 25% more likely to get a raise when they ask. The study collected data from 4,600 Australian workers across more than 800 employers and found no difference in the likelihood of asking between the two genders. The authors suggested that it might actually be “how” women ask, that a lack of assertiveness in negotiations is often cited as a potential reason why women might make less money than men for similar work.
As WGEA explains, negotiation is usually associated with agentic, and therefore masculine, behaviour. When employers negotiate with women, they tend to offer less and are more likely to resist influence attempts. Studies have shown that women’s reluctance to enter negotiations is partly because they are penalised more than men for doing so. The more women anticipate backlash, the less inclined they are to initiate negotiations.
In other words, women are asking for raises but, if they ask too assertively, they’re turned down for being too pushy, and if they don’t ask assertively enough, they aren’t good negotiators so they don’t get a raise.
The pay gap reflects choices women make, not discrimination
First of all, there’s that questionable word, “choice”, again.
Secondly, what our study showed was that sex discrimination continues to be the single largest factor contributing to the gender pay gap, increasing from 35% in 2007 to 38% in 2014.
Sex discrimination in the report accounts for everything that is left after all the other factors that have an impact on the gender pay gap, such as age, tenure, time out of the workforce, occupation, industry, part-time work and sector, have been taken into account. This means that more than a third of the gender pay gap is the result of gender discrimination and unconscious bias.
In other words, women are paid less than men simply because they are women.
So if the new report She’s Price(d)less reveals anything above and beyond what we already know about pay inequity in the Australian economy, it is that we now know exactly what constitutes the gap.
Not only should this be enough to silence the sceptics but it should shine a light for individuals and their organisations – and indeed the wider community – on where to start fixing the problem.