Pay gap worst for women at highest levels of education

01 April 2016

  • Shainaz Firfiray says pay gap still perseveres at highest levels of education
  •  WBS academic blames gender discrimination and unconscious bias for this
  • She argues women less likely to negotiate the best deal for themselves
  • Narrowing pay gap is critical to employers seeking best talent in the future

WBS academic Shainaz Firfiray says the gender pay gap still perseveres, especially at the highest levels of education, due to gender discrimination and unconscious bias. Here she discusses just why there is still a long way to go in order to achieve gender equality when it comes to pay.

Significant increases in female educational attainment and entry into higher paid occupations have led to a shrinking of the gender pay gap over time.

As women have closed the gap in education and experience, one would have expected these leaps to result in higher earnings for female workers. However, the pay gap continues to persist and in fact rises with higher levels of education such that the biggest gaps are found among males and females with the highest levels of education.

The human capital perspective suggests that the gender pay gap exists because women are less likely than men to be continuously employed and are often drawn towards lower-paid professions in which they incur fewer penalties for this discontinuity.

Related article: Diversity in the boardroom

Some research suggests that childbirth slows down working women’s acquisition of skills and experience and prevents them from moving into positions with high status often leading them to switch to less demanding and lower status jobs with limited opportunities for career progression.

As women have shorter working lives and face more interruptions during their careers than men, it is assumed they have lower incentives to invest in market-oriented skills training. To the extent that pay inequality arises from increasing returns to skills like work experience, women receive lower pay because they have on average lesser skills and work experience than men.

Male business man crossing finish line
Taking the gold: Men still lead the race when it comes to pay

While interrupted work histories, female dominated occupations and differing work patterns may partly explain the gender pay gap, gender discrimination, unconscious biases against women and undervaluation of women’s work are the main reasons women are paid less than males for comparable work.

The undervaluation of women’s work and social norms that reinforce perceptions about female economic dependence are some of the common biases faced by women while negotiating their salaries.

Also as employment relationships are becoming increasingly personalized with a greater emphasis on negotiable employment terms, women are facing systematic disadvantages. Women rarely initiate negotiations and even when they do, they routinely negotiate lower salaries and less desirable employment outcomes than their male counterparts.

This may happen because women experience self-doubt and anxiety while negotiating and also incur higher “social costs” in the form of damaging their relationships with their managers.

Women face heavy career penalties

Generally employers assume that women will be less committed to their jobs and less suitable for career advancement than their male counterparts with similar qualifications and professional experience.

In many labour markets women face heavy career penalties for intermittent work experience and flexible career trajectories.

As many female workers must combine paid work with family-related responsibilities, it is important that policy makers and employers offer arrangements that allow women to reconcile work and family demands as such practices may alleviate patterns of discrimination in pay.

The amount of money an individual earns determines whether they can afford the basic needs of life, buy a home and save for their retirement. Given that our skilled labor force will increasingly be comprised of women in the coming years, narrowing the gender pay gap is critical for employers who want to attract the best talent while ensuring that women are fairly rewarded.

woman business person
Happy camper: There is still a way to go for women to have something to smile about when it comes to pay

A number of policies might help in gradually reducing this gender imbalance in pay.

Among these job-protected maternity leaves that protect women against job termination after childbirth may increase the likelihood that women stay with the same employer and hence reduce gender-related pay inequalities.

Absence of job-protected maternity leaves often implies that women may take prolonged career breaks or temporarily drop out of the labor market, hence leading to a long-term negative effect on their pay.

In addition, the provision of affordable child-care facilities can also open up more choices for women who want to re-enter the labor market after motherhood.

Often working mothers with relatively lower levels of education have found the prohibitively high costs of child-care as a major hindrance to re-entering the labor force upon childbirth.

Finally, the ability to work flexibly and availability of jobs with work demands and performance expectations that are compatible with family-related responsibilities can go a long way in ensuring women do not face any unfair wage penalties in the labor market.

Workplace culture impedes progress

Although a number of factors including legal rights, progressive cultural attitudes and supportive policies for working women are beneficial for narrowing the gender pay gap, prevailing workplace cultures might continue to impede progress even in the presence of an enlightened policy infrastructure.

Workplaces that expect employees to prioritize work over non-work responsibilities and devote long working hours as a demonstration of their commitment may continue to perceive women as less committed to their careers. Relatedly, the emergence of a “facetime” culture in certain occupations continues to reinforce gender-related inequities in several contemporary workplaces.

Shainaz Firfiray teaches Organisational Behaviour on the Full-time MBA and Distance Learning MBA. In addition, she also teaches Human Resource Management on the Full-time MBA.

She also teaches Organisational Behaviour and Managing Human Resources on the MSc Human Resource Management & Employment Relations.

In addition to postgraduate teaching, Dr Firfiray also teaches Organisational Analysis on a number of undergraduate programmes.

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