PayScale research shows wage gap smaller than Bureau of Labor Statistics indicates
Activists were outraged in 2013 when the Bureau of Labor Statistics published the report that claimed women earn 78 cents to every dollar a man earns. This statistic has been at the forefront of the gender wage gap controversy and discussed continually by various media outlets.
The Bureau of Labor Statistics’ 78 cent figure, which is an uncontrolled number, meaning it does not take into account any other factors, is calculated by comparing the average earnings of all working men to that of all working women.
Critics have pointed out key flaws to this data including the omission of contributing factors such as amount of hours worked and career choice that may explain the discrepancies in earnings.
PayScale, a company devoted to linking individuals and businesses to the largest salary profile in the world, released a report titled “Inside the Gender Pay Gap.”
This report examines the differences in the median earnings of men and women overall. The report also assesses the effect of additional factors on this gap including marital and family status, industry, job-family balance, education level, management status and job level.
The data used was collected from 1.4 million full-time employees who completed the PayScale survey between July 2013 and July 2015.
Used as a point of reference, the controlled data set was determined by calculating the difference in male median pay and controlled female median pay.
Controlled female median pay is an estimate that accounts for outside compensable factors. Some of these factors include years of experience, education, company size and management responsibilities.
The result is much different than the widely publicized uncontrolled Bureau of Labor Statistics figure. According to PayScale’s report, using the uncontrolled median pay, women make 74 cents to a man’s dollar or 25.6 percent less than men.
Using the controlled figure, women make 97 cents to a man’s dollar or 2.7 percent less than men. This controlled number is a drastically lesser amount and could be within the margin of error since these numbers are all estimates.
PayScale argues that both the cause and problem with this gap is that women are not working the same jobs as men are and men are more likely to work higher-paying jobs.
This could be due to the nature of the industry, job type or job level. PayScale goes on to compare the earnings potential between some of the jobs most commonly held by women to those most commonly held by men. An example is women are 2.1 times more likely to be first line managers of office and administrative support workers that have an average salary of $45,100. Men are 2.2 times more likely to hold a computer software engineering job that has an average salary of $88,700.
Additionally, PayScale’s report concludes that women get promoted less often and earn less when they do. The controlled numbers show that the gender pay gap increases the higher the position. For example, the controlled gap for a manager or supervisor is 3.1 percent less for women with similar characteristics than their male counterparts. At the executive level women earn 6.1 percent less than their male colleagues.
Taking marital status into account, PayScale found that there is the largest gender pay gap in married women with children. The median female married without children earns $48,000 while the median male married without children earns $60,800.The median female married with children earns $46,800 while the median male married with children earns $67,900.
Interestingly, according to PayScale’s survey men say they prioritize home over work more frequently than women do. However, work-life balance has a greater impact on women’s salaries.
Women who prioritize home life over work life earn 3.4 percent less compared to men who do the same. Conversely, this portion of the report is the most subjective portion.
Respondents may not be as truthful out of embarrassment and what one considers prioritizing home over work may be different than another. Surprisingly, the data found that single men and women with no children who never prioritize home over work have a zero percent gender pay gap.
Lastly, the report took a close look at the technology industry. Looking at the controlled data, the highest pay gap is seen at the executive level with women earning 6 percent less than men do in this field.
PayScale’s report offers a few solutions at the individual and employer level to help close the gender wage gap.
A few pieces of advice for the individual includes knowing your market value, negotiating, setting goals, finding a sponsor, educating yourself, modeling good behavior and speaking your mind. At the corporate level, PayScale urges all companies to prioritize diversity in the workforce.
A key point of PayScale’s solution is that men initiate pay negotiations four times as often as women. In addition, men ask for raises that are on average 30 percent larger than women.
There was a report done by CONSAD Research Corp. for the U.S. Department of Labor that largely refutes that there is a gender pay gap.
One of its main points, which was omitted from the PayScale report, is that when women do ask for raises they often ask for non-cash fringe benefits such as more vacation days and better health insurance. The report concludes that these fringe benefits account for 9 percent of the wage gap bringing the median amount women make up to 96.4 percent that of men, which is extremely close to PayScale’s 97.3 percent figure.
Although there are varying reports on the gender wage gap, they all seem to have one thing in common, which is that there is some sort of gap. The discrepancy lies in how large the gap and how it can be reversed.