Understanding the Gender Pay Gap

A couple of weeks ago, a Slow News Weekly reader (who happened to be female) sent me a message.

“What’s the deal with the gender pay gap? Why isn’t it improving? I’m paid the same as my male colleagues…I think.”

Most of us have read the headlines and felt the familiar surge of outrage. But you’re not wrong to suspect that there’s more going on behind the numbers.

The current state of the game

In February, the Australian Government’s Workplace Gender Equality Agency released the latest round of statistics on the gender pay gap. Here’s what you need to know:

  • The full-time gender pay gap is currently at 15.3%. Women earn on average $253.70 per week less than men. (So that’s looking at all full-time work and averaging out the gap across industries.) So for every dollar a man earns, a woman is earning just 84 cents.
  • Over the last twenty years, there hasn’t been a huge fluctuation in that number. The highest was in 2014, when the gap was 18.5%. The lowest was in 2004 when it was 14.9%.
  • Western Australia has the biggest gap – 22.5%. South Australia has the smallest – 10.3%.
  • The gender pay gap varies pretty dramatically from industry to industry. You can check out the table below for the full list.
  • The pay gap gets bigger as you age. It’s just 5.7% when you’re under twenty. It remains at around 12.5% until your mid-forties – at which point it explodes to 20%. It retreats a bit to 16.9% for over 55’s.
  • The gaps are particularly high at management levels. For Key Management Personnel, there’s a 24.9% gap – which means women are earning, on average, $89,516 less than men a year.

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Beyond the headline-grabbing nation-wide averages, there’s a more complex story. As the numbers above show, there’s a lot of factors to consider: industry, age and seniority. Let’s take a look at those three factors in finer detail. But first, we need to consider the larger problem: parenting.

Babies ruin everything

The biggest factor for your wage is how you parent. And bluntly, women still lose more time out of their working lives because they’re doing more of the parenting. Part of this is biology – their pregnancy will require doctor visits and, at the absolute least, about a month off. But part of this is also cultural.

According to the Oz’s government’s Workplace Gender Equality Agency (WGEA) women spend 64% of their working week performing unpaid care work – twice as much as men. In a United States survey from the Pew Research Centre , 54% of parents interviewed said that the mother did more around managing their child’s schedules and activities. (6% said the father did more, 39% said it was equal.)

So are men just naturally disinterested in parenting and lazy?

No. Over 90% of WGEA surveyed parents believe that both parents should be involved equally in care. But when men approach their employer for flexible work arrangements, they’re much more likely to be denied. (17.3% of men versus 9.8% of women.)

79% of young fathers would prefer to choose their start and finish times, but only 41% do.

79% of young fathers would prefer to work a compressed work-week, but only 24% do.

A study out of Iowa looked at lawyers’ salaries. They found that men see their pays cut more than women when they switch to a part-time schedule for a year. The study suggests men pay a higher price for taking time out of work for child-care – for some families, it’s a simple economic decision for the mother to step out of work, not the father.

However, that’s in the legal profession…and we arrive at our first, major point of difference.

Industry

Australia’s labour market is divided – there are industries that are dominated by women, and industries dominated by men. Research suggests that men typically dominate industries with higher pay (mining and construction). Industries with lesser pay, such as health and education, have a larger female workforce than male. This is as much about our country’s larger understanding of sex and gender as it is other relevant issues such as pregnancy and parenting. But Australia’s divided workforce is a huge factor in the big nation-wide average. And we’re not going to see that big number (currently sitting at 15.3%) shrink much further until those big industries have more balance.

Research from Harvard pulls out some interesting results from the States that are also helpful. Economists hypothesise that not all industries are created equal when it comes to their flexibility around family matters. According to research from economist Claudia Goldin, tech and science industries have relatively small pay gaps, but the business and corporate worlds are much bigger.

It’s a question of what industries allow for flexible work environments, or favour work that can be undertaken in solitude. In the world of science, for example, scientists are given a timeline and goals to reach – and are then set free to do that work. Lawyers will need to collaborate with their team, work billable hours with their clients, and appear in court – all at a strict schedule.

If we take a look at the table above, which ranks Australia’s workforce, we see that time-intensive and team-based industries drift towards the top. Those industries that rely on a part-time or casual workforce, or are defined by the public sector, not private or profit-driven sectors, drift towards the bottom.

The solution is to make all hours equally valuable, which is easier said than done. But modern workforces are moving further and further away from a 9 to 5 work day with great results. We’re now in the age of the ‘gig economy’. One study’s even found that managers couldn’t tell the difference between employees who worked an 80 hour week and those who just pretended to.

Age & Seniority

The age gap widens as a woman ages into her 20’s and 30’s – which is no surprise, it’s the child-rearing age. But then the gap starts to shrink a little, as childless women ascend into senior roles (at least, that’s the idea).

But of course, women are still not occupying as many leadership positions as men. However, it is one of our biggest areas of improvement. In 2009, just 8.3% of ASX 200 (the 200 biggest companies on the Australian stock exchange) board positions were women. Now, it’s 26.2%.

The Gender Pay Gap

…is real. And complicated. But the biggest factor is how employers – and society at large – thinks about parenting and the relationship between family and how we work.

We’ll re-visit these figures in another year to see how things have changed.


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