Study after study has identified a persistent gender pay gap. A PayScale report found that women still make only $0.79 for each dollar men make in 2019. A Bureau of Labor Statistics (BLS) analysis discovered that in 2018, median weekly earnings for female full-time wage and salary workers was 81% of men’s earnings. “Women had lower median weekly earnings than men in most of the occupations for which we have earnings data for both women and men,” the BLS report found. The data is starker for minorities. The PayScale report found that the largest pay gap is for black female executives who earn only $0.63 for every dollar a white male executive earns.
But the chasm is even bigger than those numbers alone indicate. Existing studies don’t reflect the true magnitude of the gender wage gap because they ignore important types of compensation. For example, the BLS report cited earlier ignores bonuses. Furthermore, most analyses I’ve seen don’t take into account employer retirement contributions (“matches”) or future Social Security benefits. As the U.S. Soccer Team prepares to fight the sexist soccer forces, it’s worth expounding on three ways that the gender pay gap is often underestimated.
Disparities In Bonuses
A recent pay equity study by ADP shows “a vast percentage difference between female and male compensation originates from a difference in bonus pay.” However, many studies don’t include this in the calculation. For example, the Bureau of Labor Statistics is a commonly cited source for pay gap analyses; however, its weekly earnings data does not include bonuses (though another commonly used data source, the Census Bureau, does include bonuses in calculating women’s median yearly earnings).
When ADP analyzed base and incentive pay fluctuations of over 11,000 employees in the U.S. between 2010 and 2016, it concluded that bonuses play an instrumental role in determining who does or does not close the pay gap between genders and that bonuses exacerbated existing inequality
The report found that the average bonus for women was less than two-thirds what was paid to men, even when controlling for base pay, age, and tenure. The gap was also observed across different demographics such as age, salary, and industry groups. The findings are consistent in the U.K., which now requires firms to disclose compensation data, including differences in bonuses paid to women and men. Recent disclosures found that men are paid much higher bonuses than women in the U.K., with the finance sector having the biggest gap at 35%.
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