How Supporting Younger Women And Minorities Can Change The Pay Gap How Supporting Younger Women And Minorities Can Change The Pay Gap We are all very familiar with the fact that women make less than men do. As women, the fight for progress and equality in the workplace is a daily occurrence. So the recent study by Payscale on the gender pay gap reporting that women make on average 76 cents to the dollar of men is not surprising to any of us. This may seem like an unsurmountable statistic in our lifetime, but if you dig in further, there are some key insights worth addressing that are actionable today. 1 Why the pay gap exists If you take the average of all women vs. the average of all men, women make 76 cents to the dollar of the average man. The gap is obvious given that men dominate the executive ranks and our boardrooms. Job titles and seniority have a direct correlation to salaries. And since women aren’t holding as many senior roles in corporations as men do, that explains a large part of the gap. In addition, men hold the majority of jobs in some of the highest paying fields (e.g. STEM). Therefore, it’s pretty clear why the average women makes less than the average man. 2 Women are being paid less than men for doing the same job, but not as much as we think According to the study, when women are in the same roles and have the same background and education, women are making about 98 cents to the dollar of men. So yes, the disparity is about 2 cents on average. It’s not as large as we think. We’ve improved this figure greatly through the years and we are continuing to close this gap through some of the amazing efforts out there, but there is still more work to do. There are still biases and prejudices that happen daily. 3 The widening of the gender pay gap starts at 25 years old The payscale research is extremely valuable because it tells us that while men and women might start off as equals in the workforce after college, as they move along in their careers, they progress into senior roles at different rates. This is a key driver in the gender pay gap. Since the gap only get’s larger as women get older. The study shows the gap begins around 25 years old, when most people start experiencing their first opportunity to move up and get promoted. The gap between men and women just gets larger and larger after that, by mid-career, “Men are 85% more likely than women to be VP’s or C-Suite Execs and 171% more likely to hold those positions late in their career”. These results are echoed in the recent Women in the Workplace study conducted by McKinsey & Lean In. 4 There are three actionable ways to help close this gap Getting more women into STEM roles: The industries with the largest pay gap are in STEM related industries. Even before entering the workforce, in high school and in college, we can create awareness and education around STEM roles. According to the NGC (National Girls Collaborative Project), while women make up 50 percent of the college educated workforce, they only represent 29 percent of the STEM workforce. According to the Smithsonian Science Education Center, between 2000–2010, STEM related jobs grew 3 times the rate of non-STEM jobs. It is projected that by 2018, 2.4 million STEM jobs will go unfilled. In addition STEM salaries on average are 25 percent higher than non-STEM salaries. Addressing Ambition & Confidence: This research confirms a lot of what I see with young women in the workforce. According to a recent Bain study, women enter the workforce with higher ambitions than men, but after two years in the workforce (experience employee in the chart below), their ambition plummets 60 percent, while men’s ambitions stay the same, and only grows thereafter. This tells us that something is happening in the workplace for women during this early years. Both the Women in the Workplace and the Bain study attribute the corporation’s role as critical in creating a workplace that can better encourage and support a woman’s ambition. In addition, a Wall Street Journal article sheds light on female professional ambitions and the desire to attract a mate. The article is based on a recent Harvard study, called “Acting Wife: Marriage Market Incentives and Labor Market Investments”. The report is based on two field experiments in an elite MBA program. Results show that single women play down their ambitions when their is a presence of men, because of their desire to attract a mate. Some of the most young and ambitious women in the United States feel like they need to sacrifice their ambition because they feel that makes them less desirable in the marriage market. This is not the case for men. Lastly, we cannot talk about the gender pay gap without addressing race. According to a recent Pew research study on Views of Race and Inequality, Black and Hispanic women earn significantly less than Asian and White women. Our investment in this area is critical to the success of all women. It is projected that by 2050, Hispanic and Latino women will make up nearly 39% of the total female population. The Opportunity for Employers to Create Opportunities for all Women: I have worked with and hired many bright and talented women early in their career. I have found that this is the most critical time in their careers as well. If they don’t receive the proper encouragement, management, and mentorship there is high likelihood that their ambitions and confidence will decrease dramatically. In order to even the playing field, here are my takeaways and suggestions: Encourage, mentor and promote young women. This sounds very straightforward but hard in practice. We need to train our middle management teams, they are on the frontline here. Create programs that support minority women in the workplace. When you invest in diversity, we all win. Teach women to better negotiate promotions and salaries. Women aren’t confident asking for what they want, but this can be a learned skill. Provide women the opportunity to take leadership roles on projects, letting them own something provides them the opportunity to demonstrate their abilities, create visibility for themselves, learn and develop new skills, generate confidence and also be considered for promotions. Understanding a woman’s desire to progress up the corporate ladder. This may not always be clear once a woman starts her career, but if we better understand what her greatest strengths are, we can help show her paths towards success. Creating an open discussion around childbirth and maternity leave and returning to workplace. Companies are ongoing a huge change right now to address issues related to mothers in the workplace. Companies need to address and understand the concerns of maternity leave for women and create programs in place that could allow working moms to succeed. Helen Bui Helen Bui is an entrepreneur, media & advertising veteran, advisor, mentor and economic empowerment champion. Helen is currently the Founder at Skylet, a platform that is helping young women become smarter about their money. Skylet members have access to lifestage specific communities, education, information and tools to help them become smarter about their money. The Stash-it app, now a part of Skylet, was featured in The Wall Street Journal as one of the helpful financial apps for millennials.