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Salary Gender Gap Persists For Biz Grads

WomenLead Power Networking event. Courtesy photo

Remember the days when men and women were equally compensated for their education and job title? No? Oh yeah, that’s because it hasn’t happened yet. According to a study published today (January 18), the gender gap in salary remains. New year, same problem.

Universum, a market insights research firm, asked more than half a million business and STEM (science, technology, engineering, and mathematics) students at universities from 29 countries, including the U.S., a simple question: What salary do you expect to earn in your first job after graduation? Across all countries and both categories of major areas, women, on average, expected to make less in their first jobs after graduation than men. In the U.S., male business majors expected to make around $60,000 before taxes and without any added bonuses. U.S. women expected around $55,000.

The gap in the U.S. was greater than in the other three Western Hemisphere countries included in the study, Canada, Brazil, and Mexico. Business majors from Malaysia, Sweden, and Canada had the smallest gaps and business majors from Russia, India, and Spain had the highest. (See the Cost of Talent 2017 Report here.)

“They are exactly what I thought,” Carolyn Goerner, a clinical professor of management and entrepreneurship at Indiana University’s Kelley School of Business, says of the results. “They are consistent with the fairly recent research coming out about gender differences and negotiation.”

PAY GAP HAS BEEN PERSISTENT SINCE 1960s

Kellie McElhaney, an adjunct associate professor and faculty director at the Institute for Business and Social Impact at the University of California-Berkeley’s Haas School of Business, echoed Goerner on a separate phone call. “No surprise at all,” McElhaney says. “The data supports this. There is a gender pay gap, period.”

The gender pay gap has been slowly closing since first being tracked in the 1960s, but it’s very much still there. According to the most recent available data from Payscale, in 2016 women in the U.S. earned 76 cents for every dollar a man earned in an “uncontrolled gender pay gap.” In a “controlled gender pay gap,” where men and women in similar jobs and education were categorized, the gap shrinks to 98 cents for every dollar.

The caveat, McElhaney says, is that the majority of stats available — Payscale’s included — are not parsed by race. So if you are an underrepresented minority, it’s tough to know if any of these studies hold much relevance. But it’s hard to imagine companies — still largely owned by white men — are paying equally all around.

A LOSE-LOSE SITUATION FOR WOMEN

Goerner, who is also co-director of the Kelley Women’s Initiative at Indiana University, says the relatively new idea of a “social cost” of negotiations is likely present in these findings and others. “There is an interesting phenomenon at play that happens when men and women go into negotiate salary,” Goerner explains on a phone call with Poets&Quants. “And it is something that doesn’t have that big of effect for men, but really silences women when they are feeling out the environment to see if it is going to be an issue.”

The premise, Goerner says, is due to deeply ingrained gender roles and norms. And that negotiation, in general, is “inherently” an aggressive act. “Somebody tells you they want to give you something and you say, ‘no, I want more,'” Goerner says. “If a guy does that, it’s just not that big of deal. It’s OK for men to be more aggressive, we see it as part of that gender role, it’s fine. However, if a woman takes that same step, there is almost a psychological backlash.”

According to a study published five years ago in Organizational Behavior & Human Decision Processes, “assertive, self-advocating women suffer a social backlash” when negotiating. “Decreased likability” is an example the study references as social backlash. However, “non-assertive, other-advocating women” also suffer a backlash, except this one is a “leadership backlash.” According to this study, it’s kind of a lose-lose situation. If a woman negotiates, she isn’t socially appropriate. Yet if she doesn’t show assertiveness, she has “lower presumed competency,” the research says.

Meanwhile, “male negotiators do not suffer any backlash consequences despite being characterized in a fashion similar to that of the females in each condition,” the study concludes.

DATA SHOWS WOMEN ARE NOT WORSE NEGOTIATORS THAN MEN

What continually saves women from the potential backlash, Goerner says, is also a gender role stereotype. Women are more intuitive and are able to read situations to avoid the potentially thorny interactions, she points out. “We’re just now getting to the point where we can help women overcome that,” Goerner continues. “There are some great communication strategies they can use. But we just sort of figured this out as researchers.”

McElhaney sees it the same way. “Women are more heavily penalized than men,” McElhaney says of the unconscious bias involved in salary negotiations. Or to put it more bluntly, McElhaney says for men aggressive negotiation comes off as good and for women it comes of as being selfish and not looking out for the company.

“The data shows women aren’t worse negotiators than men — not by any stretch,” McElhaney says. “And if you see a woman negotiate for her child, you’ll see phenomenal negotiation skills. It’s that women choose to negotiate more often for other people, like their teammates, than themselves.”