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November 18, 2009

Why are well paid women so bad at negotiating their salaries?

You've probably already heard the news, but just in case, lemme spell it out: Women earn less than men working the same jobs.

On Monday the NYT blogged about an interesting study conducted by the compensation website Payscale.

The findings were twofold. First, pay disparities between men and women increase with salary. Thus the difference in compensation between higher earning women (in the study, above $100k) and their male counterparts is greater than that between lower earning women and their male counterparts. Second, when one adjusts for factors besides gender that can influence compensation (these aren't specified, but I'm guessing it's stuff like quantifiable performance results, cost of living, schedule availability, time worked, seniority, periodic performance reviews, etc), then the pay gap shrinks.

Regarding the first finding:

If it seems odd that successful (in this case, highly compensated) women are worse at narrowing the gender gap than those who earn less, Payscale offers this theory: for high paying jobs, performance is a more subjective matter. An engineer banking $67k per year has some tasks to fulfill, and success in meeting those tasks results in higher or lower compensation. But the criteria for judging a CEO or law firm partner or marketing veep are fuzzier. So, Payscale proposes, there's more room for latent value judgments/discrimination.
In other words [...] jobs in which quality is easier to measure are more likely to be compensated based on merit, so equally qualified men and women are likely to receive equal pay. On the other hand, in jobs where quality measures are more subjective, meritocracy may not rule, and men may be better compensated for reasons other than their qualifications. For example, perhaps men are subconsciously viewed as more competent than women, or are more adept at negotiating for raises.
Frankly, I don't buy it. Maybe I'm just a grad student who knows little about the business world, but isn't success in many high paying jobs just as quantifiable as in low paying ones? I mean, yes there are the gurus who get paid to sit around and lend their name to a brand, but aside from those exceptions, isn't performance very measurable? How many clients did you bring in? How much did the stock grow when you were in charge? How well did your revenue withstand the recession? etc. Please correct me if I'm wrong, business-savvy readers.

But if that's true, then my very off-the-cuff speculations are as follows:

1) People tend to be rich and successful at the end of their careers. So those top earners are older. And perhaps those older women are inured to the cult of acquiescence. Women starting their careers today, hence earning less, are doing a lot more asking, I hope. That would explain the smaller gaps in the lower earning bracket. With time, I hope to see the gap close at all levels of the compensation slope.

2) But what if the disparities are not due to where these survey responders were in their careers, but rather about the positions themselves, or the people in them? Indeed, what if there's something about engineering or other 67k jobs that helps foster equal pay, and something about the jobs at the top earning bracket that leads to discrimination?

Here's the most interesting point the writer, Catherine Rampell, makes:
The implication is that in most jobs where a wage gap exists, it is probably not due to overt discrimination, with bosses deciding, Mad-Men-style, that women should receive unequal pay for equal work. Rather, in most jobs, the different career choices that men and women make — or perhaps the different career opportunities men and women have available to them — account for big differences in pay, says Al Lee, PayScale’s director of quantitative analysis.
I image that higher paying, higher powered jobs have more room for such choices. Who do you befriend. Who's your mentor. Is your title worded the right way. How do you present yourself, verbally and nonverbally, in the job application process. Did you play golf with the right person. Are you perceived as competitive or a softie. Is your spouse staying at home and caring for the kids or must you cut back on overtime to do that. Is your office strategically located.


When you're at a low or mid-level job, maybe those difference don't count for much. But in high powered, high stakes positions, all those nuances and unspoken attributes converge to create something called "value."

And somehow, women are missing that point.

I'm sure there's more to it than this. The thoughts are still fresh on my mind. Help me out. What do you think? What am I missing? What explanations do you see?
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