This is the first part of a series of posts relating to the gender pay gap.

There is little question about the accuracy of the statistic: in America, the median pay of full-time, working females is about 77% of the median pay of full-time working males. It’s been reported by the media, quoted by Presidents, and the source of protests nationwide. Payscale has produced an interactive infographic exploring the data, which is helpful to understand where the gap is higher/lower.

In the Payscale data, they report on the “controlled” pay gap, noting that when controlling for job and education the gap decreases to about 2-3%.

Wait a minute – that’s a big difference. Is the gap 23% or 2-3%? 

(There is a lot of importance in that little hyphen, right?)

Its both. And they measure different things.

The 23% gap comes form simply taking the median pay of men and comparing it to the median pay of women. It’s a fact. But when President Obama equated this statistic with “equal pay for equal work” he misinterpreted the fact.

Let me illustrate a major driver of the difference through a personal example. When my wife and I got married, the gender pay gap within our house was a about 65%: I was making $80,000 (ish), and she was making $28,000. The driver of this gap isn’t discrimination, educational attainment, or working hours. It was driven nearly exclusively by our occupations: I was a management consultant, she was a kindergarten teacher. My wife was not a victim of being paid less for “equal work.” Our work was not equal. Was the gap in pay “right” – no. Teachers should make more. But our contribution to the national pay gap was driven by choice, not by discrimination or lack of opportunity. We chose different paths that led to different outcomes.

So it’s clear that we have to think more deeply about the gender pay gap and it’s drivers as we consider the role of a company in addressing the gap.

Gap vs Discrimination

In past presentations, I have made the statement that “a pay gap and pay discrimination are not the same thing, and you need to not confuse the two.” There is no question that there is a gender pay gap in the United States, but the evidence is not clear that there is widespread discrimination. Let’s define the terms:

Pay gap: a comparison of earnings across two populations. It’s just math about an outcome.

Pay discrimination: A willful and intentional decision to pay someone differently. It’s a reason for a decision.

The 77 cents on the dollar talking point speaks to the gender pay gap, not discrimination (at least entirely). Even the 2-3% “controlled gap” reported by Payscale does not necessarily point to discrimination, though it does remove much of the other drivers of the uncontrolled pay gap.

The link below will take you to a podcast (or written transcript if you prefer) from Freakonomics Radio. In this podcast, Freakonomics host Stephen Dubner interviews a leading gender pay economist, Claudia Goldin, who offers a deep perspective on the real drivers of the gender pay gap. It’s well worth the listen, and is wonderfully articulate about this issue.

Link to transcript, click here.

For those who want the quick summary, here are two key takeaways:

  • The primary drivers of the overall gender pay gap are the “occupational sort” (women being in occupations that pay less) and the high cost of flexibility (which shows up in jobs chosen, hours worked, and ability to “move up” within a company)
  • If you focus on women who do not have caregiving obligations, the gap reduces to somewhere near 5%. Still a gap, but one that suggests that bias/discrimination play a relatively modest role

The Payscale exhibits tell a similar story. The gap is largely explained by an separation between males and females that occurs over time, as men are more likely to occupy more leadership positions as they age.

A Picture to Summarize

To visualize this simply, here is a way to think about the drivers of the pay gap. Note that the drivers are not specifically quantified, but are sized to reflect the prevailing theory of how they impact the overall gap.

So now what?

With this framework in mind, what do you do about it? As a company HR leader, your ability to influence the broad occupational sort has some limitations – or does it? How do you know if you have a problem to solve? And how does this view align with prevailing legislation around pay equity? We will get there over the next few posts.

One important thing to note: I firmly believe that the gender pay gap should be closed, and that HR can play a critical role in closing the gap. The solution set, however, needs to move beyond making sure that merit increases are not biased. We need to think more holistically about handling unconscious biases, lowering the cost of flexibility, reducing the progression gap, and investing in education to promote fully equal opportunities regardless of gender. We can’t solve all those problems here, but we will dive into some solutions to make an impact.