What Employers Need to Know About the Gender Pay Gap

There's a lot in the way of bad news right now, but there is some good news: the gender pay gap is narrowing. According to a 2019 Glassdoor Economic Research report, Progress on the Gender Pay Gap, although significant pay gaps remain between men and women, the pay gap has narrowed slightly in the U.S., UK, France and Australia, showing improvement since Glassdoor’s 2016 study. Today, the unadjusted pay gap between men and women in the U.S. is 21.4 percent, meaning women earn, on average, $0.79 for every $1.00 men earn. This represents a 2.7 percentage point shrink in the unadjusted pay gap from three years ago, when women earned, on average, $0.76 for every $1.00 men earn. However, at this rate the gender pay gap won't close for a few more decades. And that is simply unacceptable for job seekers. More than two-thirds (67 percent) of U.S. employees say they would not apply for jobs at employers where they believe a gender pay gap exists.[1] Today, the gender pay gap is more than a social or legal issue. It’s an issue that can affect the ability of employers to attract and retain talent. How should HR practitioners react to concerns about the gender pay gap? One increasingly popular way is to perform an internal gender pay audit to understand whether a gap exists at your company. This involves examining your own payroll data for evidence of a gender pay gap, and making recommendations to senior management about ways to lower gender barriers in recruitment, hiring, pay and promotion before they arise as broader organizational concerns. However, before you dig into your company's numbers, it's important to understand the state of the gender pay gap today. Why?  Workers and employers alike need to use this knowledge to understand how the gender pay gap affects them, why the gap persists and empower each other with tools and resources to combat the pay gap on an individual and institutional scale. “Leveraging Glassdoor’s unique salary and pay database, we’re shining a light on the factors that explain the documented differences in pay between men and women and, perhaps more importantly, where unexplained barriers continue to slow the march toward pay equality,” says Chief Economist Dr. Andrew Chamberlain.

Industries With The Biggest Pay Gaps

In the U.S., the adjusted gender pay gap is largest in media; retail; and construction, repair & maintenance industries. It is smallest in biotech & pharmaceuticals; education; and aerospace & defense industries. Since 2015, non-profit; health care; and real estate industries had the largest reductions in gender pay gaps whereas restaurants, bars & food service; travel & tourism; and oil, gas, energy & utilities industries have seen the largest increase. Although many tech jobs have large gender pay gaps, the overall information technology sector falls in the middle of the pack among industries. Glassdoor economists also found that the single biggest cause of the gender pay gap is the tendency of men and women to sort into jobs and industries that pay differently. In the U.S., occupational and industry sorting explains about 56.5 percent of the overall pay gap—by far the largest factor.

Related: Job Market Trends: Five Hiring Disruptions to Watch

Tech: Not So Progressive

The tech industry is actually middle of the pack for the gender pay gap, falling at a 5.4% “adjusted” pay gap. That’s a little above the national “adjusted” average of 4.9%. That did shrink by half a percentage point from our initial study. However, there are many tech occupations that have large pay gaps, like computer programmer. This illustrates that tech jobs today are becoming more dispersed across a wide variety of industries – health care, finance, media, consulting, etc. – tech jobs aren’t just found in the tech industry anymore. The tech industry itself may not have a huge pay disparity, but tech occupations themselves can vary widely.

Related: How to Compete With Silicon Valley for Tech Talent

Gaps Widen with Age & Seniority

Glassdoor economists uncovered interesting insights in the data in addition to the gaps between men and women, particularly when it came to rank and age. For roles like CEO, CTO, president, CFO, CIO, and CTO, we see a 24.% “adjusted” gap. This is no surprise – executive positions are notoriously dominated by men, and the gender pay gap in the C-suite is no surprise.  According to Catalyst, women currently hold 5.0% of CEO positions at S&P 500 companies. Additionally, the gender pay gaps widen as a worker ages. Workers aged 18 to 24 years saw a 0.8 percentage point shrink since 2016 in the “adjusted” gender pay gap. By contrast, among older workers aged 55 to 64 years, has grown by 1.8 percentage points since 2016. Researchers believe this is due to increased awareness among Gen Z and millennial workers, employee advocacy, younger generation solving this more quickly. Furthermore, younger workers don’t often have family responsibilities that might hinder salary growth.

Related: Why Recruiting Older Workers Adds Value to the Bottom-Line

Persistent Causes

We found that though the majority of the gender pay gap can be explained by worker differences (age, education) and by the sorting of men and women into different industries/occupations, 36 percent of the pay gap remains unexplained. This is due to things we can’t observe in our data such as:

• Workplace bias – whether intentional or not
• Race
• Whether employees have kids or not
• If and for how long workers were out of the labor force (for child care, elder care, sickness, etc.)
• Pay negotiation differences

Nevertheless, the narrowing of the gap over the past three years has been due to some unique factors as well:

1. Strong economy: We’ve been in a very healthy labor market that's created a high demand for workers. We’ve seen women joining the workforce in larger numbers given the conditions, and we’re also seeing women joining traditionally male-dominated fields such as tech and more labor-intensive roles.
2. Greater transparency: Due to the rise of platforms like Glassdoor and larger conversations about transparency, there’s more awareness about the pay gap and the ways that employers and job seekers can remedy the situation.
3. #MeToo movement: The rise of the #MeToo movement shed further light on and catalyzed discussions on workplace disparities between men and women, including areas such as pay transparency.

“Over the past three years, company leaders, politicians, celebrities and more have called for an end to the gender pay gap. Glassdoor’s comprehensive study put those words to the test to reveal that slight progress has been made to close the gap. Though a promising sign, it should not detract from the larger fact that significant pay gaps remain around the world, even after controlling for workplace and job factors,” said Glassdoor Chief Economist Dr. Andrew Chamberlain.

Related: What Companies Must Learn from #MeToo: 5 Steps to Squelch Sexual Harassment in the Office 

Pay Gap Solutions

There are three areas to consider to help close gender pay gaps everywhere: 1. Technology

• In the past three years, technology has come a long way to help close gender pay gaps. 
• For job seekers and workers, there are now advanced salary calculator tools that help people ensure fair pay relative to their experience and local job market
• For employers, there are pay audit tools to help companies discover where pay gaps may exist

2. Greater Salary Transparency

• Greater transparency around pay can help eliminate pay gaps by making it easy to identify disparities and spark conversations with employers to ensure people are paid equally for equal work
• Salary transparency, talking about pay and negotiating pay are also key

3. Policies and Programs

• To provide women with more access to career development and training, such as pay negotiation skills, to support them throughout their lives in any job or field they choose to enter.

Understanding key drivers of the pay gap is critical to identifying the best ways to fix it. Research shows that salary transparency and better information sharing are powerful tools in helping to achieve equal pay in the workforce.

Learn More

How to Analyze Your Gender Pay Gap