What causes the gender pay gap?

Just a week after the government’s Equality Bill, with its provision to force companies to publish their gender pay gaps, comes the news that the pay gaps in government departments are as bad, or in some cases worse, than those in private companies. The Financial Times reports that, according to unpublished data from the Office for National Statistics, median earnings in the civil service for full-time male employees were 14 per cent higher than for women in 2008.

The FT’s statistician, Simon Briscoe, commented:

The data suggest that last year there were dozens of grades in dozens of departments where the pay gap between men and women was greater than 10 per cent – a sensitive discovery given the government’s high-profile drive, launched last week, to require private companies employing 250 or more to disclose any disparities in salaries between the sexes.

So does this mean that government departments are deliberately discriminating against women?

Probably not. As I said last week, there is little evidence that the gender pay gap is due to discrimination by employers.

Baroness Prosser’s 2006 report, Shaping a Fairer Future, found that there were a number of social factors causing the gender pay gap. Many of these are a result of women giving up work to have children and then shouldering most of the responsibility for looking after them. For example, women tend to have more interruptions to their careers, fewer years of work experience, are more likely to work part-time and prefer to travel shorter distances to work. The report quotes some findings from the trade union Amicus:

Amicus finds that pay discrimination accounts for just five per cent of the pay gap in the finance sector, which has a large overall pay gap of over 40 per cent. In this sector, women form the majority of the lower-paid administrative grades with men in the majority in managerial roles.

Anyone with significant child-care responsibilities would find working in a senior financial services role extremely difficult. Unless you are very poor or very rich, a job in the City is unlikely to be local to where you live and the long hours with a long commute means that most City professionals don’t see much of their children during the week.

A report published last year by the Office of National Statistics seems to back up Baroness Prosser’s findings. The ONS study found that, while in 1975 the gender pay gap started at age 18, in 2006 the gap didn’t start to open up until age 34. In other words, pay levels are, in general, equal for men and women until the age at which women begin to leave paid employment in large numbers to have children.

genderpay13

The study also found that there was little variation in the pay of single people and that pay gap widens with the number of children people have:

Men and women who are not married or cohabiting have similar hourly pay, £8.72 for men and £8.82 for women, resulting in a gender pay gap of –1.1 per cent. However, the gender pay gap for married/cohabiting couples is 14.5 per cent.

The gender pay gap increases with the number of children present in a family. The average hourly pay of a full-time woman with one dependent child is £9.32, compared with £10.63 for full-time men, resulting in a gender pay gap of 12.3 per cent. In comparison, in a family where four or more dependent children are present, the gender pay gap stands at 35.5 per cent.

In short, then, the main cause of the gender pay gap is that women take breaks from their careers to have children and spend the next eighteen years or so doing most of the work involved in looking after them. The more children they have, the more interruptions to their careers and the more restrictions on being able to get higher paying jobs.

While this might be unfair is it really something for which employers should be blamed? How much of the 12.8% gap between median male and female full-time pay is the result of discrimination and how much of it is due to social norms about who does looks after the children?

Unequal pay is, on the whole, not the fault of employers. Forcing companies to publish their pay gaps and to embark on expensive programmes to equalise pay will have very little effect on the imbalance between male and female wages. Penalising employers for something which is caused by deep rooted social attitudes is unfair and completely pointless.

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6 Responses to What causes the gender pay gap?

  1. Jo Jordan says:

    You are on soft ground. Put your foot lightly on the accelerator and inch out. Any more wheel spinning and you will only sink deeper!

    Indirect discrimination has been illegal in UK for over 25 years. Or has something been repealed when I wasn’t looking.

    Why not carve out HR policies that inpire awe and admiration?

  2. Rick says:

    What the hell are you talking about?

    If you have any evidnece that the gender pay gap is due to indirect discrimination let’s see it.

  3. Jo Jordan says:

    Rick, the matter is far simpler than that.

    If the numbers show a gap, there is a prima facie case of discrimination. You need to show you are not discriminating.

    As soon as you start arguing that there are lifestyle issues, you have created the case that your HR policy favours one lifestyle over another.

    It is up to you to show that your policy is absolutely essential and that you have done everything possible to mitigate against remaining disparities. Minimally, when a disparity arises, you would have to open up a discussion and ask people if they have any ideas on how to reduce it.

    Indirect discrimination is illegal. If you make a requirement that benefits men or women, or one ethnicity and not another, you can’t argue their lifestyle, or biological requirement to take time off work or whatever led to the disparity. You have to show that the requirement that led to the disparity is absolutely essential.

    There is no point in yelling at me. I think you need to check the definitions of discrimination. I am afraid the onus is on you to show that your gender gap is not due to discrimination. This is so old hat. As I said, at least 25 year vintage and as I also said previously, the HRM is hardly rocket science. It is standard practice world over. The prima facie case of intent will be lack of systems in a place purporting to have professional HRM. Even universities have standard checks in place that courses do not discriminate.

    According to HBS blog, the changes will cover class too. That will be interesting as markers aren’t routinely collected.

    Firms who have residual disparities would be much better advised to show willing. In practice there are always residuals that give organizations headaches. People are much more likely to give you leeway to sort them out if you obviously have robust systems in place to vigorously pinpoint remaining sources of discrimination.

    If it helps, think of the disparity as a deadbody lying in your restaurant. It’s not enough to say, I didn’t mean to put a poisonous mushroom in the soup. If you don’t want investigations and hassle, make sure there are no poisonous mushrooms in the soup.

    And sorry to say this again – this explanation is also old – 30 years vintage. I’m afraid you are going to have to ‘suck it up’ and get on with sorting out any mess you have inherited.

  4. Happy Homeworker says:

    Rick

    Thanks for this – real stats telling the real story. In 14 years in HR, I never found a single case of men being paid more than women in similar jobs.

    What I did see, however, was women choosing to do jobs which were not highly paid. Many women (perhaps even a majority now) choose to work part time once they have children, others choose a job which demands little of them mentally/physically so they have energy for their family.

    As for the comments on indirect discrimination above, any lawyer can make mincemeat out of any set of statistics produced to purportedly show discrimination. It is telling that there have been comparatively few successful legal claims in regards to equal pay over the years, compared to other causes of action.

  5. Jo Jordan says:

    Well then you have nothing to worry about!

  6. Ann Bares says:

    Rick:
    Just a quick note to let you know that we have chosen this post to highlight over at our blog Compensation Cafe…
    http://compforce.typepad.com/compensation_cafe/2009/05/friday-special-at-the-cafe-1.html
    Cheers!

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