Why is the gender pay gap higher for management jobs?

The Chartered Management Institute and XpertHR published the results of a survey on the gender pay gap last week. It found that female managers earn less than their male counterparts, with the gap increasing with age. At 23 percent, the management gender pay gap is wider than the 19.7 percent in the workforce as a whole.

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The study found that the management gender pay gap really kicks in in the mid 30s.

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It also found that, by and large, the gap increased the further up the career ladder people go.

CMI-chart

This is consistent with the ONS data that I have been following for the past few years. The full-time pay gap at the median has almost disappeared for those in the twenties, with women earning slightly more than men in recent years. There has also been a significant fall in the gender pay gap for those in their thirties.

Gender pay difference for median hourly earnings, excluding overtime Percentage full-time pay difference (men/women) by age band
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Last time I looked at this I said that it would be interesting to dig out the figures for different earnings percentiles. Then I left the country for a few weeks and forgot about it.

Fortunately, David Richter didn’t. He took up where I left off and charted the numbers by age at each earnings decile. As you would expect, the pay gap is wider at the top of the pay distribution than it is lower down.

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The age distribution is where it gets really interesting though. The pay differential for those in their twenties is fairly narrow, even at the very top level. The pay gap for those over 40 is significant at all levels of the pay distribution but much higher at the top. The thirty-something pay gap gets much steeper in the upper quartile of the pay distribution. Around the median, as we already know, the gender pay gap is much smaller than it was a few years ago for those between 30 and 40. In the upper income deciles, though, the thirty-something pay gap shoots up. Those at the 90th percentile earn 16 percent less than their male counterparts. For all age groups over 30, the pay gap at the 90th percentile jumps. (The 18-21 pay gap also shoots up but we are talking about a much smaller group here; about a tenth the size of the other age cohorts.)

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Age and position in the earnings distribution, then, has a significant effect on the gender pay gap. Women over 40 and/or in the upper income bracket earn significantly less.

The CMI/XpertHR survey prompted the usual outrage and demands for compulsory equal pay audits, the implication being that the pay gap is the fault of discriminatory employers.

Stop blaming the children,” said Harriet Minter in the Guardian, implying that employers are discriminating against women with children.

There is little doubt that having children has a significant impact on women’s earnings. The gender pay gap appears just at the point in the age distribution when many women have children.

This data from Debra Leaker’s ONS study reinforces the point. She found that the gender pay gap increased with the number of children. Having more children has little effect on men’s pay but quite a lot on that of women. Furthermore, among single people of all ages, there was no gender pay gap at all.

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This is pre-recession data (I’d be interested to know if anyone has done a similar analysis since) but it probably still holds true. Children have more of an impact on women’s pay than men’s.

Some of this may be due to discrimination but other factors are at work here. The data show that the pay gap is steepest at the higher income levels. High paying jobs tend to be with bigger organisations, the ones with sharp-eyed HR and diversity departments and therefore most likely to spot any unfair practices. That doesn’t mean that deliberate discrimination against women with children is impossible but it does make it that bit less likely.

The motherhood pay gap has as much to do with women ruling themselves out of high paying jobs, simply by being the ones who take on most of the childcare responsibilities. As the Women & Work Commission said:

Women, particularly women with children, tend to have shorter commuting times than men which limits the range of jobs available to them. This potentially leads to the crowding of women into those jobs available locally, and in either case, depresses wages.

On average, women who have children have a quicker journey to work than women without children. The travel-to-work time of women with more than two children is half that of their male counterparts.

Women often want shorter commuting times than men if they have children to drop off and pick up. Also, for women working part time, it does not make financial sense to commute long distances.

It also noted:

The difference between the commuting time for men and women is largest in London.

Which is where most of the high paying jobs are.

An ONS study a couple of years ago found that pay levels tend to rise with commuting distance, especially in London.

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If women want to work closer to home, it will have an effect on their pay and this effect is likely to be greater in higher paying jobs. An accountant or lawyer based in a suburb or small town is unlikely to earn as much as one based in central London or the centre of one of the major cities. Even if a woman reaches a senior position in a local firm, she won’t earn as much as she would in the big city.

Some of the gender pay gap, then, is due to social factors. Even in enlightened Scandinavia, women still take responsibility for most of the childcare. These countries have done more than most to close the gender gap, yet their pay gaps are still around the EU average and only slightly lower than ours. Italy, on the other hand, all but eliminated its full-time gender pay gap by taking a lot of its women of childbearing age out of the workforce altogether. This, I hasten to add, was not government policy but the result of deep rooted cultural assumptions. In Italy, women leave the workforce when they have children. In Scandinavia, as here, they soldier on in part time or lower paid jobs. Even the Nordics’ famous female-friendly policies can’t redress that balance.

The CMI/XpertHR finding that the gender pay gap is so wide in managerial jobs shouldn’t come as a surprise. It is in these roles where the effect of childcare responsibilities on salaries is most acute. The further up the pay scale you go, the bigger the gap.

None of this is to say that employers should not do more to reduce the gender pay gap but I wonder how much difference employer action will make. Pay transparency rules might yield some interesting information for pay data geeks to pore over but I doubt that it will tell us much that we didn’t already know, or even whether it will reveal some major employers to be significantly worse than others.

It is unlikely that the gender pay gap will disappear until equal proportions of women and men take equal responsibility for childcare. Even in Scandinavia, it doesn’t look as though that is likely to happen soon.

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8 Responses to Why is the gender pay gap higher for management jobs?

  1. Good blog. You cite my own blog (arguing for compulsory equal pay audits) as an example of ‘outrage’ and pointing the finger wholly at employer discrimination. This misrepresents what my blog actually says – in particular I quote evidence that the pay gap has many causes, not just employment discrimination. However, given that the government has relied on voluntary action by employers to disclose gender pay data and that so few (ie 4) of the 200 employers who signed up to do so have published usable data, I do think it’s time to consider applying the existing Equalities Act provisions on equal pay audits as part of a range of measures to get business to ‘comply or explain’ their actions in this important area. I wasn’t being indignant or ‘outraged’, nor was I seeking to blame it all on employers. as your very good blog explains well, it’s much more complex than this. Steve Bevan, The Work Foundation.

  2. Rick says:

    Sorry Steve, I didn’t mean to accuse you of outrage, though, having looked at what I wrote again, I can see why it looks that way. Lazy sentence.

    I wonder if some private sector employers understand their own pay data enough to be able to work out whether they have a problem or not. In public sector organisations, most of which have some sort of job evaluation, it’s easier to compare different roles. Even some of the larger private sector firms don’t have anything quite as clear.

    This is anecdotal, sure, but many of the HR people I talk to see it as taking up a lot of resource that they would rather spend doing something else.

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