01-April-2015

There has been a proliferation of stories in the media about the so-called “gender pay gap” – a label for the observation that a given sample of male workers receives more annual salary and wages than a given sample of female workers. This has gone beyond the business media and become a pop culture topic. Here’s a recap of some of the key stories:

  •  Patricia Arquette in accepting her Oscar ranted on the gender pay gap in Hollywood, pointing out the pay of Christian Bale, Jeremy Renner and Bradley Cooper compared to that of Amy Cooper and Jennifer Lawrence for the film American Hustle. She only cited the difference in “back end” compensation, and despite my research I could not find the front end pay for those roles. The males did indeed get more backend for this movie.  But I always review both the front end and the back end when evaluating the value of an actress.
  •  This was followed by Hillary Clinton’s speech during her trip to Silicon Valley in which she cited that “One recent report on the gender pay gap in the Valley found that a woman with a bachelor’s degree here tends to make 60 percent less than a man with the same degree.” The report Hillary cited was full of flaws, and she misstated the report’s conclusion demonstrating her inability to interpret percentages. Hillary as Senator paid her female staff only 72% of what she paid her male staff, making significant progress in closing that gap.
  • Puget Sound Business Journal columnist Rachel Lerner wrote that “Higher paying jobs in Washington state tend to go to men over women. No surprise there…” She doesn’t cite any data to support this, but it must be true because I read in in the PSBJ. I didn’t know that jobs “go to” someone, I guess someone is in charge of passing out jobs to people regardless of which job they applied for. Based on the PSBJ’s About Us page, it looks like the top jobs at PBSJ go to males and the lower ones go to females, so I guess they know what they’re talking about.
  • Female CEOs are even worse off – they only make one-third of what male CEOs make, and have men in their organization making more than them. In a couple of cases. Nevermind the fact that the number one factor, over time and across industries and all other factors, determining CEO pay is company size (in revenue or assets) and that on average female CEOs run much smaller companies than male CEOs. That person passing out CEO jobs clearly is showing their bias here, giving the small company CEO jobs to women.
  • This seems to be a problem even in female-dominated industries where one would think that female domination would lead to higher female pay. This “stubborn pay gap” exists in nursing. Fortunately, less than 10% of nurses are male, so in aggregate female nurses are paid nine times more than male nurses, and I think Hillary would say this means that male nurses are underpaid by 800%. Statistics.
  • But wait, there’s more. It turns out that males in every industry (except one) earn more than females. An article in the Wall Street Journal cites a study with proof positive of the massive conspiracy, based on government data. That should provide comfort to everyone that the data is correct.
  • The Federal Reserve Bank of New York chimed in with their study of executive compensation using data from the years 1992-2005. This analytic catastrophe deserves dedicated blog commentary, so for now I’ll just point out how helpful it is to know what may have happened 10 to 23 years ago.
  • Finally, the 2015 Fortune “Best Companies to Work For”  reports that the “best” companies for women are those that provide rich female-oriented benefits and perks which of course do not count in the gender pay gap calculation. Apparently, if a female takes a job paying 20% less salary and then gets the equivalent of 30% of salary in extra benefits and perks which are not available to males, she is still underpaid by 20%. There is not a list of the best companies to work for if you are male but I assume that includes every company due to the gender pay conspiracy.

Each of these studies reaches the same conclusion – males receive more pay than females, always and everywhere, thus proving a wide and deep current of gender-based discrimination in pay.

These articles typically include, toward the end of the piece, mention that the researchers don’t know whether the males in the sample work more hours, work higher-paying shifts, work in higher paying occupations (e.g., neurosurgeon vs. nursing assistant in the “medical” industry), have more years of experience because they didn’t take time off to bear and raise children, are better or more aggressive negotiators (i.e., bigger jerks), or the most likely explanation – that there is a widespread conspiracy among males to systematically underpay females.

To free up space in the media by putting an end to this seemingly endless stream of stories and speculation, I recommend we simply do the following and be done with this debate:

  1. Have all males in the United States sign a confession, ratified by Congress and President Obama, that we have secretly conspired for decades to withhold money from females, just to be mean and greedy and hear them complain about it. We males love this sort of thing. I’m surprised, though, that in 30 years of compensation consulting with hundreds of clients and thousands of executives I was never told about this conspiracy; they must have discussed it while I was out of the room. But I’ll sign the confession just to move things along.
  2. Pay females with lower-paying credentials (e.g., nursing assistant) the same annual pay as males with higher-paying credentials (e.g., neurosurgeon). This will have the additional benefit of reducing the workload on compensation professionals who spend their time ensuring that pay is determined by job, education, experience, performance, and market rates of pay. This ultimately could move us to a single unified rate of pay for everyone regardless of what they do.
  3. Pay females their full annual rate whether they work in a job or stop working in a job to bear and/or raise children or would just rather not work. These payments would have no limit so that a female could, for example, work for one year as an attorney and then quit to raise a family and continue to receive attorney pay, with annual increases and promotions, for the remainder of her working life. This will require some additional work upfront by payroll departments but should be facilitated by new technologies such as Apple Pay. If the female has never held a job, simply pay her the amount that she thinks she deserves if she did in fact have a job, such as a neurosurgeon. I’m not sure who would actually pay for all of this, maybe there will be some male-funded pool.
  4. Provide stock-based compensation awards – stock options and restricted stock units – to females who take jobs in not-for-profit organizations that provide generous work-life and maternity benefits (the value of which are not counted in the pay gap calculation) so that they get the best of both worlds – rich benefits and perks, not-for-profit work pace and work-life balance, plus the unlimited upside of equity compensation received by workers in the innovation sector. It’s just not fair that someone who chooses to change the world by providing healthcare in a not-for-profit hospital 30 hours per week does not get Apple RSUs like the engineers choosing to change the world by inventing things that defy the laws of physics and who are working 90-hour weeks and sleeping under their desks. Lots of accounting and tax issues, here, but we Certified Equity Professionals will be able to figure this out.
  5. Pay all females extra money just in case the solutions above inadvertently result in one or more females earning less than any male in the US.

We will have to give these ideas a bit more thought because if one female receives more money than another female, there might be a research study and media coverage, again clogging up my daily news feed. I know that in Seattle if it turns out that transgenders are earning more than lesbians, this whole thing will blow up again. A political hot potato indeed.

01-April-2015