Please ensure Javascript is enabled for purposes of website accessibility

Study: Pay Inequity by Gender Remains a Problem

By Daniel B. Kline - Apr 10, 2018 at 6:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Increased awareness has not solved or lessened the problem.

While the issue of gender pay inequity has been all over the news, employers in the United States have not made collective progress toward solving the problem. In fact, the third annual Gender Equity report produced by Visier shows that the pay gap has increased for women under age 40.

In 2015 women under 40 earned an average of $0.81 for each dollar earned by their male counterparts. That improved to $0.82 in 2016 before getting worse in 2017, falling to $0.79 per dollar, according to the study. Visier's study examined a subset of its customer database: over 60 companies with a total of 1.5 million U.S.-based employees.

In addition, the gender wage gap for workers over 40 showed no meaningful improvement. That gap was measured at $0.72 per dollar in 2015, climbed to $0.74 in 2016, and then dropped back to $0.73 in 2017.

A graph showing the pay ratio for women under 40 and women 40 or above, 2015-2017

Image source: Visier. Used by permission.

Women are outperforming men

Pay rates are not based on performance. That's clear because while gender-pay disparity has not lessened, women have actually increased their lead over men in how they do their job.

In 2017, women were 21% more likely than men to achieve top-performer status; that's up from 12% in 2015. For managers, the divide was even bigger: Female managers were 22% more likely than male managers to be rated as top performers in 2017, an increase from 7% in 2015.

"Despite the higher likelihood of women being top performers, there is a considerable gap between the proportion of men who are managers and women who are managers," according to the Visier study. "In 2017, 18% of men held manager positions compared to only 12% of women. Given managers on average earn two times the salaries of non-managers, this gap contributes significantly to the overall gender wage gap."

A woman holds a symbol for gender inequality.

The gender pay gap has not improved. Image source: Getty Images.

Work needs to be done

While you would think the awareness the millennial generation has of this issue would help correct the bias, that's not actually what's happening. Women under 40 actually receive nine promotions (and the associated gains in pay) for every ten that go to men.

There is, however, some positive light at the end of the tunnel. Over age 40, the promotions trend actually inverts, with women receiving slightly more promotions than men.

Gender pay bias is not an issue that will be corrected simply through awareness, or a more enlightened generation assuming more power. It's one that companies need to take active steps to address.

Ideally, pay should be equal for two people who perform equally well in the same role. In addition, promotions should be doled out based on merit.

Neither of those things is happening yet, which suggests this issue needs a lot more active attention from companies. This is a solvable problem, but you have to understand what's wrong in order to fix it.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.