In February, the Workplace Gender Equality Agency revealed the average gender pay gap was 21 per cent across Australia’s leading employers. In presenting their results, employers frequently sought to contextualise their data, a mea culpa of sorts. A consistent observation across these reports was that women predominantly occupy low-paying roles.
Take Qantas, where the pay gap was a staggering 53.5 per cent. The national carrier pointed out their highest-earning positions, such as pilots, are primarily male-dominated. It promised to do better, by recruiting more female pilots. Many other ASX200 companies are proposing similar resolutions. While such initiatives are welcome, they do not address the significant drivers of the gender pay gap nor are they sufficient to close it.
Why? Because in our research at the e61 Institute, we use new tax data that covers the entire Australian workforce. Occupational differences account for merely one-fifth of the pay disparity.
While it’s true that men and women are segregated by occupation, this alone isn’t enough to explain the pervasive wage differences between genders. For instance, while women predominate in lower-paying roles within the care sector, men similarly fill many low-wage positions in the construction industry.
The bulk of the hourly gender pay gap is because women are being paid less than men in the same occupation. We estimate this accounts for about 80 per cent of the gender pay gap. For example, among doctors and dentists, investment managers, dealers, and advisers women are paid between 10 to 14 per cent less than men in the same occupation.
Why are women paid less than men in the same occupation? One could suggest that female finance professionals, for example, tend to be younger or less knowledgeable than their male peers. However, research by e61 reveals that even after adjusting for age, tenure and academic performance, the wage gap remains unchanged.
What else drives these differences in pay if it is not occupation? This is where it is important to note that job descriptions and requirements can vary substantially across firms even within the same occupation. Naturally, this influences how much you get paid. Companies can end up paying similarly trained and qualified people very different amounts. Some economists suggest that this contributes 20 per cent to the overall gender pay gap.
Take management consulting, where salaries can vary by large amounts between firms, even at the junior level and for tasks that require the same skillset. Even when tasks require similar training, the volume of work and the time frame can vary substantially from firm to firm. Nobel Prize-winning economist Claudia Goldin argues that the salary boost you get at a top management consulting firm, where expectations on performance are high, can be thought of as compensation for a lack of flexibility. Goldin calls them ‘greedy jobs’.
Our analysis shows that a key contributor to why women earn less than their male colleagues within the same occupation is due to personal factors: marital status and having dependent children impose a penalty on how much women earn compared to men. One potential reason behind this is that women do not get the opportunity to work in these ‘greedy’ jobs at high-paying workplaces, in areas such as the law, consulting, medicine and finance.
Since 1968 in Australia it’s been against the law to pay women less than men for performing the same role or different work but of equal or comparable value. Gender pay gaps are not a measure of equal pay but rather, as the WGEA says, “the difference between the average or median pay of women and men across organisations, industries and the workforce as a whole”.
Our research suggests that companies committed to narrowing the gender pay gap should implement policies aimed at accommodating domestic and parental responsibilities. Every survey shows that these duties are primarily shouldered by mothers. Such reforms may include normalising job-sharing in leadership positions or being flexible with when or where work tasks are completed.
The efforts of companies to reduce the gender wage gap are likely to be in vain if they focus only on promoting women into high-paying occupations, such as pilots or fund managers. If employers have a genuine mission to ameliorate the pay gap, the question of workplace flexibility will have to be at the centre of their efforts.
Feature Image: Dr Silvia Griselda.