The Gender Pay Gap Analysis

The bad news for women is that the gender pay gap is still with us. Among full-time workers in the U.S., women make around 84 cents for each dollar that men make. When we include part-time and seasonal workers, the pay gap widens to the point that women are receiving just 73 cents on the dollar that a man makes, on average. Over the course of a 30-year career, that difference adds up to about half a million dollars in lower earnings for a working American woman.

To understand this $500,000 difference better, McKinsey Global Institute analyzed the career trajectories of tens of thousands of women and men in the U.S. to track what tends to happen over time. Our bird’s eye view reveals that nearly 80% of the 27% gender pay gap observed over a decade or more is driven by women’s tendency to move into lower paying jobs and to work fewer hours compared with men.

In other words, where men, on average, tend to move into higher-paying occupations, women are more likely to make lateral moves or even move to lower-paying occupations. For example, among the U.S. workers who started their careers as nurses (a female-dominated profession), women were more likely to remain in the field or move to similar paying jobs, while men who started as nurses were more likely to become health services managers or move to other higher-paying positions. Among tech professionals (a male-dominated realm), a similar pattern was seen in terms of career trajectories.

It’s important to note that this study does not ascertain why men or women in our sample chose to work more or fewer hours or opted for higher- or lower-paying occupations. We know there are myriad rational reasons to follow one career pathway or another that have to do with opportunities, preferences, and tough trade-offs.

Instead, McKinsey Global Institute assessed the results of accumulated career decisions that help us make sense of a gap that has narrowed but not closed.

Insights from the Comparison

• Women average 8.6 years of work for every ten years worked by men. Adding up weekly hours on the job and breaks between jobs reveals a 14% difference in time worked over a decade. The difference happens to be most pronounced during peak childrearing years and never disappears.
• The accumulation of time at work drives over a quarter (7 percentage points) of the gender pay gap.
• Meanwhile, over half (14 percentage points) comes from diverging career pathways. In our data, we see more women than men downshifting into lower-paying occupations, typically ones involving less competitive pressure and fewer full-time requirements.

Of the total 27%, that leaves 6 percentage points that we can’t trace back to work experience or other variables that we tested. This residual may stem from conscious or unconscious bias or other factors outside the scope of this research.

Companies have Positive Roles to Play

The data is clear about a few things. Whether working as a nurse, programmer, accountant, or office assistant, first jobs are mere entry points. In our data, we see men and women changing roles an average of 2.6 times per decade of work, acquiring new skills along the way.

Adding to previous research from McKinsey Global Institute, we also see that some companies can help narrow the work-experience pay gap that accumulates over time by encouraging role mobility and offering coaching. We see positive results due to fostering a culture that challenges employees and invests in their continued learning.

Recommendations for Organizations

Based on the insights gathered from the analysis of the gender pay gap, organizations can take specific actions to address this issue:

1. Implement transparent pay structures: Ensure that pay decisions are based on objective criteria and are transparent to all employees to prevent gender bias.
2. Promote career mobility: Encourage employees, especially women, to explore different roles within the organization to gain diverse experiences and skills.
3. Provide mentorship and coaching: Offer mentorship programs and coaching to support women in advancing their careers and navigating challenges in the workplace.
4. Invest in diversity and inclusion training: Educate employees on the importance of diversity and inclusion to create a more equitable work environment.
5. Conduct regular pay equity audits: Regularly review pay data to identify and address any disparities in compensation based on gender.

FAQs

Q: What are the main drivers of the gender pay gap?

A: The main drivers of the gender pay gap include differences in career pathways, time worked, and potential biases in pay decisions.

Q: How can organizations address the gender pay gap?

A: Organizations can address the gender pay gap by implementing transparent pay structures, promoting career mobility, providing mentorship and coaching, investing in diversity and inclusion training, and conducting regular pay equity audits.

Conclusion

In conclusion, the gender pay gap persists in the U.S. despite efforts to narrow it. By understanding the factors contributing to this gap and taking proactive measures to address them, organizations can create a more equitable and inclusive workplace for all employees. It is crucial for companies to recognize the importance of gender pay equity and take concrete steps to bridge the gap for a more prosperous and fair future.

This article originally appeared in Forbes.