Research: Women Who Leave Workforce Incur Up to 7 Percent Pay Penalty Upon Return
PayScale, Inc., a leading provider of precise, on-demand compensation data and software, released The State of the Gender Pay Gap report Thursday, which reveals new insights about both pay and career opportunity disparity between men and women. The report shows that when employees leave the workforce for one year or more, their pay upon returning to work is 7 percent less than an employee who is currently employed when seeking the same job. Since women leave the workforce more often than men, according to this new report, and their breaks tend to last longer, they are disproportionately penalized with lower pay due to career interruptions. The new report also shows that as employees progress through their careers, men are far more likely to find themselves in executive positions with bigger paychecks than their female counterparts.
“The current business climate has created a new focus, and even spurred new laws, aimed at achieving equal pay. However, it’s not enough to pay men and women the same amount for the same work if companies really want to address the gender pay gap,” says Lydia Frank, Vice President at PayScale. “Employers should go a step further and determine if women have the same opportunities as man for advancement at the organization. A disparity in representation of men and women on executive teams and boards has a huge impact on the overall pay gap.. We’ll never close the pay gap if we don’t get serious about solving the opportunity gap. This also means evolving policies and work culture to balance the burden between the genders of caring for children and other family members to alleviate the current career and pay impact for women.
The new PayScale research shows that men move into more senior positions at significantly higher rates, underscoring the opportunity gap problem. By mid-career, men are 70 percent more likely to be in executive positions than women and by late career, men are 142 percent more likely to be in vice president or C-suite roles which are typically the most highly compensated positions at a company.
Here are some additional findings from The State of the Gender Pay Gap report:
Gender Pay Gap Still Persists—Overall, women earn 77.9 cents for every dollar earned by men across the entire labor market, defined as the ‘uncontrolled pay gap’ by PayScale. However, when compensable factors such as experience, industry and job level are taken into account, women earn 97.8 cents for every dollar earned by their male peers for doing the same work (i.e. the ‘controlled’ pay gap).
The Pay Gap Increases as Women Progress in Their Careers—The typical 20 to 29 year-old woman earns 81.8 cents on the dollar compared to her male counterparts. The gap widens to 76.7 cents for women aged 30-44 and 69.1 cents for those 45 and older.
Women’s Careers are Prone to Stagnate—Men and women enter the job market at similar, junior levels. However, women over age 30 are more likely than men to remain in those individual contributor positions. In the age group over 45 years, 59 percent of women are in still individual contributor positions versus 43 percent of men.
Career Disruptions Impact Earning Potential—Periods of unemployment have a negative impact on pay and the penalty increases as a person takes more time away from work. People who return to work after a period of unemployment make 4 percent less than someone who has not recently had a career disruption. Meanwhile, someone who has not worked in over a year experiences a 7.3 percent penalty in pay.
Women Leave the Workforce at Higher Rates Than Men—Women are five times more likely than men to take breaks from working for child rearing, and since their breaks are more likely to last more than a year, they are particularly hurt by the unemployment penalty which is reflected in the gender pay gap.
The Pay Gap Varies Widely by State—The three states with the greatest controlled pay gap between men and women are Louisiana (7.4 percent), Alabama (7.1 percent) and West Virginia (6.5 percent). Meanwhile, women are actually paid slightly more than men for doing the same work in four states: Rhode Island (0.2 percent), District of Columbia (0.5 percent), Vermont (0.6 percent) and Connecticut (1.6 percent).
The Pay Gap Also Varies across Industries—The oil and gas industry has the largest controlled pay gap at 7.4 percent, followed by transportation and warehousing at 4.9 percent. In contrast, the technology and education industries have the lowest controlled pay gap at 0.8 percent and 0.6 percent, respectively.
To further the discussion about the gender pay and opportunity gaps, PayScale will host an event on Equal Pay Day, April 10, 2018 at the PayScale headquarters in Seattle, Washington. The event, called Equal Power Day, will focus on ways to close the opportunity gap—as well as the pay gap—that persists between men and women, including a session for gender pay allies. To view all the data and explore the entire The State of the Gender Pay Gap report, please visit: https://www.payscale.com/data-packages/gender-pay-gap