For the past twenty years the gender pay gap in Australia has hovered around 16%. There has actually been a steady rise in pay inequality in more recent years, with the gap increasing from 14.9% to 17.8% between 2004 and 2012 (source). The private sector pay gap is notably larger than the public sector; 21.0% compared to 12.8% in November 2011.
The 20th century saw working conditions improve dramatically, with women no longer obliged to renounce employment upon marriage and the legal recognition of ‘equal pay for work of equal value’ in 1972, which mandated that award rates be set on ‘work value’ grounds and not on the basis of the sex. Fair Work Australia’s recent ruling that low wages in the community sector are a product of gender-based undervaluation is a positive development, yet progress in closing the gender pay gap and achieving equality in the workplace largely appears to have stagnated.
The Equal Opportunity for Women and the Workplace Agency (EOWA) breaks the gender pay gap down into components here. 9% of the gap can be attributed to women having less access to overtime, over-award payments and other benefits, and 43% to differences in workforce participation. Yet nearly half the gap – 48% – is unexplained pay inequality.
A common explanation for this discrepancy is that men are more aggressive in reaching their career goals; men ask for pay rises and promotions and they get them. Research generally supports this explanation and this is one reason why we see large numbers of women in tertiary education and at the lower levels of professional industries but noticeably absent as you approach and pass the glass ceiling. A seemingly logical response is to suggest that women simply change their behaviour, toughen up and start negotiating in order to get ahead.
However economic and psychological research suggests that behaviour is perceived differently depending on which sex it is displayed by. Research by Hannah Riley Bowles, Linda Babcock and Lei Lai, from Harvard University and Carnegie Mellon University, reveals that people react differently to men and women negotiating promotions and salary. When women ask for more they are seen as pushy and ‘less nice’ and are penalised more than their male colleagues. Economic research by Fiona Greig, also confirms that women are subject to greater social costs, a ‘backlash’, when they defy gender stereotypes and behave more aggressively in the workplace.
These results suggest that women are actually responding to incentives and acting rationally when being unassertive in the workplace. Bowles says ‘The point of this paper is: Yes, there is an economic rationale to negotiate, but you have to weigh that against social risks of negotiating. What we show is those risks are higher for women than for men.’ Women are placed in a damned-if-you-do, damned-if-you-don’t situation when it comes to career advancement, and for many the benefits of inaction outweigh the costs.
These results suggest that legislation and traditional policy can only go so far in closing the gender pay gap. To further reduce pay inequality the environment of the workplace must be changed so that women are no longer penalised for defying gender stereotypes. Simply being conscious of the existence of a gender bias and how this may impact upon something like salary bargaining is a positive first step.
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7 thoughts on “Why Women Don’t Ask For More: The Gendered Cost of Workplace Negotiations”
Good research, and I like the conclusions here. Refreshing, as too often people like to prescribe some government fix – deluded into thinking governments can overcome social and market forces.
Thanks for the feedback Collin. Grassroots social change is integral to addressing gender discrimination, however I am skeptical about the role of the market. The pay gap is significantly larger in the private sector for example, and the Equal Remuneration Case which was before Fair Work Australia earlier this year found that the market had been undervaluing the community sector partly due to gender bias (see my reply to Hanbo below for more on this).
Whilst by no means intended as a denial of a gender bias, an important point that has to be raised here is that we are talking in terms of averages. As such whilst there may be more men who are assertive in the workplace, not that I can vouch for this with personal experience (I have never been near the ‘ceiling’, glass or otherwise), there are also a lot of men who are not assertive and have introverted personalities that probably also get left to the wayside in terms of promotions. Although it is very interesting what you are saying about women choosing to be less assertive through fear of being perceived as pushy etc; a truly terrible situation to be in.
Perhaps one issue that needs to be addressed here is the fact that promotions should not be going automatically to those who ask for them but rather there should be better metrics for measuring the job performance of workers and promoting based on merit. However there is a factor that this approach ignores; that is in many industries at higher level positions, assertiveness and extraverted personality types are highly sort after to seek out new clients, maintain relationships etc. Perhaps this is one reason for promoting those who push for opportunities?
I know that employers generally are making a big push to have universities produce graduates that have ‘soft skills’, such as communication, ability to work in a team, etc. I have heard there have been many horror stories of hiring a Mr/Ms 99.9% graduate who turns out to be incapable of human interaction. Hence why there are so many dreaded group projects! (I disagree that these projects really achieve this aim, but that is another discussion entirely).
@Freya I have not done much research into this area. I am curious to know whether you think that a significant contributor to income gender bias in the workforce is the fact that companies are trying to avoid paying maternity leave and the costs of temporary replacements of women at high salary levels? I did read somewhere that increases in mandatory maternity leave creates a disincentive for companies to hire women in the first place, particularly in smaller businesses, not sure how strong the evidence is though.
David, I think that better metrics for measuring job performance and promoting accordingly is a great idea. But given that we know that traditionally ‘masculine’ traits are rewarded in the workplace (hence the gender earnings gap) and that women suffer when they display these traits, it’s not the measurement that’s the problem, but what we are measuring! We need to change workplace norms so that ALL workers aren’t expected to fulfil expectations set by male-dominated workplaces.
In relation to your question to @Freya about maternity leave, the Federal Government recently introduced a Paid Parental Leave scheme to be paid to all eligible employees regardless of gender. Maternity leave is happily a thing of the past. It is fully-funded by taxpayers, and paid to leave recipients at the rate of the national minimum wage, so there should be no disincentive for any business, small or large, to hire or promote women.
You are absolutely right about the paid parental scheme, thanks for raising that point.
I was intending the question in a wider, global sense. However, in terms of Australia, the Paid Parental Scheme only came into effect on the 1st of January 2011 so I would say that prior schemes would still have a significant impact on the current levels of wage disparity. Another thing to remember is that there are non-monetary costs associated with leave, such as finding temporary replacements, and having temporary replacements which might not be optimal for the position they are filling. Whilst both parents are entitled to take leave, and often both do, the fact remains that women tend to be the ones to take extended leave (whether this is by choice or societal pressure is another story). Even the information section on the Parental Scheme webpage refers several times to the fact that the payment is only available to the primary care giver, “usually the mother”. The fact that the government has no qualms saying that openly shows where we are at in terms of subtly designating gender roles.
In terms of what you are saying about needing to change what is measured, that may be true to some extent, but changing what is measured doesn’t change what traits are required by business for certain positions. The danger is that by asking businesses to pretend they are not looking for assertive extroverted people for certain positions, you end up pushing the promotion criteria underground so to speak.
Candidates will be rejected for ‘other reasons’ to cover for what the real reason is; in other words the glass ceiling will be reinforced. I guess what I was trying to get at by talking about improving the metrics would be along the lines of setting fixed targets to show that you are sufficiently assertive/have strong people skills without having to prove it to your boss by marching into their office and putting on a show. For example you could have a requirement to sign up so many customers, or lead so many meetings successfully, win proposals etc. Exactly what the metrics are don’t matter so much, the key thing is to introduce objective measurement so that the bias of the decision maker is not influencing the outcome.
That is not to say that there aren’t other traits that are very valuable to business that are currently being overlooked by business managers. Incorporating new ways of measuring that are beneficial to the organisation will work; trying to change the measurements to benefit one particular group at the detriment of the organisation is not a good idea. Such moves build resentment amongst colleagues and can leave the person who is promoted wondering if they are there on merit or not.
The link describes some economic reasons why, when accounting for the differences in women’s career goals and aspirations (a product of society, no doubt), their incomes are roughly equal to that of men.
Interesting link! It is great to see that the pay gap closes when women make the same education and career choices as men though, as you note, ‘choices’ are strongly influenced by the environment in which we live. (I would strongly recommend Delusions of Gender by Cordelia Fine, Associate Professor at the Melbourne Business School, for anyone interested in the social and psychological factors which influence the education and career choices of men and women; the reasons why we don’t see more women in maths, hard sciences and engineering (and even economics!), or more men in nursing, teaching and the humanities.)
However the video ignores the wage discrimination which occurs across industries. Earlier this year Fair Work Australia awarded wage increases of 19% to 41% to community sector workers in a landmark equal pay case. A key finding of the investigation was the influence of gender on low wages; community sector work was undervalued because of the ‘feminised’ nature of the work. This type of discrimination is common and damaging not only to women, but also to men who work in these sectors. We need to critically assess the value we place on certain industries.
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