The Million Dollar Question: Does Regulation Create Wage Equality?
Part I of our “Women-on-Fire” Series
With all of the rhetoric and fierce debate surrounding the wage gap between men and women this year, especially in the primary season political debates, it is hard to ignore the cold facts about income inequality.
Firstly, it’s important to note that I am speaking from the perspective of a working woman who has strived to find a reasonable work-life balance while building a career in the Tech Industry (notorious for pay disparities between men and women) and as an entrepreneur.
Whether you are on Donald’s “ #Trump – card” side of the argument, or Hillary’s “ #womancard ” side of the argument, the facts simply do not lie: women get paid less on an annual basis for doing what is considered exactly the same job.
So what is the solution? Do we introduce new regulations to ensure wage equality? Or is there a better way?
There may actually be a legitimate reason for the gender pay gap.
Here is a counter argument that is worth contemplating but does not seem to get enough air time:
- Women are paid less than men at the beginning of their careers, although not by very much – about 9%. So, let’s consider this to be the true measure of gender bias, a 9% baseline pay gap due to gender…
- At mid-career, right about the age of 35-40 years old, insurance actuary tables declare women to be a higher risk than men (AKA the “childbearing” years) and the gap widens significantly to 19%
Age is more than just a number.
- Normalized for the true measure of gender bias, that 19% reduction in earnings equates to the existing 9%, plus an additional 10% that could be argued is due to women “taking themselves out of the market” due to stepping out of the market during prime career earning years
- Note, most studies reveal that ages 35-45 years is the window when most career professionals experience the highest rate of pay increase – this includes men and women
- So, not only are men typically on an accelerated pay increase rate during this window, but, women who have chosen to remove themselves from the market further reduce their earning pace during these critical career years
So, when a woman who opted out of the workforce during this period does ultimately return to the job market (and let’s be honest, our culture is still very patriarchal wherein the man goes to work to earn for the family, and the woman stays at home to take care of the kids – for at least the first few years) four significant trends come into play…
And it is the impact of these four factors that results in a significant, and perhaps even legitimate, pay gap. Yes, I said legitimate! It is a pay gap that naturally sustains throughout the remainder of the traditional career (I’m intentionally emphasizing traditional career here):
- While she’s been out of the workforce, the pay rates for men have naturally increased due to annual performance reviews, promotions, change in jobs, and a myriad of other factors
- The woman has been out of the market for several years causing her to miss out on these traditional performance review and pay increase milestones, causing her to have to re-prove her capabilities in the market due to the absence of performance evidence (both primary and secondary evidence)
- Hence the entry level for a woman returning to the market tends also to be lower than, or perhaps equal to the level when she left the market
- Lastly, she has now returned into a labor market that is being fed by younger people – and at a time in life when she may have come to realize that perhaps family is more important in the work-life balance pursuit
So, again, when she was in her 20’s the gender-based wage gap that was normalized at 9%, continues to exist, but now the gap is closer to 30%!
So here it is; the counter argument for regulated wage equality:
All of these things being true, frankly, I don’t want my employer to be forced through regulation to pay me the same amount as a man. In the same manner, I also don’t want them forced to pay a man the same level as me, simply because of gender.
And as an entrepreneur and business owner myself, I’d hate to be forced pay someone based on gender rather than relative performance.
And that is where I see the greatest danger in this endless #womancard debate.
The regulations and laws already exist and we don’t need more.
I, and most of the women that I’ve spoken to, have grown tired of the debate about this topic. Frankly, the added regulations and reporting requirements, conveniently timed to hit during the election debates, seem to be nothing more than a political ploy to gain the “women’s vote” and that is down right insulting!
On top of that, these added regulations and reporting requirements will only serve to cause an administrative burden, and cost, to companies that are already striving to do the right thing: To pay people fairly based on their level of contribution to the bottom line.
Here is another hard fact to keep in mind… we are a capitalist society therefore, what we are paid is in direct relationship to the value that we place on our own work and the value we each deliver – NOT on the value that a regulator places on the work.
The best way to get out from under the gender pay gap? Is to literally get out from under it!
Furthermore, advances in technology, non-traditional careers, entrepreneurial economies, the rise in consulting and independent contracting, and the rapidly rising rate of digital entrepreneurship is quickly allowing our society to overcome the 9% baseline gender bias on its own.
We all have a choice, and I prefer to be paid for the worth of the work that I do. And if I’m not happy with what someone is paying me, I will choose to work elsewhere and I will negotiate the pay level that I believe my work is worth.
These days the best way to get what you are confident that you deserve is to MOVE… Vote with your feet! Pursue a new position. Start a new career. Work for a competitor. Make the change!
Demanding that I get paid the exact same amount as someone else, simply because I am a woman, and regardless of the quality and impact of my contribution to the business, is paramount to creating a socialized union labor market where quality and impact become meaningless, and pay grades based on tenure govern what I can make.
Frankly, I don’t want my pay limited any more than I want your pay level limited and I believe that continuing down the current regulatory path and forcing this issue further will result in exactly that – limited pay rather than limitless pay opportunities.
Controversial? Perhaps, and we’d love to hear your take on it, so please share your comments in the section below or connect with us at info@pendolinogroup.com.
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