I’m sure you’ve all heard the statistics. “Women make only 77 cents per dollar that a man makes.” Of course, the same articles will point out that this is in part because women are taking jobs that pay less. Just dividing the average salary of women by the average salary of men, regardless of the jobs each is doing, is comparing apples and oranges.
So the first thing that women need to do if they want equal pay is to take on the jobs that pay more. I remember in engineering school, a good paying career where there were few women to start with, that after the first year most of the women remaining shifted from the harder disciplines like mechanical engineering into easier ones like industrial engineering. The more people you have to do a job, the lower the pay will be. The easier the field, the more people who will go through the training needed to enter that field. If you want more pay, you need to do the hard things that fewer people will do. Things like chemical engineering, which makes among the top salary every year, mechanical engineering, and aerospace engineering.
But even in the same jobs, women do tend to earn less than men, albeit not 23% less as the headlines read. While many would say this is due to sexism and push for more government control of wages, (these same “many” probably are paying the women on their staff far less than the men, since we’ve seen this is the case for prominent politicians who are advocating for pay equality), I would say this is not the case. If it were, women would find it far easier to get a job than men since companies could pay them less. Why would you hire a guy for $200,000 when you could get a woman for $160,000 with the same level of performance and same experience? You wouldn’t.
Really, the difference in men and women’s pay, when you remove other factors such as the jobs they are doing and the education they have, comes down to two factors: negotiation and work history.
You need to negotiate. When a company is hiring for professional jobs, particularly those in higher-level positions, they are not hiring a job function – they are hiring a person. If they’re hiring a cashier, they’re not going to negotiate because there are ten other people standing behind you who could do the same job. Once you’re in the job for a while, if you prove you’ll do things many of those others won’t do like show up on time every time and be efficient yet pleasant to the customers, you can negotiate for a higher salary since you’ve distinguished yourself from the others.
If you’re being hired for mid-management finance job, once they’ve decided they want you, you are among a select group who could do the job and the only one in front of them right now. If they turn you down, they probably need to start the process again and that will take them a lot of time they don’t have because they usually need you now. Men tend to negotiate, and in doing so end up with higher salaries to start. Women tend not to negotiate. Because their future salaries (until they change jobs and can negotiate again) tend to be based on their current salary, a lower starting salary causes lower salaries throughout a career. Even when changing jobs, the new employer will often make an offer based on your current salary. If you want to be paid more, you need to be willing to negotiate.
You need a strong work history. The things that studies miss when trying to compare the salaries of men and women in the same fields is work history. Sure, they both worked for 15 years in this job, but one took ten years off in the middle to care for children. Or one leaves at four to pick up kids from daycare every day, while the other is always there into the night as needed. Thinking just as an employer, who would be more valuable to you — the person who is always there, able to take care of things as they arise or the person who is only available for a fixed period of time and has no flexibility?
As has been said for decades, behind every successful man is a supportive woman. The chief executives you see could not be where they are today unless they had a wife to take care of their children and all of the things that are needed to run a household (unless he had no children and was living in an apartment so that he didn’t need to repair things or meet service providers). If you want to earn as much as a man in the same field, you need to either find a husband who is willing to raise your children and take care of most of the things that need to be done at home during the day or give up having children or much of a home life. You need to be able to work long hours when needed, be there when a crisis erupts, and put your workplace first before family time. That’s what the highest paid men have done.
Now, you may find it hard to find such a man. Realize that men have huge social pressures to work and be successful there. You would need to find both a man who is good with children and who would be able to shrug off the looks from the guys they meet when they tell them they run the household. While women are feeling more pressure than they did 50 years ago to work outside the home, men feel ten times the pressure as women. You’d need to find one who is extremely confident and give him a great deal of support.
But finally, you may discover something while chasing this great career what men have known for decades. In the end, you may find that it is pretty empty. You’re attending meetings and putting out reports while your children are growing up. The memos you create will be gone in a month or two, but your children will live long after you die and have an influence on all of those they meet – good or bad. In the caveman days, the men left the cave to kill something to eat for their wives and children. Somewhere along the way, we forgot the reason we were hunting and the hunt itself became seen as important, while the reason for the hunt was lost. We’re starting to reap the benefit of a generation of children who raised themselves, and they have different values and morals than their parents do. And different not in a good way. Keep this in mind before chasing pay.
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Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.