Winning the wage war - MoneySense

Winning the wage war

Will we see wage parity in our lifetime?


Perhaps she shouldn’t have been surprised. After all, big business and big politics have long been the almost exclusive playground for big boys. But still, when lobbyist Pamela Jeffery stepped up to a male Ontario cabinet minister at Queen’s Park to set up a meeting, she was taken aback when he asked her on a date instead. “I’d be happy to get together with you,” he cooed, looking at Jeffery with a glint in his eye, “but I’d prefer if it were just the two of us… over drinks or dinner.”

The eyebrows of the minister’s aide shot up with surprise, and Jeffery’s heart sank with disappointment. “No, I’m sorry,” she told him. Before leaving, Jeffery whispered to the aide that she felt the minister’s behaviour was inappropriate. He nodded knowingly.

That was back in 1989, when Jeffery was in her late 20s. Today, 21 years later, she heads up her own consulting firm, The Jeffery Group, and she is the founder of the Women’s Executive Network. She says conditions are better for working women today, but when you read recent news reports about how women are treated in the workplace, it’s hard to see where her optimism comes from.

Currently, women hold just 10% of board seats in Canadian public companies. Canada ranks 25th on the World Economic Forum’s ranking of countries in terms of women’s equality, behind South Africa and Lesotho. Worst of all, the average full-time female worker earns just 71% of what a man does—$44,700 compared with $62,600—and that percentage has barely budged in recent years. Katherine Scott, director of programs at the Vanier Institute of the Family, says sexism is a big part of the problem—and she doesn’t think that will change soon. To assume that there will one day be pay equity, she says, is to assume “that the institutional barriers that exist today will be addressed somehow. I see no evidence that will be the case.”

Young girls club?
Liberal newspapers, university gender studies departments and women’s advocacy groups have long held the same view: women are paid less than men because of ingrained sexism, they say, and we’ll never get that sexism out of the system. But it turns out the hard numbers don’t back that up. To find out what’s really going on, MoneySense decided to look at the long-term trend in income, rather than the current gap, to see what kind of progress we’re making. We hired researcher Roger Sauvé, president of People Patterns Consulting, to spend months digging through Statistics Canada data, with a focus on how the income for different age groups and genders has changed over the 30-year period between 1978 and 2008, the most recent year for which the data is available.

We were shocked when he presented us with his findings. It turns out that women have been making impressive gains in total income relative to men over the last 30 years, especially young women. When he focused on workers between the ages of 25 to 34, Sauvé found that over those three decades women enjoyed an impressive 27% surge in income, while men saw their income drop by 11%. (All figures have been adjusted for inflation, so those are real gains and losses.) And that’s just up to 2008—it’s likely that in the recession which followed, the gap narrowed even more.

If the trend continues, says Sauvé, the wage gap for young workers will completely disappear within the next 30 or so years. The gap for older workers is wider and closing more slowly, but as those younger workers climb the corporate ladder, they’ll likely bring pay equity with them. It may be hard to believe for those who have spent a lifetime in the trenches fighting gender-based discrimination in the workplace—but it looks like women are winning the wage war. Rather than being an intractable problem, the unfair gap in income between men and women seems to be headed for extinction, and soon. “Absolutely, I think it could happen,” says Linda Duxbury, a professor at the Sprott School of Business at Carleton University in Ottawa. “You could even see the reverse—men earning less than women.”

To predict what the future will bring, it helps to look at the past. When we do, we find that the recent gains women have made in the workplace are not a new phenomenon. Women have actually been making huge gains for more than a century.

Just 200 years ago—not a huge amount of time in historical terms—women weren’t even thought of as proper members of society. They generally had no legal standing independent of their fathers or husbands, no means of making a living independent of the family enterprise, and very limited access to education. In the early part of the 20th century, women were given the right to vote and hold office. Contrary to popular belief, females didn’t suddenly enter the work force en masse in the 1960s. The number of women in paid employment steadily increased starting in the 1870s, and this continued for almost a century. The big change was that in the 1960s, married women—in particular married women with children—began to seek, and get, paid employment.

At first they were confined largely to “pink collar jobs”—secretaries, nurses and school teachers. But pressure from the feminist movement helped women gain access to law schools, business schools and advanced degree programs. Meanwhile legal challenges led to the passing of anti-discrimination laws, and birth control gave women more control over childbearing. Increasing numbers of women went to university and college, and not just to get their ‘M.R.S. degree,’ as the old expression goes—meaning a stint at college to scope out a successful man to marry.

In the decades to come, it will be gains in education access that fuel women’s progress in the workplace. “It’s an education story first and foremost,” says James Chung, founder of New-York based consumer research firm Reach Advisors. Already, 71% of Canadian women ages 25 to 34 have post-secondary degrees or diplomas, compared to just 62% of men, a trend that looks likely to continue, because girls are currently getting better grades in school than boys.

Trading places
Women are also moving into fields of work traditionally held by men that have opportunities for higher wages. The fastest-growing job categories for women are drillers and blasters (up 750% between 1996 and 2006), petroleum engineers (up 384%) and structural metal and platework fabricators and fitters (up 321%). “Women have been acting more like men over the last 30 years so it’s no wonder that we’re closing the gap towards wage parity,” says Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives. Men, meanwhile, are moving in the other direction. It’s telling that the fastest growing job categories for the XY-chromosome set are library and information jobs, as well as estheticians and electrologists.

The wage gap isn’t closing just because women’s income is rising. It’s also closing because men’s income is falling. Our data shows that between 1978 and 2008, men aged 25 to 34 saw a dramatic 11% drop in income, while men aged 35 to 44 saw a 2% decline. This is a more difficult trend to explain, although many experts attribute it largely to the loss of male-dominated high-paying manufacturing jobs. Many of these jobs have been replaced by automation or they have moved overseas to countries where labour is cheaper. These days, an uneducated male worker tends to end up in a lower-paying service job.

Unemployment rates are now consistently higher for men than they are for women, a situation that was exacerbated during the recent recession. Indeed, each of the recessions we’ve experienced in the last few decades have caused a contraction in men’s incomes. As family incomes dropped, many women picked up the slack, increasing their working hours and income.

As a result of all of these changes, many young women entering traditionally male occupations are now finding that gender isn’t such a big deal. Virginia Au, a 29-year old graduate of the University of British Columbia’s Sauder School of Business, says she hasn’t encountered many bumps on the path to her current job, where she earns a six-figure salary as a mutual fund portfolio manager for Invesco Trimark in Toronto. “I’ve noticed that gender is not really an issue, not from my experience anyway,” she says. “I was fortunate to be able to work with a lot of good bosses who gave me the opportunity to show people who I am.”

As women make gains in the office, their home life is changing too. Many women are finding themselves to be the main breadwinner, while their husbands take care of the kids. That’s the situation for Susan Philipson, a 43-year-old who lives in a small town near Newmarket, Ont. She works as a human resources consultant, pulling in $80,000 a year—almost double the salary of her husband, Rick. Because his lower-paying job is less demanding, Rick is the primary caregiver for their seven-year-old daughter Jenny and 16-year-old son Lucas (names have been changed to protect the family’s privacy). “When we were dating, I said to Susan, ‘You’ll never earn more than me,’ ” says Rick, who is now 44 and working at a nearby hospital, “but I guess she’s proved me wrong.”

There’s no doubt that women have made some impressive gains over the last 30 years. The big question now is whether that trend will continue. Will the gap in income continue to narrow, or is sexism so deeply imbedded in the workplace that true equality is impossible?
The first thing to acknowledge is that when it comes to equal pay for equal work—the rallying cry for social activists—we’re already a lot closer than you might think. Women’s groups often cite the statistic we presented earlier indicating that women only earn 71% of what men do. But when you look a little closer at that number, it begins to look misleading.

The main reason women earn less than men, it turns out, is because they have less experience, work fewer hours, and they choose lower-paying professions. Indeed, when you look at the gender gap in terms of hourly wages—a more accurate measure than income—and you control for such things as qualifications, academics estimate that women get paid 85% to 93% of what men are paid, a percentage that’s trended upward steadily over the last three decades. “The reality is that many women work part-time, so you have to compare hourly wages to get the bigger picture,” says University of British Columbia economics professor Nicole Fortin. “When you do that, the gender wage gap doesn’t look as dire as people make it out to be.”

The reasons women enter lower paying fields are complicated, but it’s clear that gender segregation is lessening. While some fields, such as construction, continue to hold little appeal to women, many professional fields are becoming more diverse. Often what happens is that once a certain threshold of women enter the field, they are able to change the culture to be more friendly to women and they serve as role models, leading to a large influx of females into the field.

Pink collar or blue?
However, many women still continue to choose feminized fields that pay less, either because they prefer the work or they want more flexible careers to balance with their family responsibilities. Women also tend to choose lower-paying areas inside of their fields. The majority of students in medical school are now women, for example, but female graduates are more likely to become general practitioners rather than higher-earning specialists. Another factor may be salary negotiations—many women feel uncomfortable playing hardball when talking about salaries with prospective bosses.

At the heart of all of this, of course, is the simple fact that it’s still women who bear the children. This naturally leads to taking time off for a maternity leave, working reduced hours and, in some cases, following less ambitious career paths so they can spend time with the kids. But as more women out-earn their husbands, more men will take on primary caregiver responsibilities, and the drag on income caused by being absent from the workplace will be more evenly distributed across the sexes. As well, more families are choosing to delay having children or not have them at all, a factor that may contribute to economic problems such as labour shortages—but will likely bode well for women’s salaries.

When you take kids out of the equation, you find that in many cases women are already out-earning men. A recent study by Reach Advisors showed that in 366 metropolitan areas of the U.S., women in their 20s who are single and have no children already have a median income that is 8% higher than men’s. “The reverse gender gap is not just a U.S. phenomenon,” says Reach Advisors’ Chung. “We’ve looked at Canadian data and we’re seeing similar patterns.”

The women’s advocacy movement isn’t wrong about sexism in the workplace though. Even when you account for education, experience, and hours worked, there still is a stubborn gap between men and women’s pay. It’s hard for researchers to say exactly what causes it, but it is likely that some of it is caused by old-fashioned discrimination. Men still hold the reins of power in the majority of our institutions, and they still tend to hire and promote those who are the same gender as themselves.

“We see some consistent barriers that are identified in terms of advancement,” says Deborah Gillis, Toronto-based vice-president of Catalyst, an international organization that promotes opportunities for women in business. “They include a lack of role models and informal networks where they can share information and build relationships. Women just don’t have the same access to mentors and sponsors.”

But as young people enter the workforce and move up through the ranks, this too could change. Our statistics show that the wage gap is closing most quickly among the young, and other studies have found that sexism seems to be on the wane among the next generation. Today’s teens and twentysomethings genuinely seem to be appalled by the notion that if two people are doing the same job, one could be paid less just because she happens to be a woman. Research by University of Lethbridge sociologist Reginald Bibby clearly shows that teens take equality much more seriously than the generation that came before them, with the percentage who consider the unequal treatment of women to be a serious social issue doubling between 1984 and 2008.

Indeed, when Pamela Jeffery—the lobbyist who worked at Queen’s Park—gets discouraged, she only has to look to her teenaged sons for hope. When she does, it’s hard for her to believe that equal pay for equal work is all that far off. “In their generation, they see their female classmates as equals,” she says. “When they enter the workplace, they’re going to take their views of equality with them and apply that in their organizations. So I’m very optimistic.”