If Women Want to Get Paid Fairly, Here's What They Should Do
"The higher a woman rises in Corporate America the more likely she is to be paid as much as her male peers," said absolutely no one ever who knows anything about men, corporations, or America.
Now comes new research to suggest that no one with even the slimmest connection to reality will be tempted to say such a thing in the near future, either. Two Canadian researchers, whose findings were just published in the journal Management Science, reveal fairly conclusively "that CEOs pay officers of the opposing gender less than officers of their own gender, even when controlling for job characteristics."
And while such a revelation might give slight pause to gender warriors—perhaps it's familiarity bias, not sexism, behind the male-female pay disparity in American workplaces at all levels—researchers David Newton and Mikhail Simutin found only "limited evidence that male officers of female-lead firms are paid less, or that they receive smaller in increases in compensation relative to female officers."
In other words, male-led organizations discriminate against executive-level women via paychecks to a much greater extent than female-led companies discriminate against male officers. (It's old news that female CEOS themselves are underpaid relative to male CEOs, although progress has been made in recent years.)
What's worse, this pay disparity often means that high-level women are paid less than men beneath them in the org chart. Looking at data from 1996-2011, the researchers found that "male CEOs pay female officers on average $46,500, or over 12% of median compensation, less than they do their male subordinates who work at the same firm. Moreover, female officers receive significantly lower increases in compensation than do male officers when the firm is headed by a male CEO."
Not surprisingly, this gender bias is more pronounced the older the top dog in the corner office, especially if said canine is a human person of masculine gender. "Older and male CEOs exhibit the greatest propensity to differentiate on the basis of sex."
Put another way, given that roughly 95% of the largest American companies are run by men, there is slim to no chance (and slim is on vacation) that a female officer in Corporate America is being paid fairly relative to her male peers, either at her company or in her industry or pretty much anywhere.
The study—clunkily titled Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality Between Genders—is interesting for other reasons. There is a growing notion that corporations in general might be better off if led by a female CEO, not least because their share prices seem to outperform those of companies helmed by men. Many reasons have been put forward to explain this, including the idea that women are more cooperative decision-makers and possess a more rational approach to risk. There's also a theory that women are better corporate shoppers than men, e.g., they tend to pay less when acquiring companies.
That last hypothesis is supported indirectly by the Canadian study, which suggests that when shopping for talent, male CEOs—particularly older ones—pay far too much across the board. "We find evidence that male CEOs compensate their officers more richly than female CEOs do," the authors write. "The difference in compensation by male and female chief executives amounts to $15,210 per year on average, or 4% of the median officer total compensation."
So, to sum up: Male CEOs likely pay more to executives who manage their companies less well than suits hired at lower salaries by female CEOs (who are also paid less). Not exactly what investors think of as enhancing shareholder value.
It's a wonder there isn't a raft of class action suits against American corporate boards for gross negligence—for letting men run their companies at all.