The Pay Gap

Why Women Earn Less Than Men a Year Out of School


Why Women Earn Less Than Men a Year Out of School

Photograph by Stephanie Cabrera/Getty Images

Consider this scenario: A man and a woman graduate from the same university in 2009. They both major in computer science. They are 22 years old at graduation, single, and have no prior work experience. One year later, both are working full time as computer technicians in cities not too far from where they went to school.

According to a new report (PDF) by the American Association of University Women, the man would be earning a salary of $51,300. The woman’s pay would be $39,600—about 77 percent of what her male counterpart earns.

The AAUW report compared the earnings of men and women just one year out of college across various sectors of the economy. The report controlled for different factors that tend to impact pay, including hours, job type, employment sector, and college major. The report—which uses the class of 2009 as its sample cohort—found that on average, women working full time earned 82 percent of what their male peers earned. The average for all women, at all experience levels, is 77 percent, a number that has barely budged in a decade.

A good portion of the pay differential one year out of school can be explained by choice of major. Eighty-one percent of education majors are female, as are 88 percent of health-care majors. In computer science, information technology, and engineering, more than 80 percent of majors are male. Teachers and physical therapists, on average, tend to earn less than engineers. Women also choose to work in sectors of the economy where there are fewer opportunities to advance into higher-paying jobs. (A teacher might get tenure or become a school principal after working for 20 years. An engineer will move up the pay scale more quickly, and the raises will be bigger over time.)

But as the scenario above shows, even when women and men are in practically identical situations, their earnings start to diverge just one year out of school. That’s true across most sectors of the economy. One year out of college, female teachers earn 89 percent of what male teachers earn. In sales jobs, women earn 77 percent of what male peers earn. Women who major in business earn, on average, just over $38,000 the first year after graduation, while men earn just over $45,000. “About one-third of the gap cannot be explained by any of the factors commonly understood to impact earnings,” write the AAUW researchers, Catherine Hill and Christianne Corbett.

Hill and Corbett consider what could be causing that “unexplained” portion of the gender wage gap. One obvious culprit is discrimination. A less obvious culprit is salary negotiations. Women tend to be worse at negotiating throughout their careers, including their starting pay, Hill says.

Everyone knows that bias exists, but it’s basically impossible to measure—particularly when the bias is unconscious. One way to track it is to look at the number of sex discrimination complaints filed with the federal Equal Employment Opportunity Commission, which have jumped 18 percent over the past decade. There are isolated cases, as when drugmaker Novartis (NVS) was fined $250 million in 2010 for discriminating on pay, promotion, and pregnancy against female sales representatives. The authors cite a recent experiment in which male science faculty members at a research university were asked to pick a starting salary for a laboratory manager position. The scientists, who were provided with the same résumé and qualifications for each applicant, offered a higher starting salary to the male candidate.

Most women who are victims of wage discrimination are probably not even aware of it. Asking about your colleagues’ salaries is frowned upon in the workplace. Those who suspect discrimination may not want to risk it: Many corporate human-resources policies prohibit employees from poking around.

A federal effort, known as the Paycheck Fairness Act, that would have required employers to disclose salary data to the Equal Employment Opportunity Commission, was shot down in Congress this year. If it had passed, the government could have used the compensation survey to crunch numbers, look for patterns of discrimination, and bring lawsuits of its own. A similar compensation survey, which the Obama administration is quietly undertaking with federal contractors, has been much less controversial. Because one-quarter of the American workforce is employed by federal contractors, that survey could have a far-reaching impact. But the government first has to decide what kind of information is actually relevant to ask of employers. Considering that different industries have widely different criteria for how they compensate employees, that’s going to be a very, very tricky thing for federal bureaucrats to figure out.

Dwoskin is a staff writer for Bloomberg Businessweek in Washington. Follow her on Twitter: @lizzadwoskin.

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