Corporate America has yet to bridge the gender gap. And while income has generally been used as the primary yardstick of people’s economic status, wealth (or net worth) is a much more comprehensive measure of one’s financial situation.
You’ve undoubtedly heard the phrase that is quoted in support of the wide and unfair gender pay gap, “Women earn 77 cents for every dollar a man does.”
While this figure may vary a few cents in either direction, the sentiment remains the same -- “Women are being unfairly compensated for equal work.”
And there is plenty of proof to support the call to bridge that gap. A 2015 study by McKinsey found that true gender equality could boost global GDP by $28 trillion a year. That same year, a Grant Thornton study found that companies with women in executive roles outperformed those without by around 2% annually.
Some investment services firms are trying to address the problem by embracing what’s known as “gender lens investing.” The idea is to get investors to put their money into companies that advance gender equality.
And it’s not only in the investment world. Gender equality is making strides in some unexpected places too. The World Surf League announced recently that women surfers would receive equal pay for competitions under their jurisdiction.
However, the quoted gender-gap income statistics are apparently based on a flawed calculation. It is reached by dividing the yearly difference between the median annual incomes of full-time male and female workers to calculate the wage gap.
That means that income statistics for all working men and women in America are essentially mashed into one and averaged out - as if all those jobs were the same. The primary issue with that is it doesn’t compare similarities. It’s not an apples-to-apples comparison. Not even close.
Few experts dispute that there is a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make simple comparisons.
The Department of Labor shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.
Economists generally attribute about 40% of the pay gap to discrimination, making about 60% explained by differences between workers or their jobs.
Here’s the good news: Female earning power numbers are much better once adjustments are applied for prior work experience, education, industry, and occupation. After controlling for those factors, Cornell University Economists Francine Blau and Lawrence Kahn estimated the wage gap is actually only 8%, meaning women are earning 92 cents for the dollar every man earns.
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