Women earn less than men even when they set the pay

From Emma Jacobs at The FT:

That women earn less money than men is well known. But research has revealed that even when women start their own not-for-profit “social enterprises” they pay themselves less than their male peers.

The study, comprising 159 social entrepreneurs in the UK, showed an adjusted pay gap between the sexes of about 23 per cent. That is similar to the global difference in earnings between men and women. The International Labour Organisation estimates that to be about 23 per cent – meaning that, for every £1 men earn, women earn 77p.

…The new research, by academics at London Business School, Aston University and the University of Antwerp, mirrors previous findings on the salaries earned by male and female founders of for-profit companies. A report on Goldman Sachs’ 10,000 Small Businesses programme, noted that female participants, on average, paid themselves 80 per cent of the salary of male participants.

Saul Estrin, visiting professor of strategy and entrepreneurship, London Business School, and co-author of the latest report, points out that the differences cannot be explained by discrimination since these chief executives set their own pay.

He looked at the entrepreneurs’ job satisfaction and found female social entrepreneurs to be more satisfied with their role than their male counterparts.

One hypothesis suggested in the article is that the female entrepreneurs prioritize autonomy over higher pay and end up happier in these jobs, relative to their alternatives, than do the male entrepreneurs.

Comments

duuh. women are less money hungry. on average. just like much of the low income population.

"female entrepreneurs prioritize autonomy over higher pay": oh dear, I hope they're not suggesting that these women are bossy-boots.

No, they are suggesting that women value their own rights, and are willing to give up rewards for them. Good. Some say that women are also bossy-boots who want to expand their own rights at the expense of others -- that is an entire orthogonal question.

If by bossy-boots you mean more rational, yes. Beyond a certain point time is more valuable than money.

Well then they should stop bitching about getting lower pay.

The pay gap is very narrow or nonexistent:

http://www.washingtonpost.com/blogs/wonkblog/post/women-earn-91-cents-for-every-dollar-men-earn--if-you-control-for-life-choices/2012/06/04/gJQAqrHkEV_blog.html

And single women make 8% MORE than their male counterparts....

http://online.wsj.com/articles/SB10001424052748704421104575463790770831192

So if you're looking for an explanation for whatever tiny gap remains, there it is...family and children. It certainly isn't discrimination, conscious or unconscious.

I wonder how much hysteresis there is in that result. It's at least a reasonable hypothesis that might set salary expectations when self-employed based on their compensation from previous work.

You misspelled "hysteria" (original def)

Hysterical! (modern euphemism)

#1 trolling comment of the week!

Hysteria was of course (original) Def (Leppard's) biggest album.

+1 to JTF

I've posited for a while that women, at least compared to men, seem to seek compensation packages that maximize quality of life rather than bottom-line salary, and that there may be various elements (be they social, psychological, or biological) that help to define individual internal valuations of elements within a total compensation package.

The studies that consider Total compensation & years of experience correct for a portion of that effect. The studies that use direct salaries and preclude benefits are basically junk science designed to grab headlines in my opinion.

In other words: a dollar is worth less to a woman than it is to a man.

"Saul Estrin, visiting professor of strategy and entrepreneurship, London Business School, and co-author of the latest report, points out that the differences cannot be explained by discrimination since these chief executives set their own pay."

Not necessarily. Business owners setting their pay is kind of like the ultimatum game. In any given year they can divvy up the pile of money between themselves and their employees. Even though they decide their pay, they're not unconstrained. They can only maximize their own pay at the expense of bonuses, raises, etc. Push this to far and employees jump ship, bringing the company down. An internal sense of fairness is important in where this threshold is set. People may be more prone to objecting to a woman taking too much. This might constrain women business owner pay more so than males.

+1 - I've seen time and again the fact that people will accept "bad behaviour" in men without penalizing them for it (or even getting angry) while being enraged when a woman (who should presumably know better) does the same thing.

It's easy to imagine a woman being punished for "greed" far more harshly and at lower levels than when a man does it.

Particularly if this is a woman who founded a non-profit which is dependent, at least in part, on donations. Non-profit executives are constrained both by the organization's budget and by what potential donors think a fair wage is. If women expect the donor base to be sexist and to believe that women, on average, deserve 80% of what men do, then that's what they'll pay themselves.

Do you really believe that potential donors check payrolls of the organization that they intend to give money to, and that they will donate less to organizations which do not have enough of a gender gap? This is so convoluted that I can't believe it to be true. I would guess that most donors have absolutely zero interest in the salaries of the employees, as long as they do not rise to outrageous levels (as in "charity which spends 98 per cent of their budget on themselves).

To be fair, the opposite can be said for other types of bad behaviors.

Do you mean sexual promiscuity? I'm fairly sure we men get more tolerance for that too.

Yeah, but we get less of that.

It's easy to imagine lots of things. Easy to imagine doesn't = true. I do wonder, though, why people are so vested in this particular narrative. It seems to me that if you accept the Occam's razor explanation that women are choosing less money in exchange for more autonomy, more free time, etc., that reflects quite well on them as compared to men.

I wasn't saying it was true, only that it was a quite plausible possibility. The original article implied that the difference must be due to female preference. I simply posited an alternative mechanism. Even if you think female preference is more likely than the ultimatum game, the existence of the latter as a another possibility should still cause you to revise your priors.

OR! OR!
Or it might be that women are dumb dumbs and not as competent as men, so they have to hire more experienced and expensive male coworkers to cover for their lack of effectiveness. Thus there is less money leftover to pay themselves.

Even if you think [whatever it is that you think] is more likely, the existence of [this brilliant theory] as a another possibility should still cause you to revise your priors.

But men want more money because women want men with more money.

My wife certainly didnt marry me for my looks.

Whenever you people start talking about what women want in men, it's like you all grew up in a brothel. And never moved out.

Well, women do want men with money but not to the point of the being prostitutes.

Perhaps importantly though women do want, from men... confidence, braggadocio, bravery, the ability to make the first move, the ability to chase, the ability to fight for what you want, the ability to be happy that you've made another person lose out.

Or at least by hanging back and not actively selecting and chasing men, women favour these qualities indirectly. Even if they don't have a preference for them - many women profess not to have, and I believe them.

Men don't want those qualities in women really, so women don't develop them, either via a genetic or cultural model. (That said, many men reject the path of developing those qualities as well, and they have value other than mating success so women are under some pressure for them as well).

And those qualities (call them "alpha" or dominance I guess), probably leads you to higher wages, whether or not its a good thing.

When feminists try to equal out the differences in reward from social dominance between men and women, as categories, but then don't concern themselves with evening them out within the category of men, is, of course, when a lot of men become polarised against feminism.

The net intergender transfer in the United States has to be around a trillion dollars a year, and probably at most 10% of that happens in brothels.

That happens for two reasons: one, men are more driven to acquire status; and two, women are attracted to status. There is some interrelationship there but neither is purely causal, e.g. gay men tend to also be driven to acquire status. These are all just the modern manifestations of evolutionary psychology, behaviors that account for the fact our ancestors reproduced successfully while other people did not.

Because this counterexample threatens the narrative of constant woman victimhood.

Because that's a tenet of the American culture? Remember when prior_approval mentioned he enjoyed his six weeks' paid vacation? That wasn't exactly met with a chorus of "Now that we think about it, money might not be everything."

American culture buries men five years earlier than women, and is far more likely to criticize them for not working hard enough.

Another case in which [most] comments are better than the article.

It seems obvious to me that "achieving wealth" matters more to men than women. A mans sexual market value is tied to his wealth, women's typically aren't. E.G. Random waitresses can hook up with Tiger Woods, but Swedish Models like his ex-wife aren't hooking up with waiters.

Yes that is truer for men than women, but look at marriage data these past 20 years. Men and women are pretty much marrying within their income level. Not that many rich doctors marrying their secretaries or nurses these days. They are more likely to marry a successful lawyer or another rich doctor than a no-college, lower-income person.

I don't discount those studies, though I do recall some criticism for the samples including mostly young couples whereas most hypergamic marriages occur with older men/younger women. That said, when men fantasize about wealth, they're mostly fantasizing about access to many, many, young attractive women. But those studies capture another truth, just because a man wants to sleep with a very physically attractive woman of a lower social class, his better judgment will often tell him he doesn't want her to be the mother of his children or be burdened with living with her.

Am I the only one who thinks that this result can be explained by the opportunity cost of being self employed. If women earn less on the market of employed prople, they should be willing to be self employed for a lower compensation.

Good point.

So either women undervalue themselves as much as men do...

OR

Men and women both value women correctly at a lower level.

It's more likely they just have different definitions of value.

A lot of these movements seem set on redefining what men or women "should" want. To some extent these kinds of memes offer benefits to individual, family, or society, but all such roads must eventually lead to the same question: in reprogramming ourselves, what programming are we trying to fulfill? There is no root command except those we're born with. All desire is subjective, even altruism is just another set of chemical reactions in your brain.

At some point, these memes can end up leaving us less happy than before. It's certainly helpful to train men to kill each other less and women to assert their equal rights, less helpful to create an ethic that demands women work as much as men or that men abhor contact sports.

"Women earn less than men even when they set the pay."

I'll take discussions like this seriously when they address the longevity disparity between men and women.

Men are paid very slightly more when everything is taken into account and die significantly sooner than woman.

Why would that matter? If you had a coworker who was going to live far longer than you, would you expect him to be paid far less?

There's no economic force pushing people into a "lifetime earnings" equilibrium. There's a weak force pushing wages toward marginal value, but that's completely different from your point.

one possibility: these women and men set their pay in comparison to their other opportunities. So the lower pay was an indirect result of discrimination. Perhaps.

I imagine women are more committed to the ideal of a "not-for-profit social enterprise." Or more cynically, derive more status and self-satisfaction from telling their friends they don't work for tawdry profit.

These are ridiculously uneconomic organizations; they exist via government grants and the tax code. It's disappointing (but not surprising) that's what professors of "entrepeneurship" study.

I've always thought the most interesting paradox of feminism is the demand that women achieve equality in male-preferred traits like power and money. Why define success in male terms?

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