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Do Women Pay Women Less?

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USA Today reported that “The U.S.-Japan World Cup final set ratings records for Fox Sports and drew worldwide attention to the women’s game, but the champions will go home with $2 million, which is $33 million less in prize money than Germany did when they won the last men’s world cup according to the BBC.

That’s not a pay gap. That’s a Pay Grand Canyon.

Not to be missed in the FIFA equation is a small but significant factoid. In 2013, FIFA welcomed three female members on to its Executive Committeefollowing a historic election at the FIFA Congress in Mauritius. This follows a proposal made by the FIFA President with support from the existing members of the FIFA Executive Committee to have more females in decision-making positions within football [soccer].”

The public outcry objecting to the Pay Grand Canyon did NOT come from the women on the Executive Committee. Is this yet another case of women paying women less?

History seems to bear out that many have fought for the things most important to them, and won…only to realize decades later that there was perhaps not much in the way of substantive change as a result. The laws, rules and regulations from the 1950s and 1960s are often felt to have resulted only in what Olympic Gold Medalist Tommie Smith called “cosmetic changes” in a recent CNN interview.

Could the women of the European Union be heading into the same cosmetic cul de sac?

First proposed by Viviane Reding, the European Union’s Justice Commissioner, a new law would ensure that the seats of certain non-executive directorships of quoted EU companies will be filled by women by 2020. The “regenderization” of EU directorships simply wasn’t happening fast enough on it’s own to suit many.

In 2012, the European Commission took a first action to “shatter” the glass ceiling from above rather than from the bottom up in Europe’s biggest companies, not through performance management or promotion, but by proposing legislation targeting a 40% minimum of women on supervisory boards (not executive) of publicly listed large companies. The draft law includes an automatic expiration of 2028. On October 14 of this year, the European Parliament’s Committees on Legal Affairs (JURI) and Women’s Rights & Gender Equality (FEMM) voted to support the EC’s proposal and draft law, moving it along in the process.

Other than achieving pure increase in numbers over the short term, what lasting and meaningful change can come from such a measure? Is it the case that achieving larger numbers of women directors is enough to tip the scales?

Likely not.

The old adage, “Be careful what you ask for, you just might get it” may be relevant here. Cleric, politician and activist, Jesse Jackson, in an interview with Diversity, Inc., expressed ambivalence about the focus on board seats as an effective strategy in pursuit of equality in racial equity.

“I think they were kind of ready for us to get one black or brown on the board. Often times that represents change of color, not change of direction…that’s a layer that’s irrelevant to what’s happening down below. So while the board of directors is an important guideline, EEO-1 is an even better guideline, the employment records and the C-Suites, with whom they do business and the colors who they invest in.”

Despite Jackson’s yawn over the efficacy of board representation for minorities, the idea of women on boards in the EU initiative might elicit visions of sugarplums dancing, for some. Could an eventual U.S. run at a similar but more grandiose measure take shape? Social initiatives for more female executive level directorshipsin the S&P 500 and Fortune 500 companies are already in play.

Before the imaginations run wild, let’s test Jackson’s EEO-1 theory, and see if the math works.

The average size of an S&P 500 Corporate Board of Directors is 11 members. Extrapolate that even to the 1000 largest U.S. companies, and you’re looking at, best case scenario, 11,000 directors. Ignore the fact that directors are often on multiple boards. Just take the whole 11,000 as if they’re discreet members, and imagine legislation mandating a 50% quota. You’d have 5,500 women with really great jobs…out of more than 150,000,000 women in the USA.

That’s a small number of jobs, but not unrealistic considering the economic, social and political capital women enjoy — but haven’t been able to leverage. Add it up.

Women control spending in most categories of consumer goods.
Working women in the U.S. are about to surpass working men in number.
Three-quarters of the people who have lost jobs in the current recession are men.
Globally, women control about $20 trillion in annual consumer spending.
Women’s control could climb as high as $28 trillion in the next five years.
Women’s $13 trillion in total yearly earnings could reach $18 trillion in five years.
Women represent a growth market bigger than China and India combined.
Women own 40% of the businesses in the United States.

One other little added bonus, often not weighed in the leverage equation: In most states, women with male spouses own 50% of the family equity pie.

In 2010, women were already 46.7% of the US workforce and 51.5% of management, professional, and related positions. (Bureau of Labor Statistics) According to HBR, the numbers continue to climb. “Women hold about 50% of all managerial and professional positions in the United States and account for 41% of employees with authority to make purchasing decisions.”

And yet, curiously, women are still today paid on average 17% less than men for the same work.

Despite equal pay legislation dating back 50 years, American women still earn 22% less than their male counterparts. In the UK, with its Equal Pay Act of 1970, and France, legislated in 1972, the gap is 21% and 17% respectively, and in Australia it remains around 17%.

Most perplexing of all, consider who specifically are implicated in sustaining the gap. Forbes listed the Top 20 Jobs for Women in 2013. Prepare to gasp.

No. 11: Human Resources Managers 
Median weekly earnings: $1,208 
Approximate median yearly earnings: $63,000 
Women as percentage of the profession: 74%

Yes, women are a whopping 74% of the employees in the department that controls compensation management, labor relations and benefits, writes job descriptions and designs performance management systems, manages hiring and promotion decisions, guides and advises senior management on salary structures, compensation negotiations and establishes the market value of talent.

Women have proven to be an irresistible demographic for the workforce. But the gender pay gap has proven to be virtually immovable, frozen in place in the USA since the 1980s. It is, in actuality, a world wide phenomenon, not always kept a tight-lipped secret, let slip in the now infamous tech sector PowerPoint image, stating: “WOMEN. Like men, only cheaper.”

Australian technology entrepreneur and former Victorian MP Evan Thornley says he “stuffed up” when he told a Sydney technology start-up conference that women were “often relatively cheap” to hire compared to men.

And yet, with women now a majority power in the management labor market, do women now officially own and operate their own gender wage gap?

Despite the wide open doors of Human Resources, women’s majority status among the management ranks, and the undeniable positioning for influence over corporate culture and behavior in the department most likely to be responsible for Corporate Diversity & Inclusion efforts, women’s earnings as percentage of men’s earnings: 83%. Yes, female dominated HR departments are still paying women significantlyless than men in the same Human Resources jobs.

Increasing the number and percentage of women changed the HR demographic, but did it change the behavior? We are staring into the gaps between principle, law…and realities of execution and compliance.

A principle can be defined as ‘a basic generalization that is accepted as true and that can be used as a basis for reasoning or conduct, a basic truth, law or assumption.’ Equality is a principle, like justice and fairness.

A law, on the other hand can be defined as ‘a binding rule or collection of rules imposed by authority.’

The U.S. Civil Rights Act of 1964, including Title VII, was crafted around the principles of equality and equity, as well as the principle of neutrality that swirls and eddies within and around such legislation starting with Brown v. Board, 1954. A principle is intended to be high level and broad in application (e.g., Title VI, Section 601, that no person shall be excluded from participation in or otherwise discriminated against based on race, color, or national origin).  The application of that principle in law has been tested in many different narrow and specific ways. Penning the statement of a principle in law can be exceedingly difficult, as the intended effect may ultimately be different from the actual effect, e.g. Bakke, 1978 orLilly Ledbetter v. Goodyear, 2006, standing intended civil rights law on its head.

The draft EU law may have a basis in principle. For now, the push is for a unique, discreet law that reaches for a specific quota with compliance called for within a clearly defined time frame. Despite research on the improved earnings of companies with diverse boards, and improved decision making efficacy of diverse teams, the legislation does not appear to anticipate, target or promise any specific performance effect on the companies required to comply.The legislation doesn’t appear to be a public financial performance-driven issue at all.

Harvard Business Review highlighted research holding that women differ from men in the way they make decisions. Where does that connect with the idea of putting women on boards to help women? It doesn’t.

Women won’t get to choose which decisions they are called upon to make as board members any more than do men.

There is no expressed intent of the EU draft law for effect on board governance. The fact is that no studies have shown that putting female directors on boards translates to ANY significant changes in diversity below the board level as a result of changes in governance models. The women who get on boards tend to acclimate and acculturate to extant board behaviors, and adhere to the model.

Board members dabble in the tactical affairs like personnel only to the extent that the governance model allows for it. Corporate board governance models tend not to authorize foray into the the domain of staff decisions. If governance models don’t change, diversity outcomes at staff levels won’t change.

Becoming a board member requires knowledge, it does not confer power, which may explain why the affirmative action clause was not actively opposed. Board membership is largely a prestigious position. Directors generally do not determine the career trajectories or opportunities of the company’s employees. (Burke, Mattis, 1993, “Women on Corporate Boards of Directors: International Challenges and Opportunities”, p. 94)

So what should the EU watch for in terms of compliance, should the law eventually pass? No doubt, they’ll have to watch for the nature of the leadership skills and styles chosen, the issues that are dear to the women chosen. The turnover numbers will be vital information, especially the need to perform deep-data exit interviews with those who leave, providing deep learning for the purposes of improving supervisory board replacements. They will have until 2028, perhaps eight years or less to do more than value merely holding the positions over pushing a change agenda.

Does this in any way argue against quotas, against women on boards, or against legislating change? No.

Does this argue against the efficacy of certain types of changes? You be the judge.

The U.S. Civil Rights/Voting Rights Acts of 1964/65, including Title VII, are now 50 years old. Despite those landmark legislative Acts and their noble underpinning principles, minorities have since learned that they cannot vote their way out of poverty or into full employment. Perhaps women can’t legislate their way to equal pay.

Things don’t always work out as well as we’d hope or intend. Maybe it will end differently for the EU and this particular decision. We’ll know by 2028, should a 40% quota become EU law. But, as it was widely suggested in the ancient European district of Latium, “Non tenere spiritum.”

There is no “minority” in the history of the world so well positioned as are women in the U.S., and increasingly in the EU.

With three-quarters of America’s HR Departments operated by women, along with more than 51% of all management decision making turf, it makes for a disheartening reality. If women can capture that much ground, yet STILL foresee a long way to go, one could easily argue that comparatively tiny racial and ethnic minorities have no hope of achieving parity in hiring, compensation, mobility or treatment in this century, or any century.

The end result of all that’s been done over the past half century? Women over the age of 65 are twice as likely as men to live in poverty in retirement because of lower wages, more time spent out of the workforce and lack of access to retirement savings plans, according to Employee Benefit News.  And yet, “women’s representation in U.S. management ranks is slowly increasing, while the share of African-American managers has slipped since the last recession, according to a report released today by the U.S. Equal Employment Opportunity Commission.”

Either they know, or they don’t know. Are women in control without realizing it? Or, are they smartly buying the jobs by low-balling on salary to win out over other minorities? Have women discreetly taken charge while keeping the news to themselves?

If so, nobody’s talking.

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Copyright © 2014 Robert D. Jones – All Rights Reserved

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