UK Equal Pay “Come to Jesus” Moment

Written by Linda Scott

Today, the UK became the first country ever to make employers publicly disclose their gender pay gap. The reports are still coming in, but so far 9 of 10 are paying women less. It’s gonna get ugly.

I have been telling colleagues in the US that “the world will stop on April 4.”  They have been chuckling when I tell them why.  But I am quite sure I have not exaggerated the impact of the reporting that has just now finished in the UK.  On April 4, Great Britain became the first country in history that has successfully forced public disclosure of its gender pay gap by organization.

And it’s all hitting the fan now.  A few companies, like BBC, Ladbrokes, Easyjet, and Barclays reported early and their numbers have been all over the press for weeks. There was a particularly intense scandal over the BBC figures, which showed that top male anchors were making quite a lot more than the top female anchors were.

But there are 9,000 companies that fell under the ruling (all organizations, public or private, with 250+ employees), so there were still more than 8,000 shoes that had to drop by the deadline, which was midnight in Britain yesterday.  Public as well as private institutions had to report, airlines and universities, banks and government agencies.  It’s pretty clear organizations who posted today were waiting til the last minute in hopes they wouldn’t be noticed in the crowd. Everyone is expecting to wake up tomorrow morning to more shock from the numbers and more outrage from the women.

Note:  More numbers in the press this morning.  Some are even worse than those companies who reported early.  See the Guardian here

Highlights so far?  Some of the early details by institution:

Overall, the gender gap amounts to £226,000 over a woman’s lifetime, which would pay for a house, even in England, in cash.

Easyjet pays women 52% less than men.  Their excuse is that pilots are paid more and only 6% of their pilots are women, while 60% of their cabin crew is female.  And that fact in itself is not a problem? But they have targeted having 20% of new pilots be female by 2020.  We’ll see.

Ryanair has a 67% gap.  Uses the same Mad Men era excuse as Easyjet.  

Virgin Air also reporting a pay gap over 50%.  Same song, third verse.

Barclays was looking pretty bad at 48% until HSBC confessed to a 59% gap. They both gave the “but men are in the top jobs” excuse. Still, even at the middle earning level, Barclays had a 43% gap and HSBC’s was 29%.

Virgin Money has a 32.5% pay gap and they admit they are “not comfortable” with that. I think they will be getting even less comfortable over the coming weeks. They have 35% women in the top slots and 73% women in the lower paid jobs.  Their idea for resolving the problem was that, since women dominate in the low-paying jobs, they should recruit more young men into those.  OMG. I don’t know whether to laugh or scream.

Deloitte, not apologizing for their dismal performance (43% gap), said, “you can’t just magic up a load of senior women and plonk them into our organization.” They explained it’s a ten year process to get women up to speed.  OK, so, exactly what have you been doing for the 47 years since the equality laws were enacted? Obviously not working on diversity.

Coast and Phase Eight, fashion retailers, as well as Goldman Sachs and JP Morgan, have pay gaps exceeding 50%.  How does it happen that fashion stores would be more gender-biased than finance houses?

An interesting run of consumer businesses have reported equality:  McDonalds, Costa Coffee, KFC, Starbucks, Primark. The British Museum and the UK armed forces also posted full equality.

Equally astonishing are some of lame excuses that newspapers (like Bloomberg) and businesses have been offering for this now-seen-on-the-screen bigotry. Several hide behind the gender pay gap measure itself, saying it’s too blunt a measure because it doesn’t show data by rank. “Oh,” say several of the worst offenders, “men are paid the same as women, but it’s just that men are in the high-paying posts and women are in the low-paying posts.”  Whaaaaat?

In a one-time WEF study done in 2010, the top 100 employers 30 countries were asked a whole battery of questions about gender in their firms. One question asked was what percentage of each rank were female.  Like all the other countries surveyed, the numbers for Britain showed a steep downward stairstep of female representation, going from entry level jobs to the CEO and Board. A pattern like that, big enough to show in the aggregate, suggests that the reasons being offered for having no women in higher-paying jobs are not special to any one type of company (consulting firms, airlines, etc.) but are more or less consistent across all industries.

I absolutely promise you that if these folks were being made to show their numbers by grade or rank, you would still see gaps at every level.  But there would be a bigger gap for women at the top than for women at the bottom.  How do I know that?  Because that is what other data sources have indicated for a long time—it just isn’t available for individual organizations.  OECD reported in 2011 that the pay gap was widest at the top across all its member countries.

Source: 2017 Report on Equality between Women and Men in the EU. The EU Gender Gap in Earnings is a composite that takes into account the hourly wage, the number of hours worked, and the employment rate. Note that the UK has one of the highest gaps in the EU.

 

 

 

 

Another reason that the pay gap is larger at the top is that jobs are more likely to be formally graded at lower ranks, because of union involvement, and the pay scales in those situations are transparent.  In the more “professional” jobs, there is a lot of secrecy around pay, as well as negotiation, which gives managers a cover to pay women less.  That’s why studies have shown that women are underpaid by a larger margin when there’s secrecy and where salaries are negotiated rather than transparent. Research has also shown consistently that recruiters and bosses hate it when women ask for more money—and will punish them for it.  That’s why women are better negotiators than men in every other situation except for when they are negotiating for their own pay. They don’t ask because they know what the result will be.

Females start out with lower salaries, even when they have the same qualifications.  For instance, recent female graduates of universities are paid less right out of the starting gate, before there are any job performance reports or anything, and it doesn’t matter what area of study you look at.  The British are also less likely to hire those same females into entry level management jobs than they are males.  And yet, there are 31% more women than men now enrolled UK universities and they have better marks.  In other words, if they weren’t women, these females would be the ones all the companies were chasing after.

Of course, CEOs are always saying they want to increase their recruitment and retention of females, but I guess they don’t want it enough to actually pay equally.  It turns out that, in fact, employees don’t believe their CEOs anyway, according to 54% of the women in their companies. No one will believe them after this.

There are many ways to calculate gender inequality in pay.  I suspect the British public will hear a lot pompous nonsense in the coming weeks about the gender gap measure not being a good one and how when you measure it right, the gender gap in pay goes away.   First, just let me say one thing:  this pay disclosure was required by the Equality Act of 2010, but it has been sitting on the table, largely because businesses complained it was too much of a burden (and government cares more about kissing up to business than about protecting the legal rights of half their citizens).  If the government had asked them to provide more granular data or a more sophisticated calculation, you can bank on it there would have been a bloodbath.  Indeed, this “blunt” figure may well have been a compromise. (Bloomberg’s mansplaining on this was so disingenuous it was embarrassing. Even the title was insulting, “Why Women (Appear to) Earn Less Than Men in the UK.” )

Since I dabble in these numbers a lot, let me say a few words that may be helpful in the coming days.  You must be wary of those who say, “if you control for this and then control for that, the pay gap disappears.”  One of the most disturbing things about this whole discussion over recent years is the way misogynist economists and other “scholars” will massage raw data every way they can until the gender gap disappears and then announce it doesn’t exist.  If you hear anyone saying that, cut ’em off at the neck.  It’s too easy for someone to fiddle with these numbers in secret and make them come out whatever way they want.

As with Bloomberg, they will say that the gender gap number doesn’t take account of this or that.  There should be a measure over here of this other thing.  They say this kind of stuff because they haven’t studied the topic so they don’t know that, actually, these numbers can be had, broken down into composite parts, such as hours worked, hourly rate, and so forth.  And what each of those little pieces does is point to gender inequity.  Every bit supports the truth told by the gender pay gap. It’s just that we have not had them for individual companies until now.

I am reading these buzzards saying that what is needed is a measure of pay for same or similar work.  They’re comfortable saying that because they believe there is no such measure.  But there is.  The World Economic Forum has a survey they give to the top 100 employers in 30 countries every year, in which they ask what is typically paid women, as compared to men, when doing the same or similar work. The answer for the UK is 67%.  What if someone from the WEF walked into your boss’ office and asked him/her, “So, on average, what would you say your women are paid compared to men when they are doing the same work?” And your boss answered 67%.  Would you think that meaningful?  You bet you would.

The Office for National Statistics provides enough breakouts in their reports that you can get a pretty good idea of what’s real if you have the patience to wade through it.  Here’s a cheat sheet:

Women are less likely to be employed at all (63% versus 75%).

Hourly, men are paid £17 versus £14 for women.

Women are paid less in every occupation for which there are data.

Jobs done by women are paid less regardless of qualification.

Women are more likely to be overeducated for their jobs.

Women work more part-time than men (33% female versus 8% male), largely because they have more responsibility caring for others (1.5% of men and 11% of women are not in the workforce because of family).

Women are in lower-paying industries and fields, but even there, they are paid less than men.

Higher paying jobs are in fields so dominated by men, like engineering (90% male) and tech (75% male), that they are known to have hostile environments for women. (The hostile environment part doesn’t come from the Office for National Statistics, but from here.)

In other words, one way we know that the gender pay gap, regardless of its blunt nature, is pointing to something real is that every way you cut the question, women are paid less.  So, don’t let anyone tell you what is happening is not real because they don’t like the measure.  They are just trying to make you go back to sleep.

 

 

 

 

 

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