36% of gender pay gap ‘unexplained’

The gender pay gap is real and over a third may very be due to workplace bias (whether intentional or not), negotiation gaps between men and women and/or other unobserved worker characteristics, according to new research.

The Demystifying the Gender Pay Gap report from Glassdoor, a jobs and recruiting marketplace, confirms a significant gender pay gap between men and women in the United Kingdom, United States, Australia, Germany and France.  It is based on a unique data set of more than 534,000 salary reports, shared on Glassdoor by online employees, which includes pay data down to specific job title and company name.

This has enabled Glassdoor to understand both the “unadjusted” and “adjusted” pay gap in each country.

Glassdoor says the unadjusted pay gap between men and women in the UK is 22.9 percent, meaning women earn, on average, 77p for every £1 men earn. When adding statistical controls for age, education and years of experience are done, the data show the gap compresses to 15 percent. And, when additional controls for occupation, industry, location, year, company and job title are factored in, the pay gap in the UK becomes 5.5 percent, revealing the adjusted pay gap. The study found similar differences between the unadjusted and adjusted pay gaps in each country it analysed.

“The gender pay gap is real, and Glassdoor’s comprehensive study helps us better understand just how significant this gap is across multiple countries,” said Dr Andrew Chamberlain, chief economist of Glassdoor, Inc.

Glassdoor researchers found that the majority of the overall UK pay gap can be explained, while 36 percent of the overall pay gap cannot be explained. It says this means the unexplained pay gap may very well be attributed to workplace bias (whether intentional or not), negotiation gaps between men and women and/or other unobserved worker characteristics.

The study reveals that the largest contributing factor to the gender pay gap is explained by differences in how men and women sort into occupations and industries with varying earning potential. This finding is consistent across all five countries, and in the UK, it makes up more than one third of the unadjusted gender pay gap. This backs up academic research on social pressures affecting the qualifications and jobs men and women go into and on gender norms regarding caring roles which result in women doing more flexible jobs with lower pay. Less of the gap is explained by gender differences in education, age or years of experience, says Glassdoor.

“Women and men tend to pursue different career paths early in life and then sort into different industries and occupations, which, in large part, is due to a variety of societal expectations and traditional gender norms. This is the single largest factor we see contributing to today’s gender pay gap,” said Chamberlain.

“To help close the gender pay gap, we should focus on creating policies and programmes that provide women with more access to career development and training, such as pay negotiation skills, to support them throughout their lives in any job or field they choose to enter,” said Dawn Lyon, vice president of corporate affairs of Glassdoor, Inc. “Greater transparency around pay can also help eliminate pay gaps by making it easy to identify disparities and spark conversations with employers to ensure people are paid equally for equal work. Research has shown that companies that embrace salary transparency can also improve employee satisfaction in the long run, which boosts productivity.”