The Gender Gap in the Finance Industry
In the U.S., the average woman working full-time makes just 80.5% of what her male counterpart makes. Individual choices and personal preferences on the part of workers partially cause this disparity. One Harvard study from 2018 found that the female workers within their study favored flexibility, work/life balance and family leave more than the men in the study. The men in the study favored the marginal wage increases in exchange for working more and/or less favorable hours and shifts.
While that “headline” gender pay gap is broad, containing women across the American workforce and in low-paid industries, the gender gap in the finance industry remains substantial. And some of the largest players within the finance industry have been criticized for preferring cynical PR stunts as means to paper over proven workplace and ethical improprieties.
According to US Census stats from 2019, the median earnings for a male financial manager were $102,404, compared to $68,737 for a female financial manager. That means that full-time, year-round female financial managers earned just 65 cents for every dollar earned by a man in the same occupation.
What happened to the Equal Pay Act?
The Equal Pay Act of 1963 made it illegal to pay women less based solely on gender. However, the law hasn’t ended gender disparity when it comes to salaries or gender imbalances. Part of the problem stems from loopholes buried in the Act that reduce its effectiveness. Unscrupulous employers can easily exploit these loopholes.
The Act requires employers to pay the same wage to men and women who perform “equal work on jobs … which require equal skill, effort, and responsibility, which are performed under similar working conditions.” But it allows workers, often men, to receive a higher wage based on seniority, merit, productivity, and “any other factor other than sex.” This makes proving women were paid less than a male coworker difficult.
Closing the gender wage gap
Lawmakers and government regulators have proven impotent in closing the gender wage gap. Women must close the gap for themselves. Here are three ways to do that.
An oft-used explainer for the gender wage gap is that women simply don’t negotiate as often as men do. But a 2018 study published in Industrial Relations: A Journal of Economy and Society, found that women do ask for higher salaries just as often as men do, but are less likely to be successful. According to the study, women who ask for a raise got what they asked for 15 percent of the time. Men asking for a raise were successful 20 percent of the time.
Some employers have eliminated the pay gap by making salaries non-negotiable. In an article for Forbes, the financial education company Financial Finesse explained that, for the last 19 years, they have pre-set salaries for all positions. As a result, the gender pay gap at the company was erased, and their workforce became gender balanced.
Zero salary negotiations are an interesting concept. But until the practice becomes widespread, it’s up to women to get comfortable asking for more.
The first step in successful negotiating is to know the salary range you can demand based on skills, experience and leadership potential. When you know what you’re worth, you can enter negotiations with a clear, well-researched argument for why you deserve the salary you’re asking. (Hint: check out our Salary Guide for the most up-to-date finance salaries for your local job market and around the country.)
- Make your achievements known
A study from Catalyst looked at conventional career advancement advice to determine whether such advice really worked and whether it worked for women as well as men. Of the nine career advancement strategies the group looked at, two stood out as having the greatest impact for women. The first, make achievements visible to higher-ups. This helps women advance further, be more satisfied with their careers and experience greater compensation growth.
The takeaway? Seek credit for the work you do, request frequent performance feedback, and ask for a promotion when you deserve one.
- Proactively network with influential leaders
The second tactic identified in the Catalyst study was “gaining access to power.” In other words, building a network of influential people within the firm. Gaining access to power helped both men and women climb the corporate ladder and increase their salary growth.
Identify influential people in your organization and look for opportunities to work with them. Pushing for these high-profile projects will help you understand how things really work within the organization. This can put you in the path of people who can have a positive influence on your career path.
Form private certification guidelines and designations and make your company’s goal for gender parity and workplace diversity a selling point and a competitive advantage. Several states and even the federal government are currently considering measures to close the gender wage gap. Contact your local, state, and federal representatives to support favorable legislation. But don’t wait for the laws to catch up. Take actionable steps to close the gender wage gap for yourself.