How Companies Can Solve the Pay Equity Problem

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Company leaders should look at salary disparities and ask middle management to justify gender salary disparities. | Illustration by Stefani Billings

This spring the U.S. women’s soccer team sued the sport’s governing body over wage discrimination, arguing their success should earn the players as much as their male counterparts. For Stanford labor economist and Professor Emerita Myra Strober, the U.S. Soccer lawsuit is a classic case of pay inequity. “Perhaps women soccer players in earlier days were just grateful that they were being allowed to play at the national level at all, but now women feel entitled to play soccer at that level and are beginning to concentrate on the pay they receive as compared to male players,” Strober says.

Pay equity concerns more than just athletes. Leaders devoted to pay equity are now pushing companies with few women at the top echelons to disclose pay gaps and work toward more equitable workforce composition.

Strober has committed her career to studying and thwarting sexism in the workplace, in academia, and at home. Here she talks to Insights by Stanford Business to discuss what managers can do to equalize pay, the role of the modern-day family, and how wages go down when occupations are feminized.

Even though people have been working on equal pay since the 1970s, there seems to be a recent groundswell of attention to wage disparity. What’s behind this newfound interest in the issue and why haven’t we seen more change over the years?

Well, we’ve seen a lot of change. When I started doing this work in the early ’70s, we talked about women getting 59 cents on the dollar. Now we’re up to 79 cents, so that’s a tremendous change.

And in that time, women have increased their workforce participation. They have increased their work experience by taking shorter breaks from the workforce. They have increased their education so much that now women in the workforce have slightly more education than men have. And they’ve moved into the professions. Women are now 50 percent of medical students. Women have moved into academe. Some women have moved up the corporate ladder, but the number that make CEO is still extremely small.

Part of the tremendous movement since the early ’70s is because women have been making different choices, and part of it is because employers have realized that women are terrific employees and can do jobs they once thought only men could do.

What do you think companies can do to bring about pay equity?

Employers often have a women’s initiative. Sometimes they assign mentors to women, and they try to look more carefully at women’s salaries and women’s promotions. I think that’s all good.

But it’s also very important for companies to look at whether women are getting assignments that will help them prove their worth or are getting assignments that don’t help them grow at all.

Likewise, I think putting in a policy where top management looks at salary disparities and asks middle management to justify gender salary disparities is very helpful, because as a middle manager if you know that someone is looking over your shoulder and wants to know why Sally is being paid less than John, that by itself may help to equalize salaries to some extent.

The American way, if you will, is to reward people who are valuable by paying them more. What’s not fair is rewarding them because you think they’re going to be more valuable before the game even starts. Managers should take people in entry-level positions and try to groom them all to see who turn out to be best.

I also think putting in paid parental leave and subsidizing or providing childcare is a good way for a company to show that it’s interested in diversity and work/family life. And companies need to look more carefully at work flexibility. Providing flexibility in jobs previously thought to require inflexible hours and venues sometimes provides unanticipated productivity gains, and increases worker loyalty.

Research shows that when women enter traditionally male fields, the pay for that field can sometimes decrease. Why is this?

I’ve studied this topic in detail, looking particularly at elementary school teachers and bank tellers, and I have concluded that what starts an occupation’s change in its gender designation is not that women move in, but that men move out. When some other occupation that requires the same level of education becomes relatively more attractive to men, they move out of the less attractive occupation and into the more attractive one. Men move out of an occupation because its attractiveness in terms of pay, working conditions, and promotion possibilities are declining. Once men move out, women begin to move in, and then the pay and promotion opportunities decline still further.

In the 1930s and 1940s, bank telling was an attractive occupation for high-school graduates. Then came World War II and as men left to serve, women came in as bank tellers. After the war, employers tried to hire men as bank tellers, but men who went to the armed forces now could go to college free of charge. After college, the men no longer were hired as bank tellers. If they went into banking, they went in at a much higher level. Eventually, bank telling was feminized, and by the 1960s and ’70s, working as a bank teller paid less than the average salary for high-school graduates.

Likewise, computer programming initially was women’s work. But as it grew and became attractive, men moved into it and employers began hiring men as computer programmers. Women went elsewhere.

Now, the question is: Why do employers hire men into the more attractive occupations? Why do they essentially give men first choice of occupations? I think this practice is left over from the notion that it’s men’s jobs that support their families.

With more and more dual-income families, the reality of the male breadwinner and woman homemaker is fading, but we still hold onto that stereotype. What can be done to reimagine the modern working family?

I think we are beginning to reimagine the modern working family, particularly because so many children are being raised by single moms, and now in about 25% of two-earner families, the wife earns more than the husband. But still, in the last Pew survey I saw that asked whether it’s better for a parent to stay at home with their children rather than go to work, 60 percent of the respondents said yes.

How can we reduce the stereotype that it is men who support families and women who raise children? It has to happen everywhere: by fathers taking paternity leave and by women moving into more prominent positions. We have to see more television programs about dual-career couples. We have to see, more specifically, that couples rely on both earners, and single-parent families rely solely on mom’s earnings. This is a long-term project, to change the culture and the notion that there’s a family wage that has to be earned by a man.

Myra Strober is a professor emerita at Stanford Graduate School of Education and a professor emerita of economics, by courtesy, at Stanford Graduate School of Business. She was a cofounder of what is now the Clayman Institute for Gender Research at Stanford. Strober recently published a memoir, Sharing the Work: What My Family and Career Taught Me About Breaking Through (and Holding the Door Open for Others).