Representation Doesn't Pay the Bills

You may have recently seen Whitney Wolfe Herd, the CEO of Bumble, ring the NASDAQ opening bell at her company’s prosperous IPO with a baby on her hip. Wolfe Herd was sending a powerful message that struck many men and resonated with many women - to possess both business acumen and breast milk is no longer contradictory. As an executive, a wife, a founder, and a mother, Wolfe Herd’s highly visible and arguably iconic success can encourage other women to achieve their career aspirations without compromising their femininity.

The Economist reports encouraging momentum for women in business in 2020. Their data shows that more women than men attained higher education in the U.S. American women also held 40.7% of managerial positions and 28.2% of board seats last year. However, the utopian mirage of closing the gender gap and achieving an egalitarian society in the near future is spoiled by the hard truth of wage disparity. In the U.S. women earned 18.5% less than men in the past year. This puts the U.S. in 25th place for wage parity in a list of 29 wealthy countries that The Economist sampled in 2020.

As inspiring as it is to see a successful woman like Wolfe Herd celebrated for what she has accomplished, she is but one success story picked out of a larger and more worrying narrative about the gender gap that has worsened in the COVID economy. Americans should not be lulled into a false sense of progress just because qualified women are in the news for their representation in top leadership. Unfortunately, average working women can’t pay the bills with inspiration.

Headlines celebrating women in high level positions may instill a false sense of confidence in the progress being made towards gender equality. Harvard Business Review tested this theory by conducting five studies on whether greater representation of women in top leadership positions influences how people view other aspects of gender inequality, namely the wage gap. The results were striking: we as a society don't differentiate particular forms of progress from one another. Every study reflected that when participants thought representation in leadership was achieving encouraging progress, they were less concerned with wage inequality. The inverse was also true; when participants expressed concern about a potentially long path forward for improving female representation in leadership positions they also had more concern about the wage gap. These results were the same whether the study participant was a female or male. Researchers concluded that increased visibility of women in leadership quiets concerns about any form of gender inequality. A critical extension of this finding is that a person’s level of awareness about inequality directly influences his or her motivation to do something about it. When all is said and done, if one aspect of gender inequality is improved, we incorrectly assume all aspects of inequality have improved in tandem with it.

So let’s appropriately situate your level of concern: women on average earn 82 cents on the dollar compared to men based on 2018 data. However, to speak of this composite figure as fact is misleading. Average wages vary widely depending on the race of the woman in question. The figure below illustrates that compared to white men (the highest earning male race-gender category) Asian women in the U.S. earn 90 cents on the dollar and are the closest to wage parity, whereas Latina women are the furthest at just 54 cents on the dollar.

The static wage gap is a bitter, if familiar, pill to swallow. However, a dynamic analysis that examines how much women lose out on annually due to the wage gap is even more startling. Asian women are best positioned and would lose on average close to 6,000 dollars over the course of a year due to their race-gender’s wage divergence from that of men. Over their working lives, forecasts put that value at almost a quarter of a million dollars in wages lost to the gender gap alone. For Latina and Native women facing the greatest levels of disparity, that figure exceeds a million dollars.

There are many aspects to the gender wage gap that can be explored. You can see it in outright gender-based discrimination, such as the case where only 85 women for every 100 men are offered entry-level management positions. The gap may also be impacted by the entire “feminization” of an industry based on gender norms, where an industry that is viewed more strongly as “women’s work” is compensated less, has fewer minimum wage regulations and less autonomy to unionize than more masculine industries (think about who you envision in each role when you compare a house cleaner with a construction worker). There are many other examples of what may contribute to the complicated conversation about gender wage disparities, but when thinking about the impact of representation on gender inequality we can safely assume that, regardless of the justification, women tend to earn less than men.

Compounded with wage concerns, there has been an unprecedented dropout of women from the labor force since the start of the pandemic. Once working women get married and have children, wage disparity has negative repercussions on a woman’s potential to stay in the workforce. It is more often mothers than fathers that choose to drop out of the work force to attend to family duties. Working mothers today still devote on average three times as many hours per week to housework and childcare than working fathers. When life events force a parent to stay home, women more naturally assume that role. Given this societal expectation and the statistical reality that matches it, many Americans see it as detrimental for mothers of young children to work full time due to concerns for both the development of the child and the happiness of the mother trying to juggle both worlds.

Do not read this as an insult to the role of stay-at-home moms. If a woman plans to be solely a mother, that lifestyle involves difficult, often unrewarded, awe-inspiring work. However, if women intend to drop out of the workforce even temporarily, they often cannot re-enter and earn the same wage as when they left. This is sometimes called the “motherhood penalty.” My fellow UWE contributor Nisha Rao concisely highlights the contradictions that prevent women from re-entering the workforce if they have made the decision to leave and attend to childcare:

“In general, women are less likely to be hired for jobs if they have children. Studies have shown that fatherhood is seen as an attribute in hiring, while motherhood is seen as a detriment. In fact, high-income fathers get the biggest pay bump for having children, and low-income women see the biggest penalty. This disparity only gets worse when employers can see mothers and fathers interacting with children during remote work. While men may be seen as “stable and committed,” employers may see women as distracted or lazy.”

For families with children in the U.S., 64.2% of households with children under 18 years old saw both parents employed in 2019. Yet if any situation were to arise and force the need for one parent to stay home (for example, a viral pandemic that shuts down schools) wages and social expectations offer no support to the case where mothers further their careers and fathers take a pause to stay at home instead.

Decisions like this became less hypothetical and more critical for many families to keep their heads above water in the past year due to the economic trauma induced by COVID. Women have left the workforce in overwhelming numbers. 865,000 women left the workforce between August and September of 2020, and over a third of this group were Latina women. In that same period 216,000 men left the workforce, or roughly 25% of the female labor population lost. The OECD reports that it will take almost a decade to rebuild from this massive dropout and for women’s representation in the workforce to return to pre-pandemic levels. This is in part due to the high friction process of women trying to re-enter the workforce after leaving for a period of time. To make matters worse, the dropout has not leveled off. A McKinsey and Company report reveals that one in four women who remain in the workforce are currently considering downshifting their careers or leaving due to COVID-related difficulties.

Women are not one economic entity and have not had a uniform pandemic-era experience. Many have seen great economic success and others have suffered devastating blows. I urge everyone to not ignore one type of experience for the other, but to acknowledge that they both have happened and are both critical to understanding what the path forward may be for women’s economic progress. There are many positive benefits to celebrating the first women to accede certain positions globally, such as building confidence in how women see themselves and their professional potential, or encouraging an increased level of respect and normalization from men seeing women in these arenas. But don’t let flashy headlines fool you; the situation for working women in the U.S. is worse than ever. No matter how many “She-EOs” take a hammer to the glass ceiling, it remains a very distant symbol of success to lower and middle class working women. I want more Whitney Wolfe Herds to start companies that have market capitalizations measured in billions of dollars, and I want those future tycoons to be rightfully celebrated for their successes, but I also want the public to pay greater attention to the historic crisis working women are facing today and to not conflate some women getting recognition with all women seeing progress.