Among Executives, Women Outearn Men

If there's one positive thing you can say about capitalism these days, it's that the relentless and unflinching pursuit of profit by those in the executive suite has managed to put a gaping crack in the glass ceiling for women.

At least that's the implication of new work by George-Levi Gayle, Limor Golan, and Robert Miller of Carnegie Mellon University. In a study tracking career paths of some 16,000 male and female executives, they find that at all levels in the corporate executive hierarchy -- from vice president to chief executive -- women get paid more than men while getting promoted at the same rates.

How could this be? Other studies, for example, have shown that male Finnish metal workers and male academics in the social sciences earn higher salaries and receive more promotions than their female counterparts. The result appears downright counter intuitive if you look at the executive class of big public firms. Here, the data shows that only 10 percent of officers are women and they earn less on average than men.

But these aggregate numbers hide an important phenomenon: that female executives are more likely to quit their jobs earlier on in life. How does that change the view about the strength of a glass ceiling?

Well, let's assume that getting promoted didn't depend upon gender. Then, since women are leaving the executive workforce at a higher rate, a higher proportion of men will be promoted at any given rank. And if wages go up with promotions, which they do, then men will get paid more than women on average.

To see if this is how it actually worked, the researchers looked at earnings data and career path for thousands of executives between 1992 and 2006. They found that if two executives, one male and one female, are the same age and have the same education, work experience, and rank, then "women are paid slightly more than males, enjoy less wage volatility due to abnormal returns, and are equally likely to be promoted within the ...firm (although a little less likely to receive and accept an outside offer)."

The researchers confirmed, however, that female executives are more likely to quit their jobs sooner. Unfortunately it's unclear why this happens. Child-rearing responsibilities are likely not the case, the researchers say, because "executives, male and female alike, are typically in mid-life when most women have put their child bearing years behind them."

But UC San Francisco neuropsychiatrist Louann Brizendine, writing in the Harvard Business Review in June, speculated that children do still play a factor. Promising women typically decide in their early 40's whether to put in all the effort required to attain an executive level job. But because of stresses not typically affecting men -- taking care of adolscent children as well as pre-menopausal hormonal changes -- the prospect of adding yet another stress into life could very well be turning women away from pursuing greater professional success.

All of this doesn't mean that gender discrimination doesn't exist. If anything, anti-female policies or attitudes could be a big reason why more women don't stay in executive-level jobs. And it could also be that retirement is more attractive to women. The extra pressure on women to work outside of work (i.e. raise children) may make the transition into retirement easier for women than men.

But the bottom line, the researchers say, is that

the aggregate differences observed in the executive market between genders are almost entirely driven by factors that are unrelated to wages and promotion.