Yesterday's comments by Satya Nadella at Grace Hopper have gotten a lot of people in tech talking about the inequality of pay between men and women. There's also the commonly quoted gap in percentage of each gender in tech, but I think that's a largely (or entirely) separate issue.
So why do women make less money for the same work? Multiple possibilities exist, and likely all of these (and more) are factors:
1. They typically don't demand higher pay
a. they don't promote themselves as effectively
2. Hiring managers undervalue them
3. Hiring managers know they can exploit [1]
As with all things free(ish) market, there's the buyer's side and seller's side. These two must overlap for there to be a mutually beneficial outcome.
The seller (business)'s side:
The business's interest is in staffing a position with a qualified person for as little as possible. Considerations for as little as possible can range from literally the lowest dollar amount someone will take to long-term retention and fairness considerations. A business can:
B1. Treat women equally. All is well.
B2. Be fundamentally biased and value comparable women less than men
B3. Be aware of gender-based trends and try to lowball women because they just might get away with it
The buyer (potential employee)'s side:
The employee's interest (assuming all else equal) is to get the most money for the job they are doing.
This amount is the maximum the business would be willing to spend to staff the position.
E1. Employee knows their market value and will ask for it.
If an employee fails to get to this number it is because:
E2. The employee does not know their own value
E3. The employee knows their own value, but for whatever reason doesn't make a push to receive appropriate pay (this can be fear of losing the job offer, non-confrontational personality, ... )
We can now look at each possible combination. Suppose the position in question's salary is fairly market valued at $100k.
B1.E1. Employee is offered 100k. Hooray.
B1.E2. Employee is offered 100k. Hooray again.
B1.E3. Employee is offered 100k. The system works!
B2.E1. Female employee is offered 75k. She asks for 100k. Company doesn't think she's worth it, deal is off.
B2.E2. Female employee is offered 75k. She takes it.
B2.E3. Female employee is offered 75k. She dislikes it, but takes it.
B3.E1. Female employee is offered 75k. She counters at 100k. Company accepts. Hooray-ish.
B3.E2. Female employee is offered 75k. She accepts.
B3.E3. Female employee is offered 75k. She dislikes it, but takes it.
I've simplified a lot of the details, but I think this matrix is representative and instructive (there are various sub-divisions we can make, but I think the principles emerge. For example, whether or not every man would get 100k from B2 or B3 isn't really relevant so long as they get more on average). Of the 9 outcomes, 3 are ideal and driven by socially responsible companies. 1 other achieves the same pay, but is driven by the employee. 4 others result in lower pay. 1 results in no job.
I think there's not much more to say about the 3 ideal cases. B3.E1 is interesting though. While the female employee gets max pay, she's now also burdened with the stress of maintaining her pay growth (presumably B3 will not grow her salary at market rate without her negotiating for it). This at a minimum makes her work environment less pleasant and/or feel discriminatory, at worst it causes her to have diminished capacity to perform her best, causing a real drop in value to the company. The remaining B3 cases would turn out at least somewhat better if the employee knew to negotiate for fair market value. Nothing the employee can do will get her market value at B2.
So how can any of this change?
Ideally, companies would all do the socially responsible thing and fix their practices. However, there will still be a very real desire for them to pay employees as little as possible, and I don't think that will ever go away. With transparency of pay, the B2 group should become non-competitive. However, pay is unlikely to become transparent ... but prospective employees can address this by applying for more jobs or to companies with good reputations. The real headway needs to be made in the B3 group. If employees can gain an understanding of their market value, they can push the B3 group closer to the B1 group. While there's still the stress of maintaining market value over time, this is still a much better position to be in.
Some industries address this with unions. Unions have not been a part of the tech landscape, and I don't think they would stick for reasons I won't enumerate right now.
Athletes address this with agents. Would we be willing to have someone else negotiate our contracts for us for a fee? Agents would have more visibility into actual salaries because they would represent lots of people. Thus, they would know the actual market. On the flipside, we'd probably need to move to fixed-length contracts (like in sports) so that the agents have motivation to keep negotiating for us. Is the prospect of higher pay worth going to this model for? The risk of not getting re-employed after a contract is over? The possibility of a pay decrease if the market softens? I don't know, but it's an interesting idea.
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