Human ideas about fairness are defined at an early age. At school and during playtime, children develop a strong sense that everyone should be rewarded equally for equal work. But in the real world, there are many factors that impact equal treatment — including gender.
In 2019, there is a 19 percent median pay gap between men and women in the United States. In industries with the highest earning potential, that gap is even wider. On average, Hollywood actresses make 25 percent less than their male counterparts, or 75 cents on the dollar. For top-level female executives, it’s a staggering 55 cents on the dollar. One reason this may persist is that in these highly competitive industries, pay transparency can be low. In the case of Hollywood in particular, actresses may not know how much less they’re being paid until long after contracts have been signed.
In similarly competitive industries like sales, where salary is “performance-based,” the discrepancy is also striking. Stockbrokers are the highest-paid sales workers in the US — how much they earn is directly correlated to how much they sell. A 2012 study by the Harvard Kennedy School showed that female stockbrokers were making less than 66 cents on the dollar compared to men, a fact that could be interpreted as a performance issue. This gap has been attributed to differences in confidence and the ability to work under pressure, but more recent research suggests that these stereotypes are entirely false. The real disparity is shown in the accounts women are assigned — accounts where the potential for profit is much lower — making it not just a pay gap, but an opportunity gap. If women aren’t given the same opportunities to excel as men, how can they reach their full earning potential?
Perhaps the most high-profile case of 2019 to highlight these issues of transparency and earning potential in performance-based industries was the rise of the US Women’s National Soccer Team. The most successful team in the history of women’s soccer, the USWNT has brought in more revenue via ticket sales since 2015 and had a higher viewership during major matches than the men’s team. Yet their paychecks tell a different story.
The women’s national team earns a yearly base salary, while the men’s team is paid on a performance-based model. The men’s team’s earning potential (not unlike male stockbrokers) is much higher compared to the fixed income of the women’s team.
Let’s break it down by the numbers: Each USWNT player receives a base salary of $100,000/year. The men’s team, on the other hand, is paid per game, receiving a minimum of $5,000 per game played. So, if both teams play 20 games and the men’s team loses all 20, the two take home the same amount of money. But, if the men’s team wins all 20 matches, their pay goes up substantially. In that scenario, the women’s team ends up making 38% less for the same number of games played — no matter how well the women’s team performs. And the women’s team typically outperforms the men’s.
To help level the playing field, the national women’s team is demanding total pay transparency. The players are advocating for a revenue-sharing model, where both the men’s and women’s teams would be paid based on how much revenue they generate. Currently, the only public data for US Soccer’s revenue is ticket sales. This proposed model would create a new level of transparency and would ideally ensure that both teams are paid proportionate to their value.
Pay transparency laws may be an important part of solving the wage gap. In Denmark, for example, new pay transparency laws have dramatically decreased the gap, with the added bonus of more women being hired and promoted. In the US, the Paycheck Fairness Act passed in the House for the second time this year and will go up for a vote in the Senate. The act would require employers to report job salaries, promotions, and firings to the federal government, broken down by gender and race, in an effort to increase transparency and further enable those who are facing workplace discrimination to take legal action.
Ultimately, the question of what’s fair is not the issue. The question is, what structural, legal, and cultural changes need to be made to ensure that the playing field is level for everyone? When that happens, everyone wins.