Job-Hopping Toward Equity
Changing employers can help narrow the gender gap in executive compensation.
Image courtesy of Beppe Giacobbe/theispot.com
Progress on shrinking the gender pay gap has been glacially slow. Though it has narrowed somewhat over the past 40 years, stark inequities persist. In 1980, women earned 64 cents for every dollar that men earned. By the end of the decade, that amount had increased to 74 cents, but since then, gains have been much more modest.1 As of 2018 (nearly 30 years later), the pay disparity was 81.6 cents on the dollar.2
Movement toward parity has been sluggish in all segments, but it’s slowest of all for people at higher earning levels, including managers and executives. Much of the research on this problem examines internal labor markets — that is, who gets promoted within organizations and how equitably they are compensated when they move up.3 However, the external market is becoming increasingly important in filling senior roles.4 Between 1970 and the early 2000s, the percentage of CEOs brought in from the outside jumped from 15% to 33% of all CEO hires.5 Clearly, we need to study the context of external job moves if we want a deeper understanding of current compensation trends.
For managers and executives, changing employers has been linked to larger increases in pay. So we set out to explore whether women — particularly those in senior roles — can use external moves to increase their own compensation and perhaps narrow the gender pay gap.
Existing survey-based studies suggest that gains from switching employers are less pronounced for women than for men.6 These studies broadly compare leavers versus stayers by gender. However, leavers and stayers may have different attributes that drive pay increases — and those differences may vary by gender.
For such reasons, we think it’s necessary to take a finer-grained look at the issue by asking some pointed questions.
References (11)
1. F.D. Blau and L.M. Kahn, “The Gender Wage Gap: Extent, Trends, and Explanations,” Journal of Economic Literature 55, no. 3 (September 2017): 789-865.
2. M. Leisenring, “Women Still Have to Work Three Months Longer to Equal What Men Earned in a Year,” U.S. Census Bureau, March 31, 2020, https://census.gov.
