PayScale Research Shows Women Who Leave the Workforce Incur Up to a 7 Percent Pay Penalty Upon Their Return

Note: This blog post is an excerpt from our newly released 2018 State of the Gender Pay Gap Report.

Today, PayScale released the State of the Gender Pay Gap report, which shines a light on both pay and career opportunity disparity between men and women. As it turns out, into 2018, the gender pay gap is still a big deal.

In fact, women earn 77.9 cents for every dollar earned by men, when we look at the median salary for all men and women regardless of job type or worker seniority. In other words, the median salary for men is roughly 22 percent higher than the median salary for women.

Even when we account for all compensable factors such as experience, industry and job level,  the gender pay gap is not erased. In fact, when men and women with the same employment characteristics do similar jobs, the woman earns 97.8 cents for every dollar earned by the man. Unfortunately, this number has not changed since our 2016 study. Take a look at our methodology here.  

Women’s Careers are Prone to Stagnate

Our research shows that men move into more senior positions at significantly higher rates, and are far more likely to find themselves in executive positions with bigger paychecks than their women counterparts.

Gender Pay Gap Report PayScale

At the start of their careers, men and women tend to work at similar level jobs, most often entering the workforce at the individual contributor level: 72 percent of men and 74 percent of women in the age group 20-29 are in individual contributor roles.

By mid-career (age range 30-44), men are 70 percent more likely to be in VP or C-suite roles than women. By late career (age 45+), men are 142 percent more likely to be in VP or C-suite roles which typically are the most highly compensated positions at the company.

On the flip side, women over the age of 30 are more likely than men to remain in individual contributor positions. By mid-career, 60 percent of women are in individual contributor positions vs. 52 percent of men. By late career, 59 percent of women in the workforce are in still individual contributor positions vs. 43 percent of men.

Career Disruptions Impact Earning Potential

We found that the wage penalty on unemployment averages to 4 percent, and the longer the career disruption, the greater the penalty. On average and controlling for relevant factors, those who were unemployed at the time of receiving a job offer make 4 percent less than someone who has not recently had a career disruption.

In addition, those unemployed for longer periods face larger unemployment penalties. Someone who was unemployed for more than a year experiences a 7.3 percent penalty.  

Gender Pay Gap Report PayScale

Women Leave the Workforce at Higher Rates Than Men

For all age groups, women with a new job offer are more likely than men to be returning from a break in employment. This is in line with the Bureau of Labor Statistics labor participation data, which shows that men are 11.5 percentage points more likely to participate in the labor market than women (as of January 2018).

Gender Pay Gap Report PayScaleThe difference is greatest for those between the ages of 30 and 44, with women being 6 percentage points more likely to be returning after a break in employment.

Women who are returning from a period of unemployment are, on the whole, 7 percentage points more likely than men to have been out of the workforce for more than a year (17 percent of women versus 10 percent of men). For some age groups, this difference is even more stark.

Returning women in the prime child-rearing years of 30 to 44 are 10 percentage points more likely than men to be unemployed for longer than a year.

Because women are more likely to take breaks from work, and take breaks that last longer than a year, they are particularly hurt by the unemployment penalty, which is reflected in the gender pay gap.

To view all the data and explore the entire The State of the Gender Pay Gap report, please visit:  

What employers can do to close the opportunity gap

To further the discussion with employers about the gender pay gap, PayScale will host an event on Equal Pay Day, April 10th at the PayScale offices in Seattle. The event, called Equal Power Day, will focus on ways employers can close the opportunity gap, as well as the pay gap, that persists between men and women. 

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