March 20 2017
The saying goes that “your attitude, not your aptitude, determines your altitude.” New evidence suggests it may also affect the earnings of women as compared to men.
We often hear about the wage gap (activists love to cite the widely debunked 77 cents on the dollar comparison of what women make when compared to what men earn). That narrative is not true for several reasons, one of which is that it ignores the role women play in negotiating for their own salary increases. Speaking up can pay up for women in securing a higher salary and raises or promotions during their career.
A new study of British households provides fresh evidence of this finding that women can be their own stumbling blocks in their quest for better earnings. The study, which was published in the Journal of Economic Behavior & Organization, surveyed people on their salary expectations in the workplace. They found that both men and women inaccurately estimated their earnings potential in the labor market – women underestimated and men overestimated. The results are mixed. Women end up satisfied with their jobs, because they got more than they expected, while men had lower satisfaction. Furthermore, women’s pessimism over wages less inclined them to push for higher wages, a promotion, or a better-paying position. Meanwhile, men whose expectations were unmet were more likely to engineer a pay raise or promotion or to seek out a new job.
According to the report’s abstract:
Both sexes display inaccuracies in estimating their labour market prospects, but in different directions. Consistent with the literature on sex differences in psychological bias, females are less optimistic than men and on average tend to be overly pessimistic. Optimism, measured as an upwardly biased perception of the labour market returns distribution, increases the likelihood of disappointment with realized performance. A substantial proportion of the female job satisfaction advantage appears to be associated with both overly pessimistic female expectations and overly optimistic male expectations.
Interestingly, some economists want to take the pressure off women and keep it on public policy as PsyPost reports:
Chris Dawson, Senior Lecturer in Business Economics at the University of Bath’s School of Management, said ... “The takeaway message of this research is not about putting the responsibility on women, but recognising that without policy measures to address this, we run the risk of never closing the gender pay gap.”
Professor Veronica Hope Hailey, Dean of the University’s School of Management, added: “Whilst the role of unconscious bias in gender relations in the workplace has been well documented, this new research demonstrates the role of unconscious pessimism and passivity on the part of women…The onus is on policy makers and employers to foster female talent so that initiatives to close the gender pay gap can succeed.”
The professors are off the mark. Women need to know that that their passivity and pessimism can translate into fewer dollars. The status quo of working hard and hoping for a raise may never happen.
While there is a role for the private sector to “foster female talent,” women have a tremendous opportunity to move from a passive to an active role in their careers. Waiting for a legislator to change policy may that might not happen can lead to worse outcomes. Women know what they value in terms of salary and benefits. We don’t need lawmakers interrupting that employer-employee relationship with mandates and policy requirements that erode their bargaining power and remove the flexibility that employers can offer or that female workers seek.
Educating women starting with their first summer job all the way to their last job before retirement about negotiating, engineering career promotions, looking for mentors and advocates to identify new jobs, and looking for opportunities are examples of the right approach. These efforts help women to feel empowered and may move them from a position on the bench to being an active player in their salary game.