Economy/Economic Policy

Internet Economy Mimics Old-Style Pay Inequities

Tuesday, January 16, 2001

Like their brethren, women workers in the Internet economy are making the big bucks and working the long hours. Yet, they are making roughly 25 percent less while working only slightly fewer hours. Ring a bell?

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(WOMENSENEWS)--It's no secret that a wage gap exists nationally between men and women. Women made three-quarters of men's weekly wages in the third quarter of 2000, according to the Bureau of Labor Statistics. But little has been said about the gender wage gap in the Internet economy. Perhaps it was assumed that an industry that altered the relationship between employer and employee would leave bricks-and-mortar business world bias behind. Get ready to be disappointed.

The Industry Standard, a weekly business magazine largely dedicated to coverage of the Internet economy, conducted a survey of nearly 2,600 of its newsletter subscribers to find out just how much money Internet workers are raking in each year. The results, released last September, were staggering. The study found the median cash compensation--or base salary plus bonus and commission--of an Internet economy worker to be $83,000. However, the Standard recently dug deeper into the compensation data to find out if this prosperity was being enjoyed across gender lines.

The data indicates a trend has passed from the old economy to the new: the practice of paying women less than men. The Standard's Internet Workforce Compensation Study 2000 found that the median base salary of women working in the Internet business is $60,500, or 24 percent less than the $80,000 median base salary of men.

Gender Differentials Appear in the Bonuses Too

In addition to inequality at the base salary level, fewer women reported receiving a bonus as part of their compensation package. While 64.1 percent of men received a bonus as part of their compensation package, only 60.6 percent of women said the same. And the median bonus received by women--$7,000--was half of the $15,000 median bonus reported by men.

This disparity in bonuses helps explain why the gender gap grew even larger when total cash compensation was evaluated. The Standard found the total cash compensation of women to be $66,000, or 27 percent lower than the $91,000 median total cash compensation of men.

The overall situation, it appears, is extreme. But data can be easily misconstrued unless similar categories are compared, apples with apples. A general principle for both men and women in the business world is that more education means greater opportunity to move into management positions. That's why it's not surprising that the gender wage gap narrows at both higher levels of education and higher levels of management.

The median base salary of women in top management, $118,000, was only 4 percent less than the $123,500 of men with equivalent titles. However, loftier bonuses for top male managers again increased the gender gap for total cash compensation of top management. The median cash compensation of top female managers was $125,000, 17 percent less than the $150,000 median cash compensation of top male managers.

No Easy Explanation for the Gender Pay Gap

The Standard's data does not explain why the gender wage gap exists, especially when recruiters say they see no difference in starting salaries based on gender. Theoretically, a company that offers more competitive compensation packages to men, or greater learning and career opportunities to men will make the company unattractive to women, lessening the company's overall strength. Yet this theory assumes that women will be aware of the discrepancy and that they have bias-free opportunities elsewhere.

The data was not weighted to balance factors such as the number of years in the workforce, prior job experience and the size of the company. The data also raises the question of when small start-ups with owner-executives, often lacking personnel professionals, will begin to mirror the practices of large, established corporations with checks and balances in place to prevent discrepancies in the pay between sexes.

"The war for talent is alive and well, and we make abundantly clear that a disparity based on gender is a one-way ticket to competitive hell," says Tom Casey, a partner at Unifi Networks, the global human resources consulting arm of PricewaterhouseCoopers. "To deny that the glass ceiling may exist would be idiocy. But even more idiotic is to allow it to continue."

Women Work Slightly Fewer Hours

Being a woman in the Internet economy does have its perks. On average, women put in a shorter work day, 9.7 hours compared with the 10.3 hours put in by men. Just over half of women say they work at least one weekend a month, while 61 percent of males report the same. And more women are compensated for working overtime, 16 percent compared with 12 percent of men. But these very small differences are certainly not enough to explain the gender wage gap.

At the end of the day, it can be hard to feel sorry for Internet economy workers, both male and female. The nationwide median salary of Americans working full-time in the third quarter of 2000 was $32,000 per year. That's only 43 percent of the $75,000 median base salary of Internet workers. But this does not change the reality that the Standard found the compensation of women to be inferior to that of men at every job level, every level of education and every job sector of the Internet economy.

Laura Carr is a staff writer for the Industry Standard.


 
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