Income inequality and gender: truth unveiled

All people are made equal. Yet not all get equal incomes. It’s only natural since equal doesn’t mean the same

income inequality

Income inequality and gender: truth unveiled. Source:

People have different skills, capabilities, and experiences. Besides, they perform different types of work. However, not only those objective factors influence income level. Statistics show that gender remains an unspoken element of decision-making in the workplace that affects our salary scores.

What’s income inequality

When we speak of income inequality we don’t mean that people working at the same enterprise and performing the same functions are paid differently. Usually, national laws prohibit such practices as discriminatory. The issue of income inequality is much broader. It illustrates not only wealth, but also power distribution within any given society. The analysis of how income levels vary throughout the population reveals the “privileged” social categories and the categories that are usually doomed to low incomes.

The problem with some people earning more than others is the wide gap between the rich and the poor. All across the globe, the richest people constitute only a few percent of the total population. And yet, one third or even a half of the aggregated national wealth belongs to these few percent. On the contrary, half of the whole nation may earn only a small percentage of the total wealth, even if all their incomes are added up. In some countries, the gap between the rich and the poor is so wide that middle-income households barely exist.

To make it clear, let’s take the example of the USA. According to the Q4 2020 data from the Federal Reserve, the wealthiest 1% of citizens owned $38.61T, while the 50-90 percentile of income earners aggregated only $34.81T. The bottom 50% owned a mere $2.49T. In other words, half of the population taken together earns about thirteen times less than the top 1%. The income inequality gap has widened greatly since 1989 when the top earners had only 5 times more than the population’s poorest half.

For every nation, the social categories having the most and the least income may be different. Nevertheless, the typical top earners are middle-aged men who belong to the major ethnic group prevailing in the country or region. In this scenario, reaching a certain age may be reasonable, since you need time to develop your career and make your wealth grow. However, the ethnic and gender components of the description prove that discrimination and prejudice still exist in modern societies.

What does gender have to do with that?

We have already written about the gender pay gap that affects the global population of the Earth and constitutes about 14-18% in the developed western countries. Why does that happen? To begin with, women are most often under-represented in senior positions within all types of organisations and private firms. At the same time, female workers prevail in low-paying jobs. In many countries, men are also more likely to own land, businesses and control productive assets than women.

As for separate industries, the widest gender pay gap traditionally exists in finance and insurance, public administration, professional, scientific and tech services. That means that the senior positions in all those segments are mostly given to male professionals, while women keep holding the less-well-paid jobs.

For instance, only 35% of independent insurance agencies are led by a woman principal or senior manager. Women account for only 19% of board seats, 10% of named inside officer positions, and 12% of C-suite roles, although the industry itself is made up of over 60% women. Therefore, in the insurance industry, the pay gap between male and female employees reaches almost 40%. However, if we use PayScale data for the finance & insurance jobs, we can see that insurance agents earn on average $39,700 annually whereas senior underwriters receive $87,800 for the same period. The difference is more than twofold. According to the resumé analysis from the job-search resource Zippia, over half of senior underwriters are female. So, women aren’t getting only the lowest-paid jobs. The truth is that in the insurance industry and most other industries the top 1% of executives earn the vast majority of the aggregated income.

Here we arrive at the core of the income inequality issue. The problem is not in overt discrimination. Even the gender pay gap is not that significant if we compare the salaries of individuals with the same job titles, years of experience, education, industry, location, and other relevant factors. The unequal income stems from unequal job opportunities and power distribution.

Female executives: myths vs reality

Last year, the number of female CEOs in the Fortune 500 companies hit an all-time record ― with 37 female executives, women ran 7.4% of all the businesses on the ranking. At the same time, women represent 47% of the total US workforce. Overall, the statistics are slowly advancing each year. However, if we expand the scope of analysis to a larger number of corporations the percentage of female business leaders in the US will be even lower – a little more than 5%. The number of female CEOs has risen by 2% since 2008. Still, considering the long decades of fighting for equal rights and the percentage of women living and working in the country, the female representation at senior corporate level is disappointing. Women of color are even further underrepresented.

Globally, though, the number of women holding senior leadership positions in mid-market businesses hit 31% last year. It’s an encouraging sign of reaching the minimum representation needed to change decision-making processes globally. Although the majority of middle-size business representatives across the globe are still men, women are starting to narrow the gap and promote the interests of female employees.

Why are men chosen as executives much more often? There are a number of both objective and subjective reasons. We’ll leave the objective factors like superior professional skills aside, as there’s nothing to discuss in such cases, and speak about subjective conditions preventing women from getting to the top of their career ladders.

Gender-based prejudice. Women are considered less organised and decisive, guided more by emotions than logic, not as competitive as men, less capable of maths and strict sciences, etc. Besides, when female employees do act assertively, and don’t shy away from fierce competition, it’s frowned upon. When women negotiate for promotions and raises, it contradicts the traditional gender role models, and people unconsciously don’t like it. Such women are more likely to be labeled as “intimidating,” “too aggressive,” or “bossy” (30% more in comparison with men who negotiate, and 67% more than their female colleagues who don’t ask for promotion). By the way, such feedback comes from male and female decision-makers alike.

Family responsibilities. When it comes to work-family balance, women are more likely than men to give up career opportunities to satisfy family needs. E.g. in 2020 women’s labor force participation in the US hit a 33-year low because many working mothers were forced to leave their jobs to either assist kids with remote education, or transition to full-time home-schooling. When those in households with two working parents were asked to imagine which parenting partner would be the preferred person to leave the workforce to become their children’s primary caregiver, 69% of women said they would likely be the one to leave work, compared to 31% of males. Whether that happens according to their true will or because of traditional role models is another question. Other examples are women rejecting long and frequent business trips, moving to another country or city for promotion, long working hours, etc? In addition, there’s always parental leave that may leave a person out of career prospects for a while. In most countries, females are the main candidates for such leave, as well as for taking sick leave in the case of a kid’s sickness.

Stricter demands. According to the 2019 McKinsey report, women are more likely to be criticised in their careers. Their work is judged more strictly. “Women are often hired and promoted based on past accomplishments, while men may be hired and promoted based on future potential,” the authors say.

Social pressure. We have already described how women pushing for promotion receive public disapproval. In addition, it is coupled with social expectations. Dr. Colarco, a sociology professor at Indiana University, says women are socially encouraged to continue to be primary caregivers while doing full-time work. Working mothers ― even those with partners ― often find themselves essentially working two full-time jobs: keeping their career together while doing heaps of housework, cooking and child-rearing. In the long run, it can lead to exhaustion and a decline in mental health since women feel they can find success in neither their work life nor their home life. Thus, most women would prefer to quit or choose a less-well-paid job if their work leaves little time for their family. Social support at the family level is also fading away due to increasing nuclear family norms.


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