Compensation and Cultural Norms

Last Monday,the Human Resources Manager of Toshiba America Nuclear Energy (TANE) Corporation filed a $100 million class action lawsuit alleging systemic gender discrimination. The complaint alleges that Toshiba engaged in systemic gender discrimination against female employees by paying them less than their male counterparts, denying them promotions into better and higher paying positions, limiting their employment opportunities to lower and less desirable job classifications, and exposing them to different treatment as employees. 

As I was reading various news reports about this case, there seemed to be a lot of references to social and political factors resulting in a gender wage gap in Japan. Most reports estimate that wages for Japanese women are approximately 68% of the wages for Japanese men. If you've been following the gender pay equity discussion in the news (or in this blog!), you know that in the United States, the frequently-cited statistic is that women earn approximately 77 cents for every dollar earned by men. But Japan and the United States aren't the only two countries with gender pay gaps:

 
This table, prepared by the OECD, presents data for a selection of countries. In every country shown, a gender wage gap exists.

It's not surprising that the gender differences in earnings are largest in Korea and Japan; the ideal for womanhood in the East Asian area has traditionally been expressed in the proverbial phrase "Good Wife, Wise Mother" (coined by Nakamura Masanao in 1875). While cultural norms are changing in East Asia, this ideal continues to influence beliefs about gender roles. These beliefs about gender roles, in turn, influence the choices women make in the workplace. Approximately 70% of Japanese women do not return to the workplace after childbirth. 

The fact that only 30% of women return to work after childbirth has some implications for the characteristics of the Japanese workforce. Because women tend to leave the workforce after childbirth, those women in the workforce are likely to be younger and have less experience. If we compared younger men with less experience to older men with more experience, we'd expect to find that the earnings of older, more experienced men would be higher than younger, less experienced men. So why do we automatically infer gender discrimination when we compare the earnings of younger, less experienced women to those of older, more experienced men?

There's another aspect of this to consider - and it may not be politically correct or polite to discuss. But I'm going to mention it anyway. We know that only 30% of Japanese women return to work after childbirth. And if we know it, the employers surely know it. From a purely economic perspective (and again, I'm not saying this is the right perspective - it's just one perspective), is it surprising that an employer would not invest much time, effort, training and professional development in a young employee if the employer knew that there was a 70% chance the employee would be leaving in the near future, regardless of whether that employee was male or female?

In the United States, basing an employment decision on an expectation that an employee will become pregnant and depart the workforce in the near future would, in nearly every case, be illegal. And even though basing an employment decision on that expectation is illegal, the thought still crosses employers' minds. I've experienced it personally; as a woman approaching age-protected status with no children, my previous employers frequently contemplated the likelihood of my becoming pregnant and leaving the workforce. I was periodically asked about my "future plans" in various ways and in various contexts. The cultural norm is that women become pregnant, give birth, and leave the workplace, at least temporarily. From my employer's perspective, the likelihood of my fulfilling that cultural norm increased with every passing year.

Cultural norms, whether in the United States, Japan, or anywhere - are likely to affect decisions employers make about us, whether consciously or unconsciously. These cultural norms also influence the decisions we make for ourselves - decisions about education, our occupation, working full time or part time, or whether we'll accept a promotion with more money and responsibility but less time at home. Those decisions ultimately affect our compensation, whether we realize it or not.

 Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. For more than a decade, she's been working with businesses and government agencies providing expert EEO analysis. Stephanie has published several articles on examining compensation systems with respect to equity, and has appeared on NPR to discuss the gender wage gap. She is the host of The Proactive Employer, and is the founder of Thomas Econometrics. Follow her on Twitter at ProactiveStats.

Comments

[Laura Schroeder]

Great post, Stephanie! The numbers are just the numbers, it's what's behind them that matters. And I think you hit the nail on the head with culture and unspoken assumptions.

[Andreas Moser]

Here is the REAL reason why women earn less than men: http://andreasmoser.wordpress.com/2011/02/19/gender-pay-gap/ They have different expectations in life, and the female preference for rich men forces men to earn more.