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Why are Women Paid Less? - An Examination of the Pay Gap in Purchasing

Author(s):

John M. McKeller, D.B.A., C.P.M.
John M. McKeller, D.B.A., C.P.M., Assistant Professor, University of Wisconsin-Madison, Madison, WI 53706, 608/262-7371.

79th Annual International Conference Proceedings - 1994 - Atlanta, GA

INTRODUCTION
During the last decade, considerable attention has been given to the subject of gender as an influential factor in determining various employment attributes. Because the demographic profile of the National Association of Purchasing Management (NAPM) is increasingly female, it is certainly important that association members are aware of how gender may influence an individual's job satisfaction, potential for promotion, career choices, and management styles. However, of immediate importance is a recognition of the apparent salary inequities which continue to exist between men and women in the purchasing profession, why they may exist, and what may be done to help eliminate them.

Therefore, the objective of this presentation is to provide the following:

a review of the generally acknowledged relationships between gender and compensation;
an overview of some factors which purportedly influence the differences between male and female compensation;
an explanation of a statistical analysis conducted using U.S. Department of Commerce, Bureau of the Census, March 1991 Current Population Survey data on women and men employed in purchasing occupations;
conclusions resulting from the statistical analysis and recommendations for necessary changes within the purchasing profession.

RELATIONSHIPS BETWEEN GENDER AND COMPENSATION
The correlation between employee compensation and gender has been shown to be significant for many professions and categories of employment. Statistical evidence has continuously confirmed the fact that females earn significantly less than males. On average, women employed in American firms are reported to earn 30-40% less than their male counterparts. In the purchasing profession, the income disparity between men and women has been repeatedly documented by an annual Purchasing magazine "Salary Survey". Therefore, female purchasers appear to have good reason to be dissatisfied with their incomes.

FACTORS WHICH INFLUENCE THE GENDER "PAY GAP"
Various theories exist regarding the factors or combination of factors which cause the perpetual male/female "pay gap". Several factors which are repeatedly identified as contributory to the income disparity include:

the biological facts of child bearing;
a woman's family responsibilities;
women's career opportunities and choices;
women's level of education;
and women's level of business experience.

CHILDBEARING AND FAMILY RESPONSIBILITIES
The capability to reproduce another human being is exclusively female and women still choose to have children in spite of their perception that maternity leave and subsequent family responsibilities negatively impact their careers. Pregnancy may suspend a woman's career either voluntarily or involuntarily and thereby interrupt the continuity of employment and experience necessary for promotions and wage increases.

In addition to the biological fact that women alone can bear children, society allocates to women the major responsibility for their subsequent care. This may force women to accept part-time or lower paying jobs which allow them the flexibility to accommodate the demands of parenting during their offspring's early childhood.

WOMEN'S CAREER CHOICES AND OPPORTUNITIES
With few recent exceptions, the majority of traditionally high paying professions, trades, and job categories are still male dominated. It has been suggested that women choose to enter traditionally female or lower paying occupations as a consequence of other factors such as family responsibilities, pregnancy, and the need for work schedule flexibility. Therefore, because women choose employment in traditionally lower paying positions, their average compensation is less than that of men.

However, research has shown that equally qualified women who enter traditionally male dominated occupations are not provided with the same career opportunities as their male counterparts. This too leads to comparatively lower incomes. Furthermore, breaking the traditional male domination of a field may by itself lower salaries for everyone. It has been determined that there may be a correlation between the ratio of women and men employed in a field and the average salaries paid to individuals in that field. As female representation in an occupation increases over time, the average salary paid to personnel in that occupation may decrease.

WOMEN'S LEVEL OF EDUCATION
For many years, Purchasing magazine has conducted annual salary surveys of its subscribers. During the last decade the results of the surveys have shown a wide gap in the average compensation paid to men versus that which is paid to women." The average pay gap between male and female respondents in 1993 was almost $ 15,000.

In addition to lower pay levels, female respondents in previous annual surveys also reported educational levels below those of the male respondents. The fact that women reported both lower income and educational levels than men reported apparently led the publication's editors to assume an association between education and income. However, the 1993 survey indicated that the pay gap actually widened for women with more education.

The level of education among women in the general U.S. population has increased significantly. About half of all undergraduate and masters degrees are earned by women. Furthermore, as of 1990 women represented over a third of all newly minted MBAs, and were awarded over forty percent of all accounting and law degrees. However, studies confirm that a substantial pay gap exists even for highly educated women.

WOMEN'S LEVEL OF BUSINESS EXPERIENCE
An assumption can be made that among most business employees it has become customary to expect salaries to increase with experience. However, women may not have the opportunity for continuous, uninterrupted employment if they choose to have children. Interruption of employment can sidetrack a woman's promotional potential and job awareness and therefore may contribute to lower pay levels. Despite the fact that experience cannot be discounted as a factor in the male-female pay gap, surveys demonstrate that experience alone does not account for the majority of the difference. Given equal levels of experience, professional women still earn less than their male counterparts.

RESULTS OF CURRENT POPULATION SURVEY ANALYSIS
In order to help further assess the extent of and reasons for the reported male/female pay gap in purchasing, a sample of 240 personnel employed in private sector purchasing occupations was drawn from the March 1991 Current Population Survey. For reasons of required brevity, an entire explanation of the sample and the statistical analysis is not possible within the text of this article. (Further exploration of this topic will be submitted for journal publication prior to the 1994 International Purchasing Conference.)

The average male salary was over $12,000.00 higher than that of the average female salary. The descriptive analysis alone suggests that male/female salary differences may be attributed to factors such as age, education, experience, etc.

In order to assess the statistical relationship between salary and these variables, a regression analysis was performed. From this analysis it was determined that the pay differences between men and women cannot be accounted for by the variables listed. When all variables were held constant, a statistically significant difference still existed between male and female salaries.

However, it cannot be assumed that control variables have the same effects on both males and females. Therefore two additional multiple regression analyses were conducted using female and male subgroups.

If the average female purchaser had been paid as if she were male, she would have earned about $31,585.00. Therefore it may be assumed that only 48.33% of the pay differences between men and women can be attributed to differences in the variables (e.g. age, education, experience, etc.). The balance of the pay gap must be attributed to other unknown variables or to other factors by which gender causes women to earn less.

CONCLUSIONS AND RECOMMENDATIONS
Because of the very limited sample size, it would be inappropriate to make generalizations about the male/female pay gap in purchasing from the Current Population Survey data analysis alone. However, the analysis of the sample does seem to further validate previously cited research in other fields which has shown that unidentified variables associated with gender have a large influence on women's pay.

Discrimination against women in hiring, work assignment, and promotions cannot be disregarded as potential factors which contribute the perpetual pay inequity among male and female purchasing professionals. Women must accept responsibility for closing the gap in experience and qualifications which accounts for some of their wage differential. But we must all be responsible for the elimination of gender bias as a controlling factor for salaries in the purchasing profession.

REFERENCES

"Profile of the NAPM Membership - Report on the January 1992 Survey", NAPM publication prepared by the organization and Planning Committee, The National Association of Purchasing management, Tempe, AZ, 1992.
Purchasing, "Salaries 193", December 1993, pre-publication copy provided by the editor without page numbers.
Russell, Anne M. "Working Woman Eleventh Annual Salary Survey", Working Woman, January 1990, pp. 105-112.
Taeuber, Cynthia. Statistical Handbook on Women in America, 1991, Oryx Press, Phoenix AZ, p. 92.
O'Neill, June. "Women and Wages", The American Enterprise, November/December 1990, pp. 25-33.
Schwartz, Felice N., and Zimmerman, Jean. Breaking with Tradition: Women and Work, The New Facts of Life, Warner Books, Inc., New York, NY, 1992, pp. 275-280.
Purchasing, "Salaries '93", December 1993, pre-publication copy provided by the editor without page numbers.
Harvard Business Review, 71 No. 5. "Wage Inequality: Implications and Explanations", September-October 1993, pp. 10-11.
Lumpkin, James R. , and Tudor, Keith R. "Effect of Pay Differential on Job Satisfaction: A Study of the Gender Gap", Journal of Purchasing and Materials Management, Summer 1990, p. 27.
Stoner, Charles R., and Hartman, Richard I. "Family Responsibilities: The Good, the Bad and the Ugly", Business Horizons, May-June 1990, pp. 7-14.
Bernstein, Aaron. "The Mommy Backlash", Business Week, August 10, 1992, pp. 42-43.
Schwartz, Felice N., and Zimmerman, Jean. Breaking with Tradition: Women and Work, the New Facts of Life, Warner Books, Inc., New York, NY, 1992, p. 113.
Goldin, Claudia, and Polachek, Solomon. "Residual Differences by Sex: Perspectives on the Gender Gap in Earnings", American Economic Review, 77, no. 2, 1987, pp. 143-151.
The Economist:, "Women in Management: The Spare Sex", March 28, 1992, pp. 17-20.
Schwartz, Felice N., and Zimmerman, Jean. Breaking with Tradition: Women and Work, The New Facts of Life, Warner Books, Inc., New York, NY, 1992, pp. 276-77.
Wilde, Candee. "At Last the Gap Narrows", Computerworld, 27, September 8, 1993, pp. 91, 94.
The Economist, "Women in Management: The Spare Sex", March 28, 1992, pp. 17-20.
Purchasing, "Salaries '93", December 1993, pre-publication copy provided by the editor without page numbers.
Wood, Robert G., Corcoran, Mary E., and Courant, Paul N. "Pay Differences among the Highly Paid: The Male-Female Earnings Gap in Lawyers' Salaries", Journal of Labor Economics, 11, No.3, 1993, pp. 417-41.
Pfeffer, J. and Davis-Blake, A. "The Effect of the Proportion of Women on Salaries: The Case of the College Administrators," Administrative Science Quarterlv, 32, pp. 1-24.
Raia, Ernest, Editor - Special Reports, Purchasing magazine. Remarks made during private conversation.
Purchasing, "Salaries '93", December 1993, pre-publication copy provided by the editor without page numbers.
Schwartz, Felice N., and Zimmerman, Jean. Breaking with Tradition: Women and Work, The New Facts of Life, Warner Books, Inc., New York, NY, 1992, pp. 276-77.
Wood, Robert G., Corcoran, Mary E., and Courant, Paul N. "Pay Differences among the Highly Paid: The Male-Female Earnings Gap in Lawyers' Salaries", Journal of Labor Economics ll, No.3, 1993, pp. 417-41.
Ibid.
Purchasing, "Salaries '93", December 1993, pre-publication copy provided by the editor without page numbers.

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