RESEARCH Business Labor

CORPORATE COMPENSATION
Top male, female pay in like jobs comparable, but few women run

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

8/1/2000

Photo by Bill Wiegand Kevin Hallock, professor of economics and of labor and industrial relations, conducted the first systematic study of male and female pay at the uppermost levels of corporate America.

CHAMPAIGN, Ill. -- The first systematic study of male and female pay at the uppermost levels of corporate America lends evidence to both sides of the hotly debated question of whether women are paid less than men.

Top female executives in large U.S. companies are paid about 45 percent less on average than their male counterparts, according to a study completed by Kevin F. Hallock at the University of Illinois and Marianne Bertrand at the University of Chicago.

But as much as 75 percent of the gap can be accounted for by the fact that women manage relatively smaller companies and are much less likely to be the chair or chief executive officer of the company.

The compensation gap can be narrowed to under 5 percent if one accounts for the younger age and less seniority of the average female executive. The two economists stressed that their evidence does not support the notion that there is no "glass ceiling" in corporate America, only that women and men who hold similar jobs in companies of similar size receive fairly equal compensation.

The under-representation of women in the executive ranks of the larger companies and a woman's virtual absence at the highest-rank job of CEO or president may well reflect some form of discrimination, the two economists said.

While the number of women in top-tier jobs has increased from 1.3 percent to 3.4 percent between 1992 and 1997, the percentage of female CEOs, board chairmen and presidents in large companies has been static, if not slightly declining.

Bertrand and Hallock examined the yearly pay of the top five executives of 1,500 of the largest publicly traded firms tracked by Standard & Poor's.

The data included information on the base salary, bonus, and value of granted stock options of each executive for each of the years 1992 through 1997. In that period, female top executives were paid $894,100 a year on average, while male top executives were paid $1,333,700.

"Very few women are in the very highest jobs of CEO, president and chair of the board, and those are the people who are most highly paid," Hallock said.

The highest percentage of female executives were clustered in the ranks of chief financial officer (6.4 percent of total), senior vice president (3.5 percent) and executive vice president (2.7 percent). In contrast, only 0.52 percent of the CEOs and chairs of the board of the 1,500 companies were women.

Also, the number of female executives varied widely among industries. There were no top female executives in the agriculture sector during the surveyed period, while there were 3.9 percent in health and social services, 3.6 percent in wholesale-retail goods and 2.3 percent in banking.

Overall, female top executives earned 24.8 times the pay of the average female salaried manager in the United States, while male top executives earned 25.5 times the pay of the average male salaried manager.

Average Pay (Including Bonuses and Stock Options) of Top Five Executives in 1,500 Surveyed Large Firms in 1997 Dollars *

Average Pay of Salaried Managers in 1997 Dollars **

Percentage of Women in Select Industries *

* From "The Gender Gap in Top Corporate Jobs," a working paper by Marianne Bertrand and Kevin F. Hallock.

** From data in Current Population Survey, U.S. Bureau of Census