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Global Markets Institute Closing the gender gaps-goldman sachs pay

Closing the gender gaps:
GLOBAL Advancing women in corporate America
October 2018
Amanda Hindlian Sandra Lawson Sonya Banerjee Deborah Mirabal Hui Shan Emma Campbell-Mohn
amanda.hindlian@gs.com sandra.lawson@gs.com sonya.banerjee@gs.com deborah.mirabal@gs.com hui.shan@gs.com emma.campbell-mohn@gs.com
The Goldman Sachs Group, Inc.
Goldman Sachs Global Markets Institute
Table of contents
Executive summary 3
Chapter 1: Gender diversity in corporate America 4
Chapter 2: Framing the debate: hiring, downshifting and attrition 7
Chapter 3: Women outpace men in education but lag in seniority and pay 9
Chapter 4: Issues facing women at work today 24
Chapter 5: How women respond 30
Chapter 6: Changing the environment 35
Bibliography 39
Disclosure Appendix 41
The authors would like to thank Steven Strongin, Derek Bingham, Carl Cederholm, Julie Zide, Jennifer Carey,
Evan Tylenda and Peter Yu.
The Global Markets Institute is the public-policy and corporate advisory research unit of Goldman Sachs
Global Investment Research. For other important disclosures, see the Disclosure Appendix.
21 October 2018 2
Goldman Sachs Global Markets Institute
Executive summary
This paper looks at two key questions about women in corporate America: first,
why do women continue to earn less than men? And second, why are there so few
women in senior corporate leadership positions today?
The gender wage gap is stubborn. Across workers between 25 and 54 years old in the
US, women are paid 20% less than men. Our analysis suggests that most of this gap -
17.5 percentage points - cannot be explained by measurable factors that are captured in
labor-market studies; we believe at least part of the unexplained gap may be due to the
lack of women in highly-paid senior roles.
The gender leadership gap is stark. Although the data are limited, our assessment of
the S&P 1500 companies that disclose diversity metrics suggests that women make up
about 40% of all employees - but just 6% of CEOs.
We provide a framework to assist companies as they seek to close these gaps that
looks at hiring, "downshifting" and attrition:
n Gender imbalances in hiring play an important role. But the notable gap between
the share of women employees and the share of women leaders in so many sectors
suggests that while hiring is important, it isn't the only issue.
n "Downshifting," which can be voluntary or involuntary, describes scaling back work
- for example, taking jobs that are more flexible in terms of hours or travel. In some
cases it's a personal choice, but in others, women may find themselves "steered"
into positions with lower profiles, pay and promotion prospects.
n Attrition data show that women leave the workforce early in their careers at higher
rates than men do. But the increase in women's attrition in their late 20s and 30s is
much less pronounced today, and some women do return to the workforce later.
We find common factors between downshifting - whether voluntary or
involuntary - and attrition. These include frictions between home and work; the
"double-edged sword" of "family-friendly" policies; gender-specific expectations about
appropriate behavior, norms of leadership and definitions of success; the allocation of
commercial opportunities; and bias, whether conscious or unconscious.
We also show the long-term economic impact of taking a few years out of the
workforce - while stressing that we cannot quantify the non-economic benefits from
doing so. In a conservative scenario, we find that a woman who takes just five years out
of the workforce can forgo one-fifth of her potential lifetime income, even though she is
only away from work for one-eighth of her career.
We suggest ways companies can improve the situation and strengthen their
pipelines of female leaders. These include reviewing current policies and practices to
understand and address potential gender biases; adding more women to corporate
boards; improving data availability; helping women to re-enter the workforce or to
"upshift;" and having a voice on relevant public-policy issues.
21 October 2018 3

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