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Why Women Make Less Money Than Men

The oft reported statistic is that women, on average, make about 79% of what men make for doing equivalent work.  (For more details, AAUW is a great resource.)

Is that fair? Nope. We can improve this situation, if we are willing to do what we can do.

Once upon a time, I left my real job to join my husband in his business.  As the wife of the plumber I made, hmmm, let me think…ZERO dollars.  Yep, zero.  $0.  Bupkis.  Nada.  Of course, the idea was that when we finally made some money, I could have some of it.  However, it just didn’t happen.  Not until I created a budget and put the money for me in it!  At my mentor Frank Blau’s suggestion, I crafted a budget that was based on what I wanted, not what I could afford at the time.  He suggested that we give my wonderful, talented husband a big ol’ raise.  And that we give our techs raises.  AND that I put in a salary for me, commensurate with what I contributed to the company.  He suggested I add up all those costs, plus the other costs of running our business in a professional way.  Then, he recommended I divide those costs by the number of billable hours we could sell…and inflate that amount for whatever profit we wanted.  If I was willing to raise our prices accordingly, then we could generate the money to actually pay us all.  

I took his advice and we quintupled our selling prices.

Gulp.

Yes, it was scary.  But what I knew was that I could go get myself a job and get paid.  If we went out of business, all of us were skilled and hard working.  I was OK with going out of business, however I was not going to work that hard and make no money.

We raised our prices – 500% – and we started to make money right away. #UNcomplicated  

I wrote myself my first paycheck from the family business.  It was great.  I dropped my resentment about not getting paid.  My self esteem sky-rocketed.  I realized that I had been holding me back.  That I could fix…and did.  

One way to close the pay gap:  Quit working for free.

Another way to close the gap:  “Open” the books.

Another reason why women make less than men is that the whole payroll thing is a big secret.  Nobody is supposed to know what other people make.  Daddy and mommy probably taught you that.  I’m convinced that this is the number one reason why the wage gap continues.  When we make payroll a secret, we can get away with cutting deals that aren’t fair or available to all team members.  This usually happens at 5 pm on Friday when one of your employees threatens to quit if you won’t bump his pay.  We may justify paying women less because, well, their husbands should be picking up the lion’s share of earnings for their family.  That logic won’t stand up if we were to announce it, so “sealed” paychecks mask this inequity.  

The goofy thing is, most of the time, employees know what other employees make.  But because it supposed to be private, nobody talks openly about it, and the wage gaps create festering resentments.  Ugh.

What if we posted what everyone makes?  What if it was listed on the Organizational Chart, or in the Position Description?  I’ve discovered that the sky doesn’t fall.  In fact, transparency, or “Open Book Management” builds trust and gets team members in on the game.

Plan your approach to transparency!  Here are a few steps in the right direction…

  1. Get the accounting cleaned up and simplified.
  2. Get all the rocks out of the road for running current, accurate financials once a week.  I call this operating from a Known Financial Position…or KFP.
  3. Set financial goals (it’s called budgeting, which is an ugly word, but press on!)
  4. Raise your prices.  Why not?
  5. Assemble your Organizational Chart.
  6. Craft Position Descriptions for each Position.  “Here’s what you DO in this Position!”
  7. Map out a justifiable wage for each Position.
  8. Put names in boxes, based on what they DO or will be expected to do, regardless of gender, color, or age.(Note!  Make sure no one on the team is going to make LESS than they do now.  They can make more, but pay them less and they will be honor-bound to go.)
  9. You might have to raise your prices again.
  10. Communicate with each team member individually.
  11. Post it publicly.
  12. Hold to it and weed out any weirdnesses that may crop up.

Now, this is a beefy project and you’ll discover more details along the way.  People get nervous when you mess with their pay, so be thoughtful and inclusive as you implement these steps.  Consult with a Labor attorney as you embark on this path, to make sure that you haven’t created a discriminatory mess already, and that your new approach is sound and fair.

Ready to get going on Steps 1-4? This awesome tool can help – The Financial Quick Check.  It’s a freebie…download it here!  (And if you have a copy already, it would be great to forward this to a friend or team member! Thanks!)

Questions? Fears? Let’s chat! Comment below… I’ll respond!  We don’t have to agree, however I bet we end up with an enlightening conversation!

xo$, Ellen

“I do everything for a reason.  Most of the time, the reason is money.” ~ Suzy Parker

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2016-12-01T14:55:07+00:00