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Gender stereotyping of female experts

Woman doctor with patient.
Credit: sturti for iStock

In 2020, women earned 84 cents for every dollar that a male worker took home, a Pew Research Center analysis found.

Common explanations for this disparity—which is present across most industries and professions and is larger for minority women—include the perception that women are less likely than men to negotiate raises and promotions, women’s disproportionate childcare responsibilities, and stereotypes about women’s and men’s respective talents, which influence the industries they’re steered toward or from.

A new paper by Haas professors Mathijs de Vaan and Toby Stuart highlights an underexplored impact on the livelihoods of women—particularly those working in high-skilled, client-based professions—long after they’ve committed to their industry of choice. The researchers reveal that gender stereotyping can weaken clients’ perceived trust in female professionals’ core offering: their expertise.

“All high-skill, client-based markets depend on trust, because the consumer is a non-expert relative to the provider,” says Stuart. “If you hire a financial advisor, a mechanic, or a physician and you don’t trust them, what do you do with the advice they give you?” Most likely, he notes, you’ll seek a second opinion.

Drawing from the comprehensive Massachusetts All Payer Claims Database, Stuart and de Vaan examined whether physicians’ gender determined the perceived value of their expertise as measured by how often patients sought second opinions.

The majority of patients preferred seeing specialists who shared their gender, including for first-opinion visits. And both men and women were more likely to opt for second opinions if the purveyor of the first opinion was a female specialist. However, male patients were much more likely than women to seek a second expert opinion.

Male patients in particular tended to switch to male specialists for their second opinions—and since patients most often stuck with the second specialists, what naturally followed were significant disparities in billings. On a per-patient basis, female specialists generated 10.7% lower billings than their male colleagues in the year following the average patient’s first visit.

Stuart says gender stereotypes about competence may harm women with professional expertise in many fields, from finance to law to management consulting. “We hold all of these gendered beliefs about work even if we are not aware of them, and they have a way of becoming reality.”

Wendy Nguyen, BS 02
Co-Organizer, Stand with Asian Americans; CMO, Section4

Wendy Nguyen.Wendy Nguyen, a first-generation Vietnamese American, was raised to give back to society. So when presented an opportunity to speak up against assaults on Asian Americans, she didn’t hesitate.

It was March 2021 and eight people, including six Asian women, had been murdered by a gunman in Atlanta. “The killings were a breaking point for the community,” Nguyen says. 

Soon after, entrepreneurs Dave Lu and Justin Zhu sought her advice on how to promote a pledge they were writing to stop Asian American Pacific Islander hate crimes. Nguyen had been in marketing for some 14 years in the areas of social advocacy and health. How, they asked her, could they bring attention to protecting and supporting members of the AAPI community? 

“We have to publish it in the Wall Street Journal,” Nguyen told them. 

The pledge was published on March 31. “We thought if we could get 300 people to sign this letter, we would have done well,” Nguyen says.

More than 8,000 people signed, from Door Dash drivers to former President George W. Bush. It was the start of Stand with Asian Americans.

Since then, SwAA has raised over $1 million and made grants to more than eight nonprofits. One recipient held a contest to design the best AAPI hate-crime tracker. Another developed a youth program to register and drive voter turnout among the AAPI population.

“We are recruiting and inspiring the next generation of Asian American activists,” says Nguyen. “Activism can happen anywhere: home, workplace, streets. We want to be an outlet for anyone looking to contribute.”

linkedin.com/in/wdotnguyen  

How salary benchmarking by employers affects workers’ pay

Young Asian business woman in blue suit receiving an envelope with a salary offer
Credit: iStock

A wave of pay transparency laws aimed at reducing inequities is giving millions of workers access for the first time to information on what co-workers make and what potential employers will offer.

Yet comparing salary information is nothing new for employers. While U.S. antitrust law prohibits employers from directly sharing salary information with each other, most mid-sized and large companies routinely use aggregated data from third parties to get a read on the going rates. 

The effects of this widespread practice, known as salary benchmarking, have never been systematically studied—until now. Following White House concerns that benchmarking may be used to suppress wages and benefits, a new study offers the first evidence on its impact on workers.

The conclusion: Benchmarking does not have a negative effect on pay for the average employee. While some salaries decrease and others increase after a company uses a benchmarking tool, salaries overall simply move closer to the benchmark. 

If there was a negative effect on salaries, it would be suggestive of anti-competitive effects,” said Associate Professor Ricardo Perez-Truglia, who authored the new National Bureau of Economic Research working paper with Zoe B. Cullen and Shengwu Li of Harvard University. “That’s not what we found. If anything, we see some small salary gains for low-skill occupations.”

The researchers used aggregated data from the nation’s largest payroll processing firm to see how much employers paid new hires in hundreds of job categories before and after they used the payroll firm’s salary benchmarking tool. They found that employers paid new hires much closer to the median wage after searching the market rates for those job titles.

As a result, some new employees earned more and some earned less than they would have otherwise. “For the most part, they sort of cancel each other out,” said Perez-Truglia.

Direct sharing prohibited by law

Although U.S. law prohibits employers from directly sharing information about their employees’ compensation with each other, they can access aggregated salary data from third parties such as management consultants and payroll processors. As part of the study, the authors surveyed human resource professionals who set pay at medium and large companies and found that 87.6% use salary benchmarks, usually from multiple sources.

In July 2021, Biden issued an executive order encouraging the attorney general and Federal Trade Commission to consider revising federal guidance that lets neutral third parties share compensation information with employers—but not employees—without triggering antitrust scrutiny. “This may be used to collaborate to suppress wages and benefits,” the White House said in a fact sheet.

At that time, there was no research on the impact of benchmarking. Perez-Truglia said regulators may be responding to studies and news reports suggesting that industry consolidation is giving employers too much market power when it comes to setting salaries. 

The new study, which began in 2019, looked at starting pay offered to new hires at 586 firms that gained access to the benchmarking tool between January 2017 and March 2020. The online tool is easily searchable by job title and is based on real, aggregated and anonymized payroll records of many millions of employees.

The researchers divided the new hires into two groups: nearly 5,300 new hires where the company had searched the benchmarking tool before hiring, and a “control group” of 40,000 hires in the same companies that had not been searched. They compared pay for the two groups in the five quarters before and five quarters after the company first gained access to the salary data.

As a second control group, they looked at salaries offered to about 157,000 people hired during the same time periods in comparable roles at similar companies that never gained access to the more precise salary tool.

‘Compression toward the benchmark’

They found that on average, both high and low salaries moved closer to the benchmark. Among “searched” positions, the absolute difference between the new hire’s starting salary and the median salary for that position dropped from about 20 percentage points before the firm gained access to the tool to about 15 percentage points after. This drop is “large in magnitude, corresponding to a 25% decline,” the authors wrote. 

To illustrate this “compression toward the benchmark,” suppose the median pay for a bank teller is $40,000. Without that information, one bank might pay $30,000 and another $50,000. “Once they see the benchmark information, they are much more likely to pay new hires around the $40,000 benchmark,” Perez-Truglia said.

The researchers added that “the effects on salary compression coincide precisely with the timing of access to the benchmark: The compression was stable in the quarters before the firm gained access to the tool, dropped sharply in the quarter after the firm gained access, and remained stable at the lower level afterwards.”

For searched positions, compression around the median wage was much stronger among low-skill positions, which generally don’t require more than a high school degree, than high-skill ones. Dispersion around the benchmark dropped by 40% for low-skill jobs versus 14.6% for high-skill ones. 

“This finding is largely consistent with the anecdotal accounts in interviews with compensation managers, according to which low-skill positions are treated as commodities and thus should be paid the market rate,” the authors wrote.

They did a similar analysis looking at average salary levels and found that benchmarking “does not have a negative effect on the average salary. If anything, the effect on the average salary is positive, but small in magnitude and statistically insignificant.”

Specifically, they found the average starting salary for all searched positions was either 0.2% lower or 1.7% higher than the two control groups, respectively.

There were some statistically significant gains for low-skilled employees: Their average pay increased by 5% or 6.7% depending on the control group. The study also found that the small boost in salary for low-skilled employees increased their retention. More precisely, there was an increase of 6.7 percentage points in the probability that those employees were still working at the company one year later. 

“This evidence suggests that firms may be using salary benchmarking to raise some salaries in an effort to improve, among other things, the retention of their employees,” the paper says.

For high-skill positions, starting pay went down by 2.9% or 1.6% depending on the control group, “but those effects must be taken with a grain of salt, because they are statistically insignificant,”  Perez-Truglia said.  

“Typically low-skilled employees are less likely to negotiate than high-skilled employees. They are often made take-it-or-leave-it offers,”  Perez-Truglia said.  Benchmarking could provide “more equality for those workers.”

There is also a growing body of literature on pay transparency, but much of it focuses on giving employees more access to information, usually as a way to reduce gender and racial pay gaps. A new law in California requires all private employers with 15 or more employees to provide pay ranges in all job postings starting Jan. 1. Colorado, Washington, and New York City have passed similar laws.Although employees can’t access the same kind of “super-sophisticated” pay data that employers can use, Perez-Truglia said, they can use online sources such as Glassdoor, LinkedIn, Teamblind.com and Levels.fyi to get a read on competitive salaries. Companies are also consulting these sites, he added, which generally rely on employees reporting their pay at current or past employers

Dean’s Speaker Series: Reddit COO Jen Wong on her leadership journey

Growing up as a shy introvert, Reddit COO Jen Wong said she never saw herself as a leader.

“I think I assumed a leader was a person who told other people what to do,” Wong said.

It was her fascination with companies and the people who lead them, as well as a drive to solve new problems, that led her to pursue a career that has included leadership positions at Time, Inc.; PopSugar; AOL, and now Reddit.

“I’m a puzzler at heart, and when my mind starts searching for a new problem to solve, and there’s something I can learn, that propels me forward,” Wong said. “I always want to move into something that has a clear lane for me to have an impact.”

Wong, who topped Reddit’s Queer 50 list this year, shared her leadership journey with MBA students and the Haas community at a Dean’s Speaker Series talk on Sept. 21. The talk was co-sponsored by [email protected] as part of Coming Out Week, September 18-22.

As Reddit’s Chief Operation Officer, Wong oversees business strategy and related teams.  Only four years into her tenure as COO, she has helped lead the growth of Reddit into a profitable business by scaling ad revenue to well over $100 million.  Her leadership goes beyond growing the business; she is also passionate about Reddit’s company goal that’s just as important as revenue: diversity and inclusion. In addition, Jen is viewed as an expert in the digital landscape.

Watch the full talk:


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