Jun 22 2012

Pay – What are you worth?

I just started flicking through Merryn Somerset Webb‘s book on personal finance for women (dreadful cover – looks like a chick lit novel and how I hate that genre!).  The first chapter looks like it deals with getting paid what you are worth and it quotes an interesting piece of research from Linda Babcock, a professor at Carnegie Mellon University in the USA.  She noticed that students were graduating with similar qualifications and going into similar jobs, but the women were starting on salaries that were 7% lower than the starting salaries of her male students.  It turned out that the women accepted the salary they were offered when offered a job.  The male students negotiated any offered starting salary upwards. 

The startling thing is the difference over a lifetime.  A man who starts on a salary 5% higher than a woman and then has exactly the same percentage pay rise for the rest of their working lives will earn £285,000 more over 30 years.

Now, this has obviously made me wonder if I am earning what I am worth.  I know for many years that I wasn’t, as when peers told me their day rates (often in a pub late at night) they were charging considerably more than me.  I know that I didn’t, in my first ‘proper’ job after university and working in a call centre.  The man who had done the job before me was paid more for it than I was, but that was in the 90s and I didn’t realise there was anything I could do about it.

I know that in my last salaried position (about 6 years ago) I had the same sort of qualifications (two degrees), a similar amount of experience (we had both had practical jobs in a waste company) and was the same age as a male peer in the senior management team.  I had more staff responsibilities, but he earned more.  When I questioned this, I was told he had been there longer than me and would kick off if I got paid the same as him.  Both of these were true, but I am not sure if that was a valid reason for the disparity.

Now I didn’t intend this to be a blog about sexism, but thought I’d give an example of unequal pay and now realise that it happened in two out of the three companies I worked for.  So I will now be checking at the board meeting next week whether I am earning the same as my fellow (male) non-exec.  I intended to write about inequality in pay and how some people get away with what they do.

The FT this week has written about the growing shareholder rebellion at Xstrata, where the company is claiming that it needs to pay it’s senior management £173million to keep them as the company merges with Glencore.  I thought the Telegraph described the situation well when it said that the job of executives is the same as the jobs of the rest of the workforce – ‘to produce a good return for the owners.”  “It is as if the butler of a great house took the lion’s share of the revenues from the estate while issuing the poor earl, who owns it, a little pocket money.”

Whether this is an analogy that rings true with many Telegraph readers, I don’t know, but I liked the way they put it.  In a year when a quarter of the FTSE 100 CEOs had a 41% pay increase and the rest of the population received just 1%, it does beg the question.  Are any of us being paid what we are worth?

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