When Changing Jobs, Men Have Higher Wage Growth Compared to Women
Published in September 2015
When it came to yearly wage growth, the difference between men and women was more pronounced for people who changed jobs as opposed to those that remained in the same jobs.
According to recently released data from the ADP Workforce Vitality Report, when it came to yearly wage growth, the difference between men and women was more pronounced for people who changed jobs as opposed to those that remained in the same jobs.
Women who saw higher wage growth while remaining at an existing job in the second quarter of 2015 realized on an average a 6.0 percent increase year over year, compared to 5.6 percent for men. That pattern was similar to what the previous two quarters had seen.
Overall women held a slight lead in wage growth. But the pattern reversed and become more pronounced when it came to people who had changed jobs. In the second quarter of 2015, women who switched jobs saw a yearly growth in wages of 7.9 percent with the previous two quarters showing similar results.
Men, however, experienced much sharper wage growth. Their wage growth in the second quarter of 2015 was 10.3 percent, with the previous two quarters once again showing similar results. The men's wage growth rate had greater volatility and slowed over the three quarters, but even at their lowest level strongly outpaced that of the women’s rate.
The differences might have to do with types of employment and industry. Female-dominated industries – education and hospitality for example – see comparatively lower wage growth even when changing jobs. When compared to male-dominated industries like manufacturing and construction, wage growth for job switchers is much higher.
Joan Entmacher, vice president for family economic security at the National Women's Law Center, which studies gender pay issues, agreed that the heavy representation of women in low-wage sectors was a likely factor. "What we've seen in the last year is that a lot of the wage growth has been in low wage jobs and women are getting 55 percent of the low wage jobs," she said. "Women are now at a point where they have the job experience, they have educational credentials that are as good as or better than men, and they're still in these low-paying jobs. We see construction making a comeback, which has been an area of job growth for men and which is a highly segregated sector."
Gail Greenfield, a principal at talent and HR consultancy Mercer, thought there could be additional factors involved, like differences in negotiation strategies. Or it could be that "women may be moving laterally or not as aggressive in going after the higher opportunities."
The Workforce Vitality Report results suggest that companies could face challenges in employee retention. Irrespective of gender or industry, the differences in wage growth for voluntary job switchers will continue to become more prominent. And as the labor market continues to tighten, a time will come when wage growth for job holders will need to be on par with those that switch jobs. Otherwise, companies could see increased loss of existing talent, particularly among more valuable employees with advanced skills.
Here are some strategies might help:
- Increase HR efficiency — wage growth is a sign of greater demand among employers. Resulting higher turnover could make the case for improved hiring efficiency, with unified solutions and increased automation reducing the processing burdens.
- Manage Hiring Costs — companies will have to balance higher labor costs by hiring more talented workers so that productivity continues to increase. More efficient hiring practices as well as the application of available tax credits could help reduce the impact.
- Leverage Data — mining internal and external data can help identify the whether it makes sense to increase existing salaries for retention purposes or incur potentially higher costs to hire people from outside the company.
The ADP Workforce Vitality Index is a comprehensive, quarterly measure of U.S. workforce dynamics that looks at key labor market indicators, such as employment growth, job turnover, wage growth and hours worked. This report yields deeper insights into workforce dynamics and trends than previously available.
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