Even At A Company Obsessed With Fair Pay, Women Make Less Than Men

To get a sense of how complicated the gender pay gap is, take a look at Buffer, an 85-person company seemingly obsessed with paying workers fairly.

Nothing about salary is secret at the social media management company. A publicly available spreadsheet documents each Buffer employee’s salary. There’s little confusion over the rationale behind the numbers: To figure out what to pay people, Buffer uses what it believes to be a clear formula. Workers are paid according to the cost of living where they work, the market rate for their particular position and their experience level (the formula is also publicly available.)

There are no ambiguous annual bonuses doled out based on subjective measures of how you perform. Instead you get a 5 percent raise each year, categorized as a “loyalty increase.”

Yet despite a clearly scrupulous commitment to pay fairness, Buffer just realized that women at the company make less than men overall. The average annual salary for a man at Buffer is $98,705, while women make $89,205, according to internal analysis from Feb. 23, Buffer released last week -- its first look at gender and pay.

“We were surprised,” Courtney Seiter, who heads up Buffer’s inclusivity efforts, told The Huffington Post. “We’ve had transparent salaries for two and half years, we put out so much data that it never occurred to us to analyze it [for gender] until recently.”

Salary transparency is supposed to be a magical disinfectant for the stubborn scourge of gender pay inequality -- the fact that women make 78 cents for every dollar a man earns, according to federal data. An increasing number of companies are starting to examine how they pay men and women -- including Intel, Salesforce and Apple -- in an attempt to root out bias. (Others, like Amazon, stubbornly refuse.)

Many think that getting rid of secrecy around pay is the key to equality. California recently passed a fair pay law that protects workers who talk openly about pay. 

There’s even a bill lurking around Congress -- floated by GOP senators -- to make it easier for workers to talk about how much they make, for the express goal of getting rid of pay inequity.

“Ensuring transparency would not only make it easier for workers to recognize pay discrimination, it would also empower them to negotiate their salaries effectively,” Sen. Deb Fischer (R-Neb.) told an audience at the conservative American Enterprise Institute on Friday, pushing for the bill, the Workplace Advancement Act, which offers stronger legal protections for workers who share salary information.

It’s not clear if Fischer thinks transparency will be enough to root out gender pay discrimination, but she used her time before the conservative group to criticize other efforts around fixing the gender pay gap, including a recent proposal floated by the Obama administration that would require companies with more than 100 employees to turn over data on worker pay, ethnicity, race and gender, with the Labor Department.

Through a spokesperson, Fischer declined to comment to HuffPost on the new Buffer data, which suggests that figuring out the pay gap does not end with transparency. You must also take a deeper look at the numbers, as Buffer is now starting to do. Fischer called such efforts -- if required by government mandate -- too cumbersome for the private sector.

Of course, knowing what your colleagues make is powerful information. The knowledge certainly helps you figure out if you’re making a fair wage. Armed with this information, women (and men) can negotiate for raises; I’ve written about this before. If Lilly Ledbetter had only learned sooner that she was paid far less than her male colleagues at Goodyear, perhaps she wouldn’t have wound up filing a lawsuit against the company that went all the way to the Supreme Court -- which she lost for waiting too long to sue.

However, the reason women in the United States make less money than men is too complicated for negotiation alone to fix.

A number of factors drive the gap. Women tend to work in lower paying fields: More men are engineers and CEOs. More women are social workers and human resource managers. At Buffer more men work as developers, who are paid more than those in customer service, for example.

This is not simply the result of choice, but a more complicated stew of gender bias that both funnels women into lower-paying fields and depresses wages in fields that are dominated by women, as a recent piece in the New York Times explained.

Within professions, women tend to make less money because they gravitate to work that is less demanding or requires fewer hours. Many need flexibility and time to take care of children and family. So more men become partner at high-paying law firms, while female lawyers might gravitate to lower-paying in-house legal jobs, for example. The work of economist Claudia Goldin at Harvard has been emphatic on this point. It also means that we take more time away from the workforce, further depressing wages.

Negotiation won’t fix this. Policy solutions might help, for example, by providing paid parental leave and, possibly, subsidized child-care that would allow more women to stay in the workforce and even out the gap.

On top of all this, there’s still the “unexplained gap,” the difference between men and women’s pay that cannot be accounted for by looking at years in the workforce or occupation. Even when you control for that stuff, women’s pay does not quite match up to men’s.

There’s plenty of blame-the-victim theorizing in this area -- where researchers look at how women negotiate pay or advocate for promotions. And how employers respond when women do step up and ask for more.

Open Salaries at Buffer: Our Updated Transparent Formula & All of Our Salaries: https://t.co/80aS4JhG9q #TalkPay pic.twitter.com/5ZoZIzS6z0

— Buffer (@buffer) February 28, 2016

At Buffer, women make less than men for a few reasons, Seiter theorizes.

First, like so many tech startups the company, founded in 2010, is majority male: 70 percent of workers are men.  Buffer’s earliest employees were men, and because of the salary formula -- remember, $5,000 a year for “loyalty” -- that means they make more money. Seiter calls this a “diversity debt.”

It’s not hard to imagine that such a debt, which puts men ahead of the game right at the founding of an organization, is common at other places.

“There are very subtle ways that this debt can accrue if we aren’t deliberate,” Seiter said, noting that the software company Salesforce (also a male-founded and dominated company) recently spent $3 million adjusting salaries to get rid of its pay gap. If Buffer hadn’t caught this, “we could’ve turned around and had a Salesforce situation,” she said.

Second, men are more likely to work as developers at Buffer. And developers are paid more. You’ll see (in the chart above) that in customer service at Buffer, women are actually paid equitably.

There's evidence that the gender pay gap is wider in fields that are dominated by men, Andrew Chamberlain, chief economist at salary website Glassdoor, told Huffpost. Chamberlain is immersed in salary data, which Glassdoor collects from users of its job-seeking site. He was surprised that even at a company that practices salary transparency, there would still be a pay gap. "Fascinating," he said.

The third and trickier reason for the pay gap at Buffer could be its salary formula, Seiter said. “The only area where we haven’t licked unconscious bias is in assessing experience level,” she said. “We don’t have a hard and fast criteria.”

At Buffer an employee’s experience level -- intermediate, advanced or master -- is arrived at by considering a mix of criteria, including years in the workforce and skills. It’s perhaps telling that 61 percent of male employees at Buffer are considered advanced and just 38 percent of women get the same grade. At master level, things are more equal: 4.1 percent of women are master level, compared to 3.5 percent of men.

The company plans to take a fresh look at how it measures experience, going forward. And, at the same time, will aggressively try to hire more women in an effort to even out pay. Seiter also said Buffer wants to be more deliberate in laying out the steps employees need to take to advance up the ladder.

Still, for her part, Seiter does not believe she is paid unfairly and believes her colleagues are similarly situated. After all, this is a company where you can easily click to find out how much the guy next to you makes. “We talk about pay a lot in a philosophical way, but the talks don't have a feeling of insecurity or any kind of doubt.”