Gender Differences In Pay Satisfaction And Pay Expectations.(Brief Article)

The existence of a significant wage gap for men and women is longstanding and clearly acknowledged by researchers in a variety of academic disciplines (Becker, 1975; Blau and Kahn, 1994; England et al., 1988). In spite of these differences in pay, women do not report high levels of pay dissatisfaction (Crosby, 1982; Sauser and York, 1978; Smith et al., 1969). What factors account for the absence of pay dissatisfaction and lower pay expectations of women? This study examines and extends the work of Major and Konar (1984) which seeks to explain pay expectations and pay satisfaction of men and women. Prior research concerning this model has typically been based on full-time college students who have little or no full-time work experience. The subjects of the present study have extensive work experience following college and were employed full-time at the time data were collected. This allows us to directly test for the impact of work history on pay satisfaction and pay expectations.

This study examines the pertinent literature on equity theory (Adams, 1965) and social comparison theory (Jacques, 1961) as it relates to pay satisfaction and pay expectations. Furthermore, the work of Adam Smith (1937) pertaining to compensating differentials is integrated into our conceptual development of those factors which impact employees' pay satisfaction and pay expectations. We present formal hypotheses on the effects of employees' educational background, work history, family situation, and satisfaction with their current job on their pay satisfaction and pay expectations. The sample and measures used in this study are explained in the methods section. We conclude the paper with an analysis of the results and a discussion of our findings. Implications of our findings for future research and practitioners are discussed along with the strengths and weaknesses of the study.

Literature Review and Hypotheses

It is well documented that in the United States labor force, men earn more than women. Bureau of Labor Statistics (BLS) data show that in 1997 white women working full-time had weekly earnings equal to approximately 75 percent of the weekly earnings of white men. The figures were lower for black and Hispanic females (Bureau of Labor Statistics, 1997). The gender differential in pay has decreased somewhat during the past two decades; in 1979 the weekly earnings of white females were about 62 percent of white male weekly earnings (Bureau of Labor Statistics, 1994).

Despite this pattern of lower earnings among women, field studies of pay satisfaction have found that women are not less satisfied with their pay than men (Crosby, 1982; Sauser and York, 1978; Smith et al. 1969). Consistent with this finding, when pay level has been controlled, women have reported higher pay satisfaction than men (Sauser and York, 1978). Since it is assumed that pay satisfaction depends on whether pay received equals pay expected (Lawler, 1971, 1981), it follows that if women have lower pay expectations, women will be satisfied with lower pay. Jackson and Grabski (1988) and Major and Forcey (1985), as well as Tromski and Subich (1990), have observed that women have lower pay expectations and perceive lower levels of compensation to be fair.

Possible Causes of Pay Satisfaction and Pay Expectations

Major and Konar (1984) investigated possible causes of gender differences in pay expectations among a sample of graduate and undergraduate students. Consistent with earlier studies, females had lower entry-pay expectations and lower career peak-pay expectations. The proposed explanations for these differences in pay expectations were that women might differ from men in career paths, job inputs, comparison standards and job facet importance.

With regard to career path, men and women may select different fields of study in school and may enter different occupations and industrial sectors. Milkovich and Newman (1996) point out that women are more likely to study the social sciences and the humanities, while men are more likely to study engineering and business. The latter academic majors are associated with higher entry-level salaries. Further, Milkovich and Newman point out that men are more likely to enter occupations, as well as industries with higher rates of compensation.

Job inputs as a determinant of fair pay have been considered primarily from an equity theory perspective. Relevant job inputs include training, education, experience, and hours worked. While equity theory formulations focus on comparing a ratio of one's outcomes and inputs to a relevant other (Adams, 1965), Jacques (1961) argues that employees may formulate pay expectations based on job characteristics alone, and ignore what other employees are making. The research findings are mixed. Hills (1980) found no support for the idea that individuals use an internal, self-evaluation to determine the fairness of pay. However, in a more direct test of Jacques' theory, Berkowitz et al. (1987) found that respondents' satisfaction with their pay was related to what they felt they deserved, regardless of what others were paid. Along this line of reasoning, Major and Konar (1984) suggest that gender differences in job inputs may explain part of the gender differences in pay expectations. Women may have lower job inputs an d thus believe they actually deserve less. Because the Major and Konar sample consisted of college students, the measures of job inputs available for them to study were limited. Alternately, our sample consists of individuals with an average of 5 years of work experience since college. As a result we have a number of objective measures of job inputs available (e.g., labor market experience, hours worked per week, number of people supervised).

Importance of Selected Job Facets

Major and Konar also investigate the proposition that pay expectations and satisfaction may be mediated by gender differences in the importance of selected job facets. In particular, they suggest that because pay and advancement may be less important to women, they may be more satisfied with a given amount of compensation. We will investigate the impact of importance attached to pay and one's career. Another possibility suggested by Bass and Barrett (1972) is that men are more commonly the primary source of income for a family. Following this logic, gender differences in perceived financial need of the family may account for part of the gender differences in pay satisfaction and pay expectations.

Sources of Pay Comparisons

The importance of social comparisons in establishing perceptions of fair pay is supported both theoretically and conceptually (Adams, 1965; Lawler, 1971; Crosby, 1976). Empirical findings are less consistent. For example, Scholl et al. (1987) found that occupational equity, system equity and self-equity were significant predictors of pay satisfaction, while Berkowitz et al. (1987) reported that social comparisons added virtually nothing. The inconsistencies of the findings may be due, in part, to both measurement problems and the choice of the referent others. For example, Berkowitz et al. (1987) measured social comparisons as number of times a respondent compared himself/herself to another person. This measure tells us little about how one felt or about the information received from the comparison person.

Recent work by Shah (1998) utilizes a social network framework to classify social referents as one of two types--cohesive or structurally equivalent. The distinction between the two is as follows: "Cohesive actors are individuals with close interpersonal ties, or friends. Structurally equivalent actors are individuals who share a similar pattern of relationships with others and thus occupy the same position in a network" (Shah, 1998: 249). Equity theory studies often utilize structurally equivalent relevant others as comparison sources (e.g., co-workers). While structural equivalents certainly possess relevant information (Shah, 1998), cohesive referents (e.g., friends) are seen as more open and likely to provide personal or confidential information (Jehn and Shah, 1997; Roloff, 1987).

A potential source of information that has generally been overlooked in equity theory and social comparison theory is an employee's spouse. We classify one's spouse as a cohesive referent. A potential drawback of making comparisons with one's spouse is that dissimilar comparisons may create hard feelings (Wheeler and Miyake, 1992). We anticipate that spousal earnings will be negatively related to pay satisfaction and positively related to pay expectations, and that gender differences in spousal earnings will account for part of the differences in pay satisfaction and pay expectations of men and women.

Hypothesis 1: When differences in career paths, job inputs, career and pay importance, family financial need and spouse's earnings are controlled for, gender differences in pay satisfaction and pay expectations are reduced.

Compensating Differentials

Research focusing on the Major and Konar explanations for gender differences in pay satisfaction and pay expectations has typically used college students as subjects (Major and Konar, 1984; Jackson et al., 1992; McFarlin et al., 1989). Jackson et al. (1992) and McFarlin et al. (1989) acknowledge that the Major and Konar model may not be equally valid for members of the labor force who have significant work experience. Consequently, we investigate the effects of perceptions regarding selected characteristics of one's current job. Over two hundred years ago, Adam Smith (1937) suggested that workers consider the sum of the advantages and disadvantages of different jobs in making decisions about work, and that one is attracted to those opportunities that offer the greatest net advantage. Smith argued that employers adjust compensation to counterbalance the disadvantages and disagreeableness of specific types of employment. For example, if a job is insecure, more compensation is necessary to achieve a given level of pay satisfaction than when a job is secure. Among the factors discussed by Smith were the agreeableness of employment, security of employment and the probability of success. Milkovich and Newman (1996) note there is limited research to support Smith's theory. However, the findings of Berkowitz et al. (1987) support the notion that facets of job satisfaction can serve as substitutes for each other.