Women in executive roles make 56 per cent less than men, study shows

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Women executives earned about 56 per cent less on average than men executives and this pay gap widened even further for racialized women, who earned about 32 per cent less than non-visible minority women, according to a new study from Statistics Canada that underscores the sweeping disparities in Corporate Canada.

Translated into dollar figures, there was a $600,000 difference between the average woman executive’s income ($495,600) and the average executive man’s ($1.1-million). The average compensation for visible minority women was $347,100, while visible minority men took home $681,900.

This report released Tuesday from the federal statistics agency, which examined diversity among board directors and officers, pulled together multiple datasets that captured a sample of several thousand Canadian executives. The authors billed the report as the first socioeconomic profile of women executives using an intersectional lens.

The research included data from the Corporations Returns Act, which collects financial and ownership information on mid-size to large corporations, and census information from 2016.

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In unpacking the gender divide at the most senior levels, researchers looked at marital status, number of children, education, backgrounds, sector of work, job title and professional networks.

One of the study’s most shocking findings concerned the number of racialized women in executive roles. There were so few Indigenous executives – both men and women – that Statistics Canada was limited in what could be reported over concerns about violating the individuals’ privacy. About 1 per cent of executives were Indigenous, although this group represents about 4 per cent of the working population. Most of the women Indigenous executives worked at large corporations.

Over all, about one in 10 women executives identified as a visible minority. The most common groups represented were South Asian and Chinese, with fewer executives being Black and Filipino.

Paulette Senior, the president and CEO of the Canadian Women’s Foundation, said the report’s findings were extremely concerning.

“It’s worse than I thought,” she said. “This makes me wonder what have we been doing? What have decision makers been doing in addressing [these issues] – whether it’s a leaky pipeline, or who is sitting at tables during hiring. What has been going on that this is the picture in 2021?”

Statistics Canada’s findings are in keeping with an analysis that The Globe and Mail conducted as part of its Power Gap investigation, which has been examining gender inequities in the modern work force. The series found that among women in the top 1 per cent of earners, just 3 per cent were racialized. In general, women were found to be outnumbered, outranked and out-earned by almost every measure examined.

Elizabeth Richards, who co-authored the Statistics Canada paper, said one of the most intriguing findings concerned companies that operate in Canada but are American owned. The researchers found that visible minority women were five times more likely than non-visible minority women to work at one of these American-controlled companies. The same trend – to a lesser degree – was also found with visible minority men, she said.

“That’s a key takeaway,” Ms. Richards said. “That to me says there’s some more country-specific influences that maybe we don’t fully understand and we should dig into further in future research.”

The analysts also examined the family status of the executives. Women were less likely to be in a relationship – about 80 per cent of women executives were married or in a common-law relationship, compared with 90 per cent of men – or to have children. When they did have children, they had fewer of them. About 36 per cent of women executives had two or more children, while about 44 per cent of men did.

The report also found that women executives were, on average, younger than the men – 51 years old compared with 54 years old respectively.

Economist Marina Adshade, an assistant professor with the University of British Columbia, said the finding about age was interesting and perhaps a clue as to the cause of the pay gap. In her own research, she’s found that women are retiring early, perhaps before they can fully reach their potential on the corporate ladder.

Prof. Adshade said that, as a country, the focus has been on keeping women with young children in the work force – which is important – but there hasn’t been enough attention paid to what’s happening at the other end of the career spectrum.

“We are starting to lose women in the work force at 45, 55, 65,” she said. “Why are women leaving the work force? ... They have other caregiving responsibilities: caring for parents, spouses, grandchildren, for example. Older women are so undervalued that literally no one wants to think about why they’re not in the work force.”

Prof. Adshade noted that the average age of a senior manager in the federal government is 53, so if women are starting to retire at 45, it’s not surprising they are underrepresented at the top.

Another rationale for the executive wage gap that has been suggested is that women’s networks are smaller. Ms. Richards said that she and her co-author Léa-Maude Longpré-Verret were interested in seeing whether this held true with their dataset – it didn’t.

“There is some previous research that suggests that being connected to more executives leads to higher pay,” Ms. Richards said, “but what we found is that women actually had more extensive networks of colleagues.”

The reason is that women were more likely to sit on large boards with more members. On average, women directors were found to be connected to 7.5 colleagues through their board positions, while men were connected to 6.7 colleagues. Women were also more likely to be connected to other women directors.

Ms. Richards said that in their report, the goal was to quantify the extent of the imbalances in as many ways as possible, but the root causes will be for someone else to explore.

“Hopefully this provides some valuable information for other researchers,” she said. “We wanted to leverage everything that we could from the analysis and share our findings, but it is preliminary and it is exploratory so we would recommend that the academic business community or other researchers continue to really provide more insights in this space.”

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