For every dollar earned by men in the U.S., women earn about 82 cents, according to 2018 census data; this pay gap is even larger for Black and Hispanic women. Some public schools have avoided the gender wage gap because they follow a strict salary schedule, in which each teacher’s pay is determined based on objective factors such as seniority and academic degrees. But what happens when schools switch to a more flexible pay system?
Barbara Biasi, an assistant professor of economics at Yale SOM, had an opportunity to examine this question when Wisconsin passed Act 10, legislation that essentially weakened the power of teachers’ unions. Afterward, schools had much more latitude in deciding how much to pay teachers.
Five years after union agreements expired, male teachers earned about 1% more per year than female colleagues with similar experience and skills, reported Biasi and her co-author, Heather Sarsons at the University of Chicago Booth School of Business. The gender gap was even higher among younger teachers.
While 1% might not seem like much, such a gap can substantially affect income in the long run, Biasi says. It “can add up pretty quickly over the course of a person’s career,” she says.
The results suggest that women may start earning less than men when they have to bargain on their own, rather than being supported by a union that negotiates for them. This effect could be seen in many industries as union membership shrinks. “The decline of union power might have an increase in the gender gap in pay as one of the unintended consequences,” Biasi says.
Prior to Act 10, unions had negotiated pay schedules with school districts, and individual teachers did not negotiate their own salaries. Afterward, the collective bargaining agreements (CBAs) between the unions and districts were allowed to expire; though some districts extended their CBAs for a year or two, those agreements eventually lapsed too.
Once the CBAs were no longer valid, school districts could continue using the same salary schedule or switch to a more flexible pay system. But even if districts stuck with seniority- and credential-based pay, they had more wiggle room than before Act 10. For example, a teacher could argue to be placed on a higher “step” in the seniority ladder and get a raise.
Biasi and Sarsons examined teacher salaries in each district after its CBA expired. They compared pay for men and women, controlling for factors such as experience level, education, and subjects and grade levels taught.
When Wisconsin teachers lost the ability to bargain collectively, says Prof. Barbara Biasi, “the gender gap slowly starts to increase at the expense of the women.”
The pattern was clear: Before a CBA expired, no gender gap existed. Five years afterward, men earned about 1% more per year than similarly-qualified female peers did. “The gender gap slowly starts to increase at the expense of the women,” Biasi says.
The researchers saw a pay gap even in districts that kept using a seniority-based pay schedule. When they dug further into the data, they found that men were being placed on higher steps of the seniority ladder than women with the same experience level.
The trend was particularly worrisome among teachers with six or less years of experience. In that group, the gender wage gap reached 1.5% five years after CBA expiration. Biasi speculates that because younger teachers have a shorter track record, they have less data to point to when negotiating for a raise. Salaries might therefore be based on more subjective criteria, and perhaps men benefit more from that type of evaluation system.
Biasi and Sarsons looked at a variety of factors to understand what was behind the wage gap. They first considered whether the principal’s or superintendent’s gender made a difference, and found that in schools or districts led by women, no statistically significant gender gap emerged; it was present only in those with male principals or superintendents.
One possible explanation for this finding was that male leaders were discriminating against women; perhaps female teachers were asking for higher pay but were less likely than men to have requests granted. Another was that teachers’ negotiating behavior changed depending on the other party’s gender. For instance, perhaps women were less likely to bargain with male supervisors.
To investigate the latter possibility, the researchers surveyed 3,156 Wisconsin public school teachers about their negotiation practices. They found that women were 18 to 23% less likely than their male peers to have bargained at a previous job or when they started their current position, controlling for factors such as age and district traits. Female teachers also were 12% less likely to plan to bargain in the future. When asked why they didn’t negotiate, women reported feeling uncomfortable with the process more often than men did.
But the gender gap in negotiation choices emerged only in districts with male superintendents. Male teachers might be more likely to bargain with men, or perhaps female teachers are more comfortable bargaining with women, Biasi says.
Flexible pay systems can help organizations attract and reward high-quality employees. But, says Prof. Barbara Biasi, they can also “generate differences across genders that are not justified on the basis of things like ability.”
Finally, the team examined alternate explanations for the pay gap. Were men simply better at teaching and thus deserving of higher pay? That reasoning didn’t pan out; when the researchers analyzed “value-added” scores, which capture how much progress students make under particular teachers, women’s average scores were higher than men’s.
A second possible explanation was that women were less willing to move between schools or districts, which might hamper their ability to get a higher-paying job. Or perhaps demand for male teachers was higher. But further analyses provided little evidence that mobility and demand were major factors in the wage gap.
The study’s results don’t necessarily mean that organizations should avoid using flexible pay. Such systems can help attract and retain high-quality employees, Biasi says. But managers need to exercise caution when salaries aren’t based on strict objective criteria.
“It can generate differences across genders that are not justified on the basis of things like ability,” she says.