Why New CEO Pay Gap Numbers Are Misleading

In the S&P 500, female CEOs’ median pay is higher than their male counterparts.

But there is much more to the story.

The CEO Pay Gap

Seeing median CEO pay ascend, and median female pay remain higher, we might conclude that female CEOs tend to earn more than men:

The problem is the math.

Because the women’s median was based on far fewer people than the men’s, the numbers were misleading:

Further displaying the S&P 500’s dismal gender numbers, researchers did a James and John CEO count to show that it exceeded the number of female CEOs in the index until last year:

At the same time, we do find more women leading human resources and legal departments. But the head of human resources is the lowest paid among most firms’ high executives while the second lowest paid is the chief legal person.

Our Bottom Line: Greedy Jobs

In an interview with economist Steve Levitt, Nobel economics laureate Claudia Goldin told us more about the gender pay gap. She said one reason was “greedy work” that involves long hours, being “on call,” going out with clients, maybe 60-to 80-hour weeks. Typical at top law firms, for consulting, and in finance, greedy jobs paid the most. However, many women have family obligations that prevent them from taking greedy jobs.

Returning to where we began, male CEOs can do “greedy work.” Or as a NY Times journalist tells us, “Women don’t step back from work because they have rich husbands. They have rich husbands because they step back from work.”

My sources and more: Thanks to Axios’s Emily Peck for alerting me to CEO pay gap anomalies. From there,  Axios  and Morningstar had more detail. But for the complete explanation of the pay gap, I hope you will go back to this econlife with our summary of Claudia Goldin’s research and to this NY Times article.