The Gender Wage Gap: A Barrier to Retaining Hospitality Industry Talent
By Michael Sturman, Ph.D. Professor, Human Resource Mgmt, Rutgers School of Management & Labor Relations | March 22, 2015
Human resources frequently comes up at the top of issues that concern hospitality industry executives and operators, as firms often struggle with finding and keeping talented employees and managers. At the same time, however, repeated studies have found gender-based inconsistencies in the way the industry evaluates, compensates, and supports its employees, often resulting in barriers to the advancement of women. Direct pay discrimination is illegal is many countries, and institutionalized discrimination is a major global concern for human resources in general. Prejudiced and biased practices is something every organization should be seeking to eliminate. Given the industry's continuing human resources challenges, allowing such barriers to persist not only is often illegal and may expose a company to legal action, but it is counterproductive as well. In this article, we outline several recent research studies that collectively explore the gender wage gap in the hospitality industry, identify other barriers to women's full participation in the industry, and present suggestions offered by women hospitality executives for improving the situation.
As a starting point, there is little dispute that a gender-based pay differential exists in the hospitality industry in many countries outside the U.S. For example, a study by Christer Thrane of over 100,000 hospitality employees in Norway found that men were paid about 20 percent more than women between 1994 and 2002. In a study of Norwegian tourism firms, Ole Skalpe found a significant pay gap between male and female CEOs. Another study, by Fernando Munoz-Bullon, found that a somewhat smaller gap in a study in Spain's six tourism regions, but the gap between men and women still exceeded 6 percent-in spite of Spain's minimum wage law. In Portugal's hospitality sector, a study by Luis Delfim Santos and Jose Varejao found a gap of 8.4 percent in salaries paid to men and women. Finally, a study in 2007 by the United States General Accountability Office among full-time managers in thirteen industry sectors found that within the hospitality and leisure sector, women's pay averaged 80 percent of that of men in most years between 2000 and 2007.
Noting these studies, Dr. Susan Fleming, a senior lecturer at the Cornell School of Hotel Administration, recently conducted a study of wages specifically in the U.S. hospitality sector, using data collected by the U.S. Census in 2010. (This study is forthcoming in the Cornell Hospitality Quarterly.) She tested for several possible explanations for this gap. In brief, the explanations involve economic theories or outright discrimination.
The economics-based explanations are known as "human capital" theory and "new home economics" theory. The human capital explanation states that people's different levels of productivity are a result of various educational or skill levels, which then result in appropriately different pay levels. Along the same line, the new home economics theory suggests that productivity (and therefore pay levels) are a function of the amount of time people allocate to paid work. Those who work fewer hours would logically have lower pay than those who work more hours. Thus, if women consistently have lower productivity for either of these reasons, then the reason for the pay disparity would be a simple matter of economics, rather than discrimination.
Other explanations for the wage gap are rooted in discrimination. These are occupational overcrowding, devaluation of women's work, and social closure. Occupational overcrowding would occur when women are forced into a small set of occupations due to belief systems about what constitutes "appropriate" work for them. This in turn, results in there being far too many (female) workers for the jobs available and thus lower wages for that job category. Even if "women's occupations" are not overcrowded, several researchers have observed that occupations dominated by women generally have lower pay rates, due to the fact that work stereotypically associated with women is devalued. Finally, the idea of social closure theory is simply that members of a dominant or higher status group would reserve the best jobs for members of their own group. If that is what's happening, then men would make sure to give men the best opportunities. Because not every possible difference in productivity can be accounted for in the data, Fleming notes that her study cannot definitively prove the existence of social closure, but a pay gap that is otherwise unexplained by major differences such as hours worked and education level would point in the direction of discrimination.
Fleming's research was designed to replicate an earlier study by Raymond Sparrowe and Kathleen Iverson, which used U.S. Census data from 1989. Similar to those researchers, Fleming drew a random sample of 112,990 people working in a total of 50 occupations in the U.S. hospitality sector in 2010. These workers had filled out a Census Bureau questionnaire known as the American Community Survey. Using those data, the study controlled for the human capital and new home economics theories, and also tested for the presence of structural discrimination in the form of occupational overcrowding. Even after accounting for the likely economic theories and overcrowding, Fleming found strong evidence that there remains a significant difference in the income of women and men working in the hospitality industry, and further that outright discrimination seems to be the only explanation for this difference.