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Working women earn more than Patricia Arquette may realize

Rick Newman

Academy Award winner Patricia Arquette used her 80-second acceptance speech at Sunday night's Oscar ceremony to champion women’s rights, declaring, “it’s our time to have wage equality once and for all!” The crowd roared, with Hollywood royalty such as fellow Oscar winner Meryl Streep cheering in solidarity. Many viewers no doubt did the same at home.

Arquette continued her equality push on Twitter following the Oscars, arguing, among other things that "women have been basically paying a gender tax for generations:"

There are, in fact, notable disparities in the pay men and women receive—but they’re not quite as deep as some make it sound. Working women have made tremendous strides during the last three decades, and in some fields there’s no longer any gender pay gap at all. Beyond that, young women today are entering the workforce better educated and in general better prepared for the modern economy than men, which will help even out whatever pay gap remains in the future. The best news for working women may be that pay discrimination, while illegal, is also becoming culturally unacceptable, with much stronger support systems for women who risk their jobs or careers by demanding equal pay and fair treatment.

Still, some prominent anecdotal examples fuel the storyline of women battling their Mad Men bosses for the right to be treated the same as men. Hacked emails from Sony Pictures executives, for instance, revealed that megastars Jennifer Lawrence and Charlize Theron earned less than their male counterparts for similar roles in a couple of films. If Hollywood’s leading ladies can’t get a fair shake, how can mid- or entry-level working women? Meanwhile, a sexual discrimination lawsuit involving the high-profile venture capital firm Kleiner Perkins Caufield & Byers seems likely to highlight differing pay and performance standards for men and women in the money machine known as Silicon Valley when it kicks off this week.

Numerically, the gender pay gap clearly exists. It’s generally accepted that women earn just 78% of what men earn, on average. Women’s pay improved sharply during the 1980s and 1990s, but it has stagnated, relative to men’s pay, since then, as this chart from the Institute for Women's Policy Research shows: 

Source: Institute for Women's Policy Research

This trend is distressing on the surface -- it implies that a woman who started in a certain field at the same time as an equally qualified man, and performed just as well, would nonetheless get paid less for her entire career.

But that’s not what is really happening in most cases. Women are more likely to take time off for family reasons, which slows their career development and their rate of pay increases--skewing average pay figures in favor of men. Women are also more likely to work part time or choose flexible arrangements over demanding work more likely to lead to promotions, so they're better able to care for other family members. Put another way, men are more likely to take jobs with grueling hours, which usually pay more. 

In other words, choices women make themselves undoubtedly explain some of the pay gap—and that’s where the shouting starts. Some people believe that when accounting for these external factors, there’s no real difference between what men and women with comparable experience get paid for doing the same work. But some studies have shown that institutional bias against women remains ingrained, if tacit. Last October, Microsoft CEO Satya Nadella managed to summon both sides of the thorny ssue last fall when he said women should "trust the system" to give them fair raises -- then basically took back his words after critics of both genders lambasted him as naive.

It's complicated

As always, the truth likely lies somewhere between the two extremes: There’s probably still some pay discrimination at companies with a 20th-century mindset, while at the same time women have more economic power than ever.

Advocates like Arquette — who spoke to an audience of 35 million or so on Oscar night -- may help nudge the gender-equality holdouts into treating women better. But it’s also important to highlight things women can do for themselves to improve their pay and career prospects. Even high-ranking women, for example, sometimes undersell themselves when negotiating pay and perks. Former Sony Pictures co-chair Amy Pascal said recently that she paid Jennifer Lawrence less than her co-stars in American Hustle because Lawrence never asked for more. “I run a business,” Pascal said. “People want to work for less money, I'll pay them less money. I don't call them up and say, 'Can I give you some more?'"  Research by data-compensation firm Payscale shows that women in general have become more aggressive about asking for raises —but men have too.

There are also new efforts to lure women into higher-paying fields--especially technology, one of the few remaining male bastions, other than manufacturing and construction. Intel (INTC), for instance, has pledged to devote $300 million by 2020 to help draw more talented women to the firm, among other things. Other tech companies have acknowledged a shortage of women at all levels—including the executive suite—and pledged to do better. The question is whether these types of initiatives will filter down to schools and encourage more young women to focus on tech, math and scientific fields.

One final issue that holds down women’s pay is a problem that affects men as well—a general lack of marketable skills at lower levels of the workforce. That leaves a lot of women little choice but to seek low-paying work in retail, fast-food or cleaning services, where an oversupply of workers seems sure to keep pay depressed for the foreseeable future. A heartfelt plea from the podium on Oscar night won’t change that, but better training and education might. That’s a cause worth taking up the day after the speech.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.