At a Sydney technology startup conference, Evan Thornley, an Australian multimillionaire and co-founder of online advertising company LookSmart, gave a talk about why he likes to hire women. “The Australian labor market and world labor market just consistently and amazingly undervalues women in so many roles, particularly in our industry,” he said. When LookSmart went public on Nasdaq in 1999, he said, it was one of the few tech companies that had more women than men on its senior management team. “Call me opportunistic; I thought I could get better people with less competition because we were willing to understand the skills and capabilities that many of these woman had,” Thornley said.
Wow, how insightful! Not only has someone in the tech industry openly admitted to a pay discrepancy, but he’s framed it in a way that might help companies see the value in hiring more women and close—or at least narrow—the gender gap.
Thornley went on to say that by hiring women, he got better-qualified employees to whom he was able to give more responsibility. “And [they were] still often relatively cheap compared to what we would’ve had to pay someone less good of a different gender,” he concluded. To illustrate his point he showed a slide that said: “Women: Like Men, Only Cheaper.”
Wait, what? That’s not how this conversation should go at all. Realizing that women are undervalued and then paying them less then men because you know you can is not the solution that any company should adopt—and not just because it’s illegal. That’s like reading the recent nutritional studies that say saturated fat might not be that bad for you after all and then running out and eating an entire stick of butter.
Thornley has, naturally, been roundly criticized for calling women cheap labor. “WT actual f—” Annie Parker, co-founder of Australian digital start-up accelerator Muru-D, tweeted after images of Thornley’s slide were made public. A news site Australia even titled its article: “Well S—, That Was a Dumb Thing to Do at a Startup Conference.” Thornley has since apologized for and backtracked on his comments, writing online that “I have always paid men and women exactly the same for the same work and you will find a large group of fantastic talented women I’ve worked with who will vouch for that.” (LookSmart did not respond to requests for comment.)
Thornley got skewered not just for what he said, but also for saying publicly what research has implied for years: Assuming things are equal, a more experienced, better-qualified employee who’s a woman will be paid less than a less-experienced, less-qualified employee who is a man. That backs up up a recent Harvard University survey of its undergraduates that found that female members of Harvard’s class of 2014 are making significantly less money in their initial jobs, compared to their male peers—and this at the beginning of their careers, when their experience level (more or less nonexistent), background (Harvard), and family status (largely unmarried, with no children) should be the same. According to the Harvard Crimson:
A plurality of women entering the technology or engineering sectors reported that they will make between $50,000 and $69,999, while a plurality of their male counterparts said they will make between $90,000 and $109,999. None of the women going into finance said they would earn $90,000 or more, compared to 29 percent of men in finance.
A 2007 study by two Cornell University professors found that when all factors (education, experience, chosen industry) are accounted for, women make about 91 percent of what men make (PDF). That may not sound like much, but if you make $200,000 a year, how would you feel about an $18,000 pay cut?
This may be more problematic than policy quibbles over the gender pay gap’s exact width in cents. When employees are underpaid, they have less incentive to continue to work when other demands—becoming a parent, for example—cause them to weigh their costs of living against the monetary benefit that the paycheck would provide. Underpaying women might be cheaper for companies in the short term. In the long run, it could cause more women to opt out of the job market, leaving people like Thornley stuck with overpaid, underqualified men.