Why do Washington's women leaders make less?
April 16, 2014 | National Journal
What National Journal's 2014 salary survey says about the pay gap.
By Shane Goldmacher
This past Tuesday marked a reunion of sorts at the White House as President Obama brought back Lilly Ledbetter, whose fight for equal pay has made her a feminist icon. Ledbetter, the namesake of the first bill Obama signed into law, looked on as the president inked two executive orders intended to promote women's pay equity. Obama repeated, as he has all year, the much-debated statistic that American women make 77 cents for every dollar earned by men.
Yet even as the government takes steps to reduce the pay disparity nationwide, the gender gap remains a reality at the highest-paying jobs at Washington's top trade associations, professional societies, think tanks, labor unions, and public-interest groups. Men overwhelmingly hold more of the top jobs—and they're better paid for their efforts.
Those are the findings of National Journal's latest biennial salary survey of the CEOs who run nonprofit organizations with a footprint in Washington. Women made up just 22 percent of the 644 current and former CEOs in the survey. And those female executives were generally paid less than their male counterparts. No women were among the 25 highest-paid executives on the list; only five women landed in the top 50; and just 13 women were in the top 100. Overall, the median compensation of female CEOs with a full year of earnings was 15 percent lower and $59,063 less than that of their male counterparts. (The earnings figures include executives' base pay, bonuses, and other compensation for the 2012 tax year.)
With their sizable salaries, these CEOs don't necessarily make for the most sympathetic figures in the pay-equity fight. (The highest-paid woman on the list, Pamela Bailey, who is CEO of the Grocery Manufacturers Association, made $2.06 million.) But the gap is nonetheless instructive, as it shows how America's lack of pay equity permeates into the highest-paying jobs—including those with links to the nation's capital.
The share of women in charge of associations, think tanks, unions, and other nonprofits does exceed—by a few percentage points—their ratios on Capitol Hill. (Women hold 18 percent of seats in the House and 20 percent in the Senate.) An American Enterprise Institute analysis earlier this year found near-parity in the number of employees inside the White House—229 women to 232 men—but it also showed that women there earned 88 cents for every dollar men were paid. Washington nonprofits, meanwhile, appear to be performing far better than their corporate cousins when it comes to gender equity: At Fortune 500 companies, the percentage of women chief executives still hovers below 5 percent.
The pace of progress at D.C.-linked organizations has been mixed. In the 2004 National Journal survey, women ran 16 percent of the organizations; that number has inched up to 22 percent in the decade since. "God, it's still low. Ten years. That's not a lot of progress," says Pamela Kaul, who helps place CEOs in jobs as president of an executive head-hunting company, Association Strategies, which she founded 27 years ago. "I'm surprised it has not risen faster."
In the 2008 survey, median compensation for male CEOs was $338,678 compared with $260,064 for women—a 30 percent disparity. Now the gap is 15 percent. In 2008, only four women were among the 68 CEOs who topped the $1 million compensation mark. That number has tripled to 12, out of 91 who were paid for a full year's work.
Yet major disparities persist. The question is why. Why are so many fewer women occupying leadership positions at major Washington organizations? And why are those women who do get to the corner office generally making less than their male peers?
Strength in numbers
Lisa Rickard has been president of the U.S. Chamber Institute for Legal Reform for more than a decade and is among Washington's highest-compensated female executives. Her $1.6 million in 2012 compensation ranked fourth-highest among women. She is optimistic that more women will be joining her on the CEO list. "Within the next, say, 10 to 15 years, we'll probably—hopefully—be looking at 50 percent representation," Rickard says.
She is bullish because she says the biggest stumbling block for women becoming CEOs has been the lack of female vice presidents, directors, and other lower-level organizational leaders. As she sees it, women have been absent from many rungs of the leadership ladder that prepare people to become CEOs. "You do have to move through a talent pipeline in order to accumulate the experience that qualifies you for these jobs," she says.
One challenge that could be preventing women from reaching the CEO level is that some women opt out of the workforce for a time to raise children. A 2013 study from Vanderbilt economics professor Joni Hersch found that women M.B.A. graduates from top schools were more likely than women from less competitive schools to take time away from work—which, Hersch speculated, could have "a direct effect on the number of women reaching higher-level corporate positions as well as an indirect effect due to a smaller pipeline of women available to advance through the corporate hierarchy."
Women are now in that pipeline, Rickard says, ticking off all the powerful female executives at the U.S. Chamber of Commerce (where she's also an executive vice president)—the general counsel, the chief of staff, the chief administrative officer. "The senior level, just here within the chamber, is full of high-ranking, serious, experienced, well-compensated women professionals," she says. (The chamber's longtime CEO remains Tom Donohue, who, at $5.45 million, had the second-highest haul of any executive on the list.)
Denise Grant, a CEO headhunter who is the managing partner of the Washington office of the executive search firm Russell Reynolds Associates, speaks similarly of a women's "talent pipeline" that is far fuller than a decade ago. Today, "more women get more experience that is relevant to these roles," Grant says.
Plus, those doing the hiring increasingly want someone other than an older white man. "Every slate we prepare for our clients has diversity in it," Grant says. "It's not just the same old, same old in the candidate pool."
Disparity in wages
The small share of female executives is only part of the gender gap, however. The other element is their lagging pay. One factor may be that women are leading smaller organizations. Roughly 44 percent of groups headed by women had revenue of less than $20 million, according to the National Journal survey, compared with about 33 percent of those headed by men. Meanwhile, men more often run the largest groups: 34 percent of men headed groups that collected more than $50 million, versus only 23 percent of women who ran groups of that size.
But even among similar-sized organizations, there is often a pay gap. Women CEOs of groups with less than $20 million in revenue earned $76,147 less than men, at the median. And the gender gap was even bigger—$206,856—among groups with more than $100 million in revenues. (Pay was nearly equitable among the 268 organizations that fell in between, with less than $4,000 separating men's and women's compensation.)
Perhaps more interesting than size are the types of groups that women lead. Women held only four of the 26 top spots (15 percent) in the banking and finance realm—the highest-paid sector, besides sports and insurance. In contrast, women ran more than 25 percent of public-interest groups and more than 34 percent of those in education, arts, and science—both among the lowest-paying sectors.
"You see women in the causes—in the human services and social services—and the pay can be lower," says Kaul, the veteran executive headhunter. Wendy Pangburn, who specializes in placing top local executives at associations and nonprofits as executive vice president of DHR International's Washington office, agrees. "In general terms, you tend to see women executives more toward mission-oriented organizations," she says.
Is that by choice, or the result of gender typecasting? "I think women have had more of an interest in joining organizations where they really feel a connection to the mission and the cause," Kaul says.
Another possible factor leading to the CEO pay gap is that women may be getting locked into lower salaries at earlier points in their careers—and are never able to make up the difference, even as they climb toward leadership positions. As a recruiter who represents employers, Pangburn is privy to the salaries of those seeking top posts. She says women often arrive earning less than men. "It starts from receptionist to researcher to an analyst to a junior VP to a senior VP," she says. "At all steps of the salary-compensation ladder, you generally see women paid less."
Carolyn Miles runs what was a $576 million organization in 2012. She is CEO of Save the Children, a nonprofit that ranked in the top 10 for revenues of all groups in National Journal's survey. But when it comes to Miles's compensation package—she pulled in $403,857 in 2012—she is decidedly middle of the pack. She ranked 320th of the 560 CEOs paid for a full year's work. Miles is aware of her relative rankings and doesn't care. "That's not why I do what I do," she says.
"Could I ask my board to pay me more? I guess I could," Miles says. "But I don't. I do think there's something about men and money—and women and money—that's different."
Call it the Lean In factor, after Facebook executive Sheryl Sandberg's best-selling book. Sandberg set off a national conversation last year about whether women are less aggressive than men in seeking higher pay and opportunity in the workplace. "If we want a world with greater equality, we need to acknowledge that women are less likely to keep their hands up," she wrote in one oft-quoted passage.
Could that apply to CEO pay too? Pangburn thinks so. She's been at the negotiating table on behalf of associations and nonprofits and has seen women executives take less than they could have gotten. "We blink when we shouldn't," she says. "I can say this as a female because we don't represent ourselves as well as we should. We should draw a line in the sand."
To be sure, the sectors that have drawn more women—more charity-focused groups such as Save the Children—are also a factor in how hard a bargain a candidate might drive. Demanding more money from an association representing Wall Street banks is different than doing the same from a group that serves developing-world children. (Of the five organizational categories in the survey—associations, professional societies, public-interest groups, think tanks, and labor unions—women had higher median earnings than men in only one: public-interest groups, by 5 percent.)
"You go into the nonprofit sector, and the expectation should be that you're not going to be paid like you're working in the corporate sector, and I think that's OK," says Miles, who years ago worked at American Express. "To me, it also has something to do with the work that we do. I'm paid a very fair salary.… It's astronomical compared to the people we serve."
The women interviewed agreed on one thing: Times are improving. "It's gotten a lot better," says Grant, one of the headhunters. Kaul, another recruiter, predicts "a big jump" in the next two to five years, as women have risen to vice presidencies and are on the precipice of the big chair.
Women are taking leadership roles in traditionally male-dominated sectors, such as energy, where 15 of the 17 CEOs in our survey were men. In December 2012, less than a month after Rep. Jo Ann Emerson won reelection to her Missouri seat, she announced unexpectedly that she would resign to become CEO of the National Rural Electric Cooperative Association. If Emerson is paid the same as her male predecessor, former Rep. Glenn English ($1.89 million), it would put her in the upper echelon of executive earners. And just this month, Sue Kelly took the helm of the American Public Power Association. Her predecessor, Mark Crisson, collected $705,412 in 2012.
Of course, ground is lost as it is gained. The two incumbent women CEOs in the energy sector in 2012—Regina Hopper of America's Natural Gas Alliance ($885,313) and Denise Bode of the American Wind Energy Association ($589,964)—have both since departed.
Indeed, there's a long way to go to achieve full equality. If the pace at which the percentage of women CEOs has increased in the past 10 years holds steady, then equal representation would still be decades away.