Talk of employers paying male employees more than females is nothing new–the Equal Pay Act has been around for 50 years, and women are still making 77 cents to a man’s dollar. But a study conducted by Babson College shows that self-employed women also pay themselves less than men who hold similar positions.
A survey of graduates of Goldman Sachs’s 10,000 Small Business Program found female entrepreneurs in the program averaged 80% of the salary their male entrepreneur counterparts earned, nearly the 81% the Institute for Women’s Policy Research found between weekly gender wages for full-time work in 2012.
Babson professor and author of the study Patricia Green was surprised by this outcome and plans to investigate the disparity. As for possible reasons for the wage gap, Green said, “I’m not sure if it’s benchmarking against salaried women, I’m not sure if it’s a lack of confidence, I’m not sure if it’s negotiating themselves down first. Sometimes women have a tendency to say: ‘I couldn’t possibly ask for that. I better recalibrate that before I put that number out there.’”
It’s possible that women just want to keep money in the business until it is certain to work out. But is this fear of risking it all causing women to hold themselves back?
The good news, from the study’s view, is that the wage gap narrowed after six months. While both men and women gave themselves raises, women gave themselves higher raises, leaving an 8% gap as opposed to the original 20%. Suggested explanations for the remaining pay gap include gender segregation in the type of businesses men and women operate, and that women are more apt to start businesses in lower average salaried positions than men.