Women fall victim to salary penalties

updated 10:02 a.m. ET Feb. 24, 2005

NEW YORK - Professional women who put careers on hold for family or other reasons earn 18 percent less once they return to the workforce, a new survey reports.

The salary penalty for hopping off the career track is even higher in the business world, where earnings drop an average of 28 percent, according to the survey by the New York-based Center for Work-Life Policy.

The drop in pay partly reflects many women’s decisions to return to work in jobs with less responsibility, or to part-time jobs. But it may also reflect that women are exiting the workforce during the years when many men make the largest leaps up the corporate ladder, the survey’s authors conclude.

The longer the break, the higher the price
The price for exiting work is greater the longer women wait before returning. Women who take less than a year off from their careers, return to the labor force at an average of 11 percent less pay. But those who take off for three years or more return to pay averaging 37 percent less than what they originally earned, according to the survey.

The research is detailed in the March issue of the Harvard Business Review, a copy of which was delivered to The Associated Press. The survey tapped more than 2,400 women nationwide, focusing on those with a graduate degree, professional degree or undergraduate degree with high honors. The group also surveyed 653 similarly qualified men as a means of drawing comparisons.

The notion that more executive women are choosing to exit the workforce has generated considerable attention over the past year in business circles. The survey, done this past summer, is one of the first efforts to try to verify and explain women’s choices.

Women surveyed who had temporarily left the workforce said they did so for an average of 2.2 years — just 1.2 years for those working in business.

“However, even these relatively short career interruptions entail heavy financial penalties,” Sylvia Ann Hewlett and Carolyn Buck Luce, leaders of the task force that authored the study, write in the magazine. “The longer you spend out, the more severe the penalty becomes.”

Hewlett is the founder and president of the Center for Work-Life Policy. Luce is an executive with Ernst & Young, one of three companies that sponsored the survey. They could not immediately be reached for comment.

The return to lower pay has multiple causes, the study concludes. Nearly four in 10 of those surveyed said they have intentionally chosen a job with fewer responsibilities and lower pay in a trade off for having the time for family life.

Of those who rejoined the working ranks after stepping away, just 40 percent return to full-time, professional jobs. About one in four take part-time jobs, and about one in 10 go to work for themselves, all choices often involving lower pay.

About 44 percent of the women who exit the workforce do so to gain more family time, with another 23 percent to pursue a degree or additional training. That is quite different from the reasoning of men who have taken such breaks. The biggest reason for doing so, cited by 29 percent of men, was to change careers. Another 25 percent said they did so to earn a degree. Just 12 percent said they put aside work to devote more time to family.

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