There's a reason the highest-paid men in the US earn more than women --  but it's not the pay gap

Sheryl SandbergKrista Kennell / Shutterstock.comMaking it into management matters. Sheryl Sandberg, Chief Operating Officer of Facebook, is pictured.

• Among the highest earners, women earn 39 cents for every dollar a man makes in the US.
• This likely isn’t because executive women are paid less than their male counterparts, but that they are underrepresented in higher levels of management.

• Promoting more women along the way could help improve diversity in the corner office.

The gender pay gap is twice as bad at the top.

The average woman in the top 2% of US earners makes 39 cents for every dollar a man makes, according to an analysis of the 2015 American Community Survey (ACS) by labour economics research firm Job Search Intelligence (JSI). Overall, women in the US earn an average of 79 cents for every dollar a man makes.

Explaining the wage gap isn’t easy: Occupation, industry, and tenure likely contribute to the majority of the pay gap, according to a report published in the Academy of Management Perspectives. But the report also found that unexplained factors, including discrimination, could still account for a significant portion of the discrepancy.

The pay gap among the highest-earners may indicate that women are underrepresented in top leadership roles.

“What we see currently is that women are represented in accordance with educational attainment when they get out of college,” said Paul Hill, president of JSI. “They start falling behind in their representation in management occupations when controlling for educational attainment. This is a real issue that is not reflected by simple wage gap analysis.”

Women are passed over for promotions at each step of the career ladder, Business Insider’s Rachel Gillett reported. Recent research by McKinsey & Co. and Lean In found that for every 100 women promoted to management, 130 men advance. The disparity grows over time — only 20% of senior executives are women.

Missing out on management opportunities has a compounding effect. Executive search firm Spencer Stuart found that 90% of new CEOs of S&P 500 companies were promoted from within the company’s ranks in 2016. Of the 58 new chief executives last year, only four — a measly 7% — were women.

In fact, the US has so few high-earning women that many states do not report income for the top 1% by gender for the sake of protecting the anonymity of the ones who do, according to JSI.

There is good news, however. The small number of women who have made it to CEO tend to out-earn their male counterparts. In 2016, the median income for female CEOs was $US13.1 million, compared to $US11.4 million for male CEOs, as Business Insider’s Veronika Bondarenko reported.

Although women CEOs may be well-compensated relative to their male peers, there’s still work to do to close the gender pay gap, whatever the cause may be.

In 49 states, the average salary for a woman in the top 2% is below the national average of $US206,000. Only women in Connecticut and Washington DC earn more than $US206,000 on average.

By contrast, salaries for men in the top 2% surpass the national average in all but five states: Alaska, Indiana, Iowa, North Dakota, and South Dakota. Among all earners in the top 2%, men out-earn women by an average of $US226,000.

In many states, the average male salary in the top 2% actually qualifies for the top 1%, which has a threshold of $US389,436, the Economic Policy Institute calculated. The average female salary does not qualify for the top 1% in any state.

Until more women land leadership roles at higher levels of management, this pay gap is likely to persist.

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