Men, Women, and Money: Negotiating for More than Small Change

More than 40 years after the publication in 1963 of Betty Friedan’s The Feminine Mystique and 55 years after the publication in 1949 of Simone de Beauvoir’s The Second Sex, American women still earn, on average, 75 cents for every dollar earned by American men. Why?

For decades, we have been wrestling with this question in its social, political, economic and moral dimensions. It has been the subject of debate–often the Nature vs. Nurture variety–and of legislation and litigation. For the most part, only a hardcore minority would argue openly in favor of this pay disparity. Gone are the days when people could, with any semblance of credibility, take the position that men, as the primary breadwinners, deserve to earn more than women. The economic facts are irrefutable: More and more women are heads of households and primary breadwinners themselves; and it is the rare household these days that can get by on only one salary. Yet this gap remains.

In their recently published book, Women Don’t Ask: Negotiation and the Gender Divide , Linda Babcock and Sara Laschever forcefully and credibly lay out the argument that the core issue underlying this problem is one of gender differences in negotiating strategy. More to the point, as the title of the book suggests, they argue that women simply don’t negotiate as often, as powerfully, or as successfully as their male counterparts. This, they say, has profound economic and professional implications for women, and goes a long way towards answering the question of why such a significant economic gap still exists between the sexes, even after a number of other important barriers, both legal and cultural, have fallen or significantly diminished.

The authors meticulously address both why it is important – for women and men – that this inequity be dealt with, and what sorts of changes, both societal and individual, will be needed to accomplish this goal.

Linda Babcock holds a bachelor’s degree in Economics from the University of California at Irvine and an MA and PhD in Economics from the University of Wisconsin at Madison . Her work has previously been published in a range of scholarly journals, including The Quarterly Journal of Economics, Industrial and Labor Relations Review, and The Journal of Legal Studies. She is a professor of economics and director of the PhD program at Carnegie Mellon University ’s H. John Heinz III School of Public Policy and Management.

New York City-born, Sara Laschever holds a bachelor’s degree in English Literature from Princeton University and a master’s degree in creative writing from Boston University . She has been a working writer and editor for some 20 years, her articles appearing in such publications as The New York Times, The Boston Globe, The New York Review of Books, The Village Voice, and The Harvard Business Review, among others. She has done editorial work, on a consulting basis, on books published by Harvard Business School Press, Hyperion, St. Martin ’s Press, and Alfred A. Knopf. She was a co-founder, in 1994, of the journal millennium pop – since morphed into a web site – which comments on popular culture issues.

Their partnership on this project has been a fruitful one in avoiding some of the problems that typically dog this sort of book. The final product does a good job of balancing the imperatives of academic rigor and mainstream readability, of effective polemic and a solid grounding in research.

Academic prose is often turgid and difficult to follow, but that is not so in this case. Books making socio-cultural arguments often run aground on their failure to cogently support what they are saying with credible data; that also is not a problem here. Finally, we live in a time when publishing houses have so pared down and outsourced their operations that most texts suffer from myriad errors and omissions that should be caught long before the final product reaches the book store. One suspects that Laschever’s experience as an editor herself is one reason that Women Don’t Ask, for the most part, does not suffer this failing.

The book has its genesis in an incident the authors relate at the beginning of the introduction: “A few years ago, when Linda was serving as the director of the PhD program at her school, a delegation of women graduate students came to her office. Many of the male graduate students were teaching courses of their own, the women explained, while most of the female graduate students had been assigned to work as teaching assistants to regular faculty. Linda agreed that this didn’t sound fair, and that afternoon she asked the associate dean who handled teaching assignments about the women’s complaint. She received a simple answer: ‘I try to find teaching opportunities for any student who approaches me with a good idea for a course, the ability to teach, and a reasonable offer about what it will cost,’ he explained. ‘More men ask. The women just don’t ask.'”

Proceeding from this central “Aha!” moment, Babcock and Laschever, using both study data and copious anecdotes, follow the question of why women don’t negotiate as much as men, the implications of this fact, and what can be done to change this. They are careful, early on, to stress both the widespread nature of this phenomenon and that it is not a difference limited to American society: “The more than 100 interviews we conducted in the process of writing this book — with men and women from a range of professions (including full-time mothers) and from Britain and Europe as well as the United States — supported these findings. When asked to identify the last negotiation in which they had participated, the majority of the women we talked to named an event several months in the past and described a recognized type of structured negotiation, such as buying a car. (The exceptions were women with small children, who uniformly said, “I negotiate with my kids all the time.”)

“The majority of the men described an event that had occurred within the preceding week, and frequently identified more informal transactions, such as negotiating with a spouse over who would take the kids to soccer practice, with a boss to pay for a larger-size rental car because of a strained back, or with a colleague about which parts of a joint project each team member would undertake. Men were also more likely to mention more ambiguous situations—situations that could be construed as negotiations but might not be by many people. For the most part, the men we talked to saw negotiation as a bigger part of their lives and a more common event than the women did.”

The authors also demonstrate, early on and concretely, the ways in which negotiated pay differences which may, on the surface, seem trivial, can have a drastic effect on ones lifetime earning potential, the example they use resting on often-taught and easily understood issues of compounding:

“Suppose that at age 22 an equally qualified man and woman receive job offers for $25,000 a year. The man negotiates and gets his offer raised to $30,000. The woman does not negotiate and accepts the job for $25,000. Even if each of them receives identical 3% raises every year throughout their careers (which is unlikely, given their different propensity to negotiate and other research showing that women’s achievements tend to be undervalued), by the time they reach age 60 the gap between their salaries will have widened to more than $15,000 a year, with the man earning $92,243 and the woman only $76,870.

“While that may not seem like an enormous spread, remember that the man will have been making more all along, with his extra earnings over the 38 years totaling $361,171. If the man had simply banked the difference every year in a savings account earning 3% interest, by age 60 he would have $568,834 more than the woman — enough to underwrite a comfortable retirement nest egg, purchase a second home, or pay for the college education of a few children. This is an enormous “return on investment” for a one-time negotiation. It can mean a higher standard of living throughout one’s working years, financial security in old age, or a topflight education for one’s kids.”

Finally, they argue credibly for the benefit to be had by corporations which diminish or eliminate the losses caused to women by this trend, citing the example of Deloitte & Touche, which implemented a successful affirmative action program for women in the early 1990’s. This resulted, by the year 2000 in a near-tripling of the number of female partners at the company, from 5% to 14%, and an evening out of the turnover rate between male and female managers; prior to the implementation of the program, women had left at nearly twice the rate of men. They stress that this represents progress as a matter of equity, but also point out that it saved the company close to $250 million in retraining costs.

In addition to pointing out ways in which women are economically disadvantaged in the workforce, and how this might be changed, Laschever and Babcock also note that there are certain concrete advantages to the negotiating strategies typically taken by women. They write:

“Women also have some advantages that can make them outshine men at negotiating. Although the more aggressive approach favored by many men can win good short-term results, women’s focus on cooperation and relationship building can be a huge advantage. This is because a multitude of negotiation studies in the past two decades have shown that a cooperative approach, aimed at finding good outcomes for all parties rather than just trying to ‘win,’ actually produces solutions that are objectively superior to those produced by more competitive tactics. The influence of this line of research has been so profound, and the behaviors it recommends dovetail so nicely with women’s strengths, that negotiation experts often joke that the goal of many negotiation courses today is to train people to negotiate like women.”

Better Training, Greater Transparency

The answer that the authors give to the question of “what is to be done about this disparity” is essentially two-fold. First, as others have before them, in a variety of contexts, they advocate better and more thorough economic education for girls and women, particularly around the crucial importance of negotiation. Second, they argue for enhancing what might be seen as a subset of what economists and politicians often refer to as transparency: what people are paid should be less of a secret; pay should be based more on merit and performance, rather than negotiation; managers and executives should make a greater effort to ensure equity between their employees, based on clear and objective standards.

In a sense, this dual-track approach covers the authors from both sides of an interesting fence. They are arguing both that girls and women should be taught to negotiate more and more effectively, but also that the necessity for this sort of negotiation should be decreased.

How one views the potential success or failure of the first prong of this approach brings us back to the Nature vs. Nurture argument. Egalitarian men and equity feminists would argue that we should raise children to be whoever they want to be, unconstrained by the gender stereotypes that have traditionally limited the vision and the actions of both men and women. Conservative men and difference feminists might argue that there are in-born gender differences that will limit the effectiveness of such attempts at change, and, in addition, that there are benefits in differential approaches which should not be eradicated.

The second prong of their approach – the issue of transparency – raises fundamental questions about what we value, as a matter of culture and as a matter of economics, and what we want to put first in this equation. To what degree do we see limiting the centrality of negotiation as a matter of leveling the economic playing field? To what degree do we see it as a limiting of competition, over all?

Wherever one comes down on these issues, the book raises important questions and sheds new light on a problem with which we will likely continue to grapple, in economies throughout the globe, for some time.

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