At a glance
- Diverging work experience patterns drive a “work-experience pay gap” that makes up nearly 80 percent of the total gender pay gap, equal to 27 cents on the dollar among US professional workers. Women tend to build less human capital through work experience than men who start in the same occupations, as seen in the tens of thousands of career trajectories we analyze. Over a 30-year career, the gender pay gap averages out to approximately half a million dollars in lost earnings per woman.
- One-third of that work-experience pay gap is because women accumulate less time on the job than men. Women average 8.6 years at work for every ten years clocked by men because, on aggregate, they work fewer hours, take longer breaks between jobs, and occupy more part-time roles than men.
- The other two-thirds arise from different career pathways that men and women pursue over time. Women’s careers are as dynamic as men’s: Both men and women averaged 2.6 role moves per decade of work and traversed comparable skill distances in each new role. However, women are more likely than men to switch to lower-paying occupations, typically ones involving less competitive pressures and fewer full-time requirements.
- As women switch jobs, they are less likely to move into occupations projected to grow in demand, instead often moving into shrinking occupations. Should current occupational pathways persist, by 2030, more than three-quarters of working men would be in occupations projected to grow relative to today, compared with less than two-thirds of women. The overall gender pay gap could remain at current levels.
- Some employers enable greater movement into growing occupations for all workers while reducing the gender pay gap, even adjusting for the industry mix. These “People + Performance Winners” excel in both financial performance and building human capital. They stand out for rotating people internally, focusing on coaching, and fostering a culture that challenges employees while empowering them.
Whether sorting packages in the mailroom, coding in Python, or tending to patients, everyone starts their career somewhere. Yet in most industries, a first job is merely an entry point. What happens over the course of a career is crucial to building an individual’s human capital.
Human capital is formally defined as the knowledge, skills, competencies, and attributes that individuals possess. Its accumulation begins in childhood and continues throughout educational stages and working life. The value of human capital is realized when people put it to work—that is, by gaining work experience—and pay is an important signal of that value.
Work experience, pay, and human capital itself are linked in complicated ways, and the threads are hard to unravel. One worker may enjoy pay hikes as she moves from one role to another and acquires additional skills, a pattern of work experience that enhances both her human capital and the way it is valued through her pay. But another worker may see her human capital eroding over time as her skills go unused in a lower-paying role that doesn’t require them. In this case, both human capital and its value diminish. Meanwhile, two workers who started out possessing similar skills may go on to earn differing levels of pay when they switch into roles with varying organizational and industry characteristics, indicating that the same human capital is valued differently in the two jobs.
Overall, however, work experience is vital to both individuals and economies. For individuals, work experience underpins nearly half of lifetime earnings. For economies, work experience reflects how effectively human capital is matched with employers’ needs to raise productivity. In this context, comparing the work experience trajectories of men and women assumes its importance.
Women have narrowed and even reversed the gender gap in education in the United States. Yet only 58.7 percent of women participate in the labor force, compared with 70.2 percent of men. And what women and men do at work diverges significantly over time. Our research finds that that divergence, over a decade or more of work, drives almost 80 percent of the gender pay gap of 27 cents on the dollar—what we call the “work-experience pay gap.” (See sidebar “Definitions of the gender pay gap vary.”)
To arrive at this conclusion, we analyzed how men and women go about accumulating work experience—switching jobs, returning after breaks, climbing the corporate ladder, making lateral moves, downshifting, and more—and how they realize the value of human capital differently (in terms of pay). This privileged, close-up view is possible because we use a data set of some 86,000 de-identified online career histories of real people in the American workforce. Our data set is overweighted with white-collar, higher-paying jobs because people with public-facing, online work histories are more likely than the general population to hold them—and they are of particular interest to talent-scouting employers.
This research focuses on the extent, nature, and impact of divergence in work experience patterns and its effect on the pay gap between men and women. While gender pay gaps have been well studied by other researchers, we add to the discourse by dissecting the dynamics of work experience gained over time (Exhibit 1).
A diagram shows simple illustrations of two figures representing workers, and arrows flowing from left to right representing their career paths over ten years. The figures and arrows are placed on a grid of five tiers stacked vertically, each representing a higher income quintile as the workers move upward. Both workers start in the fourth quintile in Year 1 on the left, with one worker moving up to the third quintile in Year 10, while the second worker moves higher, to the second quintile in Year 5 and the top quintile in Year 10.
We emphasize that we do not directly investigate the reasons that they diverge. Women and men may intentionally choose to pursue different paths for a variety of reasons relating to opportunity and personal agency, with complex underlying factors that are difficult to untangle. For instance, personal preferences might lead women and men to opt for different kinds of work, or they may assign meaning to their work in different ways. At the same time, not all doors may remain open to all workers at every stage of life. As other research has explored, women may bear more responsibility for caregiving and household chores, while men may shoulder greater breadwinning responsibilities, which can restrict career choices for both. Whether or not those traditional or stereotypical responsibilities hold sway lies outside the scope of this article. (For details, see sidebar “Our data, scope, and methodology.”)
The gender pay gap highlights differences in how men and women realize value from their human capital. Over a 30-year career, we estimate, women earn about $500,000 less than men, on average. This loss of pay—and productivity, by implication—takes on particular importance in the context of tight labor markets and future demographic headwinds, with fewer workers potentially needing to support more retirees and fuel the nation’s economic engine. As automation and AI transform the nature of work and the skills required in the economy, optimal talent utilization is becoming a critical issue.
Women’s work experience patterns diverge from men’s on two key dimensions: time and mobility
Women actively change roles and traverse similar skill distances when compared with men, but they spend less time in paid work, on aggregate, and they navigate their careers in different directions (Exhibit 2).
A table of statistics compares women’s and men’s careers. First, two measures show that women accumulated less experience, with men taking fewer total days of breaks (359 versus 509) between roles, and men working more hours per week (40.6 versus 37.8). Second, three measures show that women and men experienced similar career moves, making about 2.6 role moves, moving to a new organization about 78 percent of the time, and demonstrating a skill distance of 42 to 44 percent. And third, two measures show that women ended up in top-paying occupations at a lower rate, with a smaller share (32 versus 46 percent) moving to the top quintile, and a smaller share (3 versus 6 percent) in C-suite positions.
Diverging work experience patterns drive nearly 80 percent of the gender pay gap
The many choices that women and men make over time lead to career arcs of decidedly different shapes. There are almost as many career trajectories as there are people in our sample. But looking at aggregate views, a few patterns stand out. While women earn more undergraduate and advanced degrees and start out strong, their career trajectories generally are flatter than men’s over time. Meanwhile, regardless of where men start out, they are more likely on average to climb into jobs that are more highly valued in the labor market.
Other examples also illustrate this trend. In the sidebar, we present two occupations currently dominated by women—nurses and office support—and another two similar to tech with male majorities—managers and production workers. Two of these are growing, as tech is—nurses and managers—and two are shrinking—office support and production workers. (See sidebar “Diverging career trajectories among managers, nurses, office support, and production workers.”)
Fewer women are moving into occupations that are projected to grow, but some employers are altering this trend
The mix of occupations needed by America’s economy is evolving. Demand for workers in some fields—notably, healthcare, technology, and management—is expected to grow through 2030 as adoption of automation and AI technologies accelerates, while some roles in office support and production work will disappear in aggregate by then, according to previous MGI research. Millions of US workers will likely need to transition out of “shrinking” fields of work into “growing” ones.
Drawing from the P+P Winner advantages observed in our study samples, some broad ideas stand out that could be useful to other employers. P+P Winners cultivate internal mobility opportunities that can build skills and retain talent. They also target training and apprenticeship programs, especially for midcareer talent. Other evidence documents the promise in these approaches. For example, skill-enhancing opportunities within organizations have increased employee satisfaction and retention. According to LinkedIn’s Global Talent Trends 2020 research, employees tend to remain at a company 41 percent longer if the company regularly promotes from within. And a recent Gallup survey suggests that midlevel and mid-tenure employees, who constitute the majority in most organizations, would benefit from targeted training and development programs. As labor markets remain tight amid demographic shifts, employers should keep in mind that workers will have more options in choosing their work and choosing their employer. Both men and women can, and will, make strategic career moves that help them grow. Each individual’s choice is their own, but employers can do more to position themselves for this future.
A person’s first job is just the first step in a long journey. Work experience matters and defines the quality of workers’ career arcs as well as their pay. Gender pay gaps that grow over time reflect different choices made by men and women in utilizing and building their human capital. Companies can influence those choices by fostering organizational cultures that emphasize role mobility and skill building for all workers, ensuring that both women and men realize more value from their human capital over their careers at the same time that they prepare for the future of work.
