Every year, we’re reminded of how men in America not only receive higher pay on average in, but also tend dominate the ranks of the richest. Women are just 12 percent of Forbes’s list of 400 wealthiest Americans (and most of them are heiresses). Among Fortune 500 companies this year, there are only 24 female CEOs.
It’s a depressing stat, a sign of how difficult it is for women to make it to the very top of the income heap. But for all the debate about the glass ceiling, few facts have been established about the number who break through.
Only when economists Fatih Guvenen, Greg Kaplan and Jae Song set out to investigate the matter did they realize how little it had been studied. “We didn’t even know the basic number,” said Kaplan, an assistant professor at Princeton. “How many females are in the top 1 percent?”
Using data from the Social Security Administration, which is based on tax returns, the researchers have for the first time given us a good look at the trends behind the presence of women among the nation’s top earners. These are the key points of their new working paper, and the key illustrations:
1. More and more, women are breaking into the top 1 percent — but not the top 0.1 percent.
The paper’s authors analyzed two tiers of high earners. First, there is the top 0.1 percent — the tippity-top earners — who in 2012 were making more than $1 million or so a year. Then there are the remaining one-percenters, who in 2012 were making $291,000 to $1 million.
High-earning women are still rare in America’s workforce, but the situation was much worse just a couple of decades ago. In the past 30 years, women went from 1.9 percent of tippity-top earners to 10 percent. Among the remaining one-percenters, women increased their presence from 3.3 percent to 17 percent.
Recently, though, the trend has stalled among tippity-top earners: From 2000 onward, the share of women been stuck at around 10 percent. Call it the glass penthouse ceiling.
Even as more women are becoming one-percenters, the barrier to the top 0.1 percent has barely budged in the last decade. The authors don’t know why this is happening, but the recession may have played a role. Most of these inroads, as we will see, have been made by newer generations of women. The economic crisis may have slowed down the promotion process for them.
2. It’s become more likely for women to stay on top after they make it.
Top earners do not always stay top earners, but it used to be that men were much more likely to hang on to their spots in the upper income ranks. The researchers call this the paper floor: Women in the past who made it to the top were seldom there for long.
In the early 1980s, over half of the women in the top 0.1 percent fell into the bottom 99 percent the next year. In contrast, only 20 percent of their male counterparts met the same fate. These days, the gender gap has largely closed. Men and women are almost as likely to stay in the top 0.1 percent.
3. The rise of the financial sector is not why women are moving into the 1 percent.
Thirty years ago, people working in the health sector dominated the top of the income distribution. But the doctors have been displaced. These days, 31 percent of tippity-top earners come from the finance or insurance industries.
The rise of the finance paycheck, though, is not responsible for getting more women into the top 0.1 percent. Across all industries, women have been breaking the glass ceiling. Some of the more female-friendly industries are focused on retail trade and nondurable manufacturing — making things like chemicals, food, and clothing.
Kaplan also provided us with data on how the industries have evolved over time. These charts show what percentage of top earners in each industry are women. Among tippity-top earners, health workers have seen some of the least growth in gender equity, whereas lawyers have seen some of the most. In medicine, men still dominate the highest-paying specialties like orthopedic or neurological surgery, which explains some of the gender gap.
4. Gender equity is getting better for younger workers.
Because the researchers could follow people over time, they discovered that most of the increases in gender equity came from younger people entering the workforce. These charts plot the representation of women among top earners for different birth cohorts.
It’s a bit tricky to explain, so an example here might help. In 1983, people born in 1947-1951 were between the ages of 32-36. Just looking at those people in that year, about 4 percent of tippity-top earners were women. By 2003, these people were between the ages of 52-56, and about 7 percent of tippity-top earners were women.
These charts show that people born in successive years tend to experience more gender equity among top earners. The difference between generations is bigger than the differences that a single generation sees over the course of its collective lifetimes.