64 Cents on the Dollar: Inequity in Female Software Engineering Data

It has been published that females make 82 cents on the dollar to their male counterparts. The Pave Data Lab crunched the numbers and confirmed this troubling finding. However, with a little more crunching, we discovered a severely more troubling finding; for equity grants, female software engineers only get 64 cents on the dollar(!).

We want to call out that we are intentionally using sex (female / male) to describe this equity gap. While pay gaps and other forms of inequity generally pertain to gender, alongside other non-binary informants of one's social location, our source data uses sex and we made the decision to stay as close to that representation as possible.

What we know about compensation inequity. 

82 cents. 

That’s what studies to-date show the average female is paid for every dollar paid to the average male. Same job, same company, but lower compensation.

Pay discrepancy is a well-documented phenomenon with many explanations. 

Promotional favoritism, negotiating tendencies, and outright bias are just a few factors contributing to this compensation inequality. 

But the complexity and lack of transparency around the other inputs into “Total Compensation”, bonuses, benefits, and equity, only add to the problem. 

Since the earliest days of Silicon Valley, employee equity has been heralded as the pot of gold at the end of the startup rainbow. Employees accept offers at a fraction of the salary they could get at larger companies in pursuit of ownership and an eventual payday. 

But unlike cold hard cash, equity is inherently much more difficult to understand.‍

Females get 64 cents on the dollar in their equity grants.

Equity data for software engineers is far from equal. It’s actually further from equal than cash compensation. The average equity value issued to a female engineer is 64% of that granted to their male counterpart.

We looked at the initial grant value for non-founder employees within a software engineering function, inclusive of all levels across the organization. We only included data points where individuals self-reported their sex within their systems. The data set spans the United States but is highly concentrated in New York and San Francisco.

And this is just the initial equity grant value. As equity represents a share of ownership in the company, these gaps widen as valuations increase. Companies are more able to close the gap on cash than they are on equity as they mature.

What's going on and what should we do about it? 

This data is a reminder that total compensation goes well beyond cash. Total compensation is reflective of salary, bonuses, equity, healthcare, titles, and any other benefits given to your employees.

An employee’s ability to assess fairness in compensation depends on the transparency of their offer. Given the obscured value and natural complexity of equity, bias is amplified in cases of equity offers.

Here are a few steps companies take to address the reality of pay inequity within their company:

• Forming a compensation philosophy. What percentile range do you pay for employee cash comp? Do you adjust for cost of living by employee location? A defined framework helps move decisions of compensation away from gut instinct and towards a consistent process.
• Using market data. Get access to a benchmarking platform and build offers in a consistent way. Step one is defining a standard that won’t be broken. 
• Conducting proactive compensation reviews. Compensation debt is not unlike tech debt and is only harder to fix as time goes on. Even with a tight offer process, differences in negotiating preference lead to unequal outcomes.
  

This pay gap should be a relic of times behind us. 

Unfortunately, the equity data clearly paints a different story. 

But there are many amazing companies with compensation philosophies that address pay disparities at the core. And our goal is to enable every company to make decisions based on data and merit, not bias.

So this won’t be the last time we highlight the pay gaps for underrepresented groups. Email us at PDL@pave.com with your ideas on what we should cover next. 

For additional reading on this important topic, we've included some links to other resources to learn more:

• The State of the Gender Pay Gap in 2021
• 2020: A Study Analyzing Equity Distribution By Gender, Race & Ethnicity, & Geography
• Evaluating Progress Toward Pay Equity and Inclusion