High tax rates discourage women from pursuing promotions?
Sheryl Sandberg is getting people excited about her new book, Lean In. It seems as though this would be a good time to add to the “Aid to Evaluating Your Accomplishments” page (hit reload a few times to see the names change). Most of us would be happy either to (1) care for an infant child, (2) run one of the world’s most valuable companies, or (3) be the author of a bestselling book. Sandberg is doing all three simultaneously.
Sandberg’s life sounds pretty good but not every female executive can rise to such levels; there simply aren’t very many jobs as good as being Facebook COO. The typical female (or male) executive can expect to end up somewhere in the middle of a pyramid.
The men that I know seem to seek promotions uncritically. They don’t need a much larger salary in order to take on a larger responsibility. They’re happy to go from “Director” to “Managing Director” or “VP” to “Senior VP”. As Napoleon said, in reference to medals, “It is with baubles that men are led”.
Some women friends though, tell a different story. One who lives in San Francisco is typical. She earns a very comfortable salary, more than $200,000 per year, managing a small team. She was offered a promotion recently that would have paid her about $9000 per year additional. She cited federal income taxes, California state income taxes (among the highest in the nation at up to 13.3 percent), and an additional San Francisco city payroll tax in calculating that at most she would be able to spend about half of the additional money, netting perhaps $4500 per year. She decided that it wouldn’t be worth it because the bigger job would involve more hours of work and more travel time. Her hourly after-tax wage would actually have fallen. Other women talk about being bored to death watching PowerPoints in endless meetings. The higher up in the pyramid, the more time spent looking at PowerPoints and the less time doing anything productive and therefore satisfying. Asked about the value of titles, a female MBA said “I care about the hours that I have to work and the salary that I get paid. They could call me ‘secretary’ and I would be just as happy.”
It is far from obvious that it is rational to want to climb a corporate hierarchy. There are a lot of good jobs near the bottom of the pyramid for talented people. One can get paid $250,000 per year without having to manage anyone. If you don’t manage anyone you can work flexible hours and not lose sleep at night over whether or not a subordinate will complete an assigned task. The first step into management brings a radical reduction in quality of life and, typically, only a small raise. Being a COO or CEO is great (and being fired from a CEO job is even better; Robert Nardelli got paid $210 million to stop working at Home Depot) but being a middle manager is not necessarily a great job. As there are thousands of middle management jobs for every CEO or COO job the probability that a career in management will lead to one of those great jobs is tiny.
Sandberg and others posit complex reasons for women failing to claw their way slightly higher in management pyramids. Perhaps part of the answer that women, on average, do a more rational cost/benefit analysis.
Related: http://philip.greenspun.com/careers/women-in-science
[Note that the same can be said about programming jobs, albeit typically at lower wages than the ones above. To be a programmer can be heaven. To manage programmers is often hell. Why go from heaven to hell for a 15 percent raise that, after taxes, will have only a tiny effect on one’s lifestyle? If money is that important, why not do a little consulting on the side instead?]
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