Compensation a problem in Austin's tech, KVUE study finds

An anonymous survey of 464 women in Austin's tech industry reveals that more than 60 percent of them said they are compensated less than men.

Author: Shawna Reding

Walk through WP Engine’s offices smack in the middle of Downtown Austin, and you’ll find yourself in the sort of paradise you read about when media profiles up-and-coming tech companies.

Born in Austin, the WordPress website server-hosting company has some pretty content workers.

Employees at the Austin location enjoy views of the city skyline, catered lunches, open work spaces, happy hours and unlimited paid time off.

Another perk of the company is the focus on equality. 

The company said everyone has a pretty good idea what everyone else’s paycheck says and everyone is paid the same amount for the same work -- no matter your gender, the color of your skin, your sexual orientation or your religious views.

But that’s not the case for most of the Austin-area women who responded to KVUE's tech survey. About 63 percent of women said they make less than men while almost 30 percent of women said they are compensated the same as their male peers.

KVUE's survey was based on a nearly-identical one conducted in California's Silicon Valley after Michele Madansky, one of the coordinators of that survey, gave KVUE permission to recreate it. More than 700 people -- 464 women and 254 men -- of varying positions and levels in Austin's tech industry anonymously responded to the survey.

In Austin, for every one woman working in tech, there are three men working in tech.

The elephant in ATX: Sexual harassment rampant in Austin's tech, KVUE study finds

We can’t compare KVUE's results regarding compensation to the Elephant in the Valley survey, because Madansky said they didn’t ask about compensation. But you’ve probably read this headline countless times -- just phrased slightly differently: Women generally make less than their male peers. 

A report from Glassdoor, a website where current and former employees anonymously review companies and management, found that the largest pay gap was between certain types of computer programmers. Men made nearly 30 percent more than women counterparts on average. 

In 2015, men working full time across all industries typically were paid 20 percent more than women. In that same year, Texas ranked a little lower that the national average – the median annual earnings for a woman working full time was $36,934. That’s 21 percent lower than a man’s pay.

Now you’re probably wondering how these women in KVUE's survey know how their pay compares to that of their peers. After all, some of the women surveyed said this very thing – transparency of pay -- was a problem.

Well, the answer is simple.

They talk.

“The truth of the matter is people always talk about their salaries and especially big companies can try to make a secret of things, but the truth of the matter is people talk,” Jean Anne Booth, the CEO of an early stage tech company called UnaliWear said. “You’re asking people to not be human. And we’re all human. Even if we’re nerds.”

The results of those conversations can be unpleasant.

“Not knowing what others make is a huge roadblock. Twice now through the grapevine I've finally found out that I was making far less and I had to go fight to be equal,” said a technical architect at a mid-sized company in Austin.

Some see the inequality because of their role with the company.

“I am in HR, I see everyone's compensation and know 100 percent that I am compensated less than my male peers and that most women in different departments are paid less than their male counterparts,” a woman at a mid-sized company said.

Jayne Frasure, a senior HR specialist at Austin HR – a firm that services small to mid-size businesses throughout Austin and Texas – said that pay inequity is wrong and outdated.

“It’s a very old fashioned trait that women have a man to back them up and the man brings home all the money so a woman is just supplementing the income. That is just more and more not the case,” Frasure said. “Women are independent and not getting married, or maybe the husband is staying home and taking care of the kids and things of that nature. So, equity in pay is absolutely required in our world today.”

She said it also makes for a negative work environment.

“The conversation of pay when it’s out there in the workplace and people are talking amongst themselves -- there does become friction when you see someone is making more money than you are and you’re in the same job,” Frasure said.

Through Women Who Code Austin, women network with other women who are trying to break into the tech industry or who are trying to further their careers in tech. At a meeting once, co-director Sara Ines Calderon said women revealed to each other how much they make. 

“And as result of the discussion, several of us were able to get a raise because we realized we were under the market level,” she said.

Calderon said when these conversations start happening more regularly, women will be compensated more fairly.

What should companies do to ensure equity in pay?

But experts said it shouldn’t just be up to the employee to figure out that they’re under paid. Frasure said organizations must practice transparency in how they set their pay scales.

“In other words, what kind of skill set do you need to have? Is there particular training, number of years of service (required)? What do you need to do to get to a certain pay level?” Frasure said. 

Employers then need to communicate how an employee gets to certain pay rates on that scale.

“… And if people understand how to strive to meet the requirements to make the level of pay that they’re looking for – and it is equitable across men and women – I think that is the best opportunity for any organization to avoid the friction that can come out of a question of compensation,” Frasure said.

If an employer is intentional about being transparent in how much it pays everyone, employees can free up their mind to focus on their work.

It’s in that kind of environment where an employee thrives.

“My current company publishes data to show that both men and women are paid virtually the same,” an engineer at a large company said. “This makes me proud to work here.”

WP Engine strives for that kind of environment as well.

In 2016, the founders signed the White House Equal Pay Pledge along with 50 other companies. That means that WP Engine conducts an annual company-wide gender pay analysis and reviews hiring and promotion processes. WP Engine is also supposed to “identify and promote best practices that will close the wage gap.”

Mary Ellen Dugan, WP Engine’s chief marketing officer, said if an employer is intentional about being transparent in how much it pays everyone, employees can free up their mind to focus on their work.

“If you’re going to foster a diverse culture, and you want a culture that’s focused on your mission, your passion – whatever you’re trying to do – taking away these questions of ambiguity are so important,” Dugan said. “If you can publicly state we have equal pay -- my goodness, that’s just off the table. Everybody knows everybody has equal pay, and then they can concentrate on what’s their next career move.”

Why companies should ensure all employees have equal pay

Even if employers do pay their female employees as much as their male peers, many women in the survey said they are not promoted nearly as much as men. So women said they are missing out on that pay increase that is supposed to come with the promotion.

“I am compensated for my level, but I have had a hard time getting my level corrected to be the proper placement,” a design lead at a large company said.

One respondent said that inequality comes from different expectations for different genders.

“Men are promoted on their potential to perform a job and women needed to do the job before being promoted (at my former employer),” a designer at a large company said.

In the seven years that Austin-based WP Engine has gone from a startup with several employees to a large tech company with close to 500 employees, 25 percent of them have been promoted. 

“We’re really focused on making sure that if somebody comes in they have the opportunity to grow and to move forward,” Dugan said.

Before we move forward let’s take a step back and look at how women get their foot in the door in the first place and the general state of diversity in Austin’s tech industry.

The problem of diversity

Calderon with Women Who Code is focused on getting women into tech companies. She said more and more women are getting prepared for the tech industry through code bootcamps as opposed to getting computer science degrees at universities. Code bootcamps teach basic programming skills to students who typically don’t have previous experience and charge $11,000 on average for a 10-week course.  

In 2014, 38 percent of the graduates from over 60 coding bootcamps in the U.S. and Canada were women, Course Report found. In 2012, about 18 percent of computer science degrees were obtained by women, according to the National Science Foundation.

Calderon said that can pose a problem for women.

“You need to make up a lot more years of experience if you come out of a code bootcamp.” Calderon said. “People who are hiring seem to put more stock in computer science degrees. If those who are getting computer science degrees are men, then men are going to be making more money.” 

Fortune Magazine took a look at why women are drawn to bootcamps as opposed to computer science degrees.

Something that Dugan said sets WP Engine apart is that 35 percent of their workforce does not have a college education.

“There’s a huge range of people who have a passion to get into tech, who may not have had an opportunity to go to a university,” Dugan said. “And so one of the things that we’re really proud about is that we’re bringing in people with new ideas that will help us on innovation and help us in service. And then those people are allowing themselves to get new skills and get promoted.”

At WP Engine, of the 474 employees, 26 percent are women. Thirty percent of the non-leadership managerial staff there is female and 55 percent of the executive staff is made up of women. One of those executives there said comparatively, those numbers are good.

“If we look across the technology space, we’re really proud of those numbers there,” Dugan, one of those executives with WP Engine, said. “They’re a good representation of one element of diversity in tech.”

Pinterest is a company that has gone public with its diversity goals and numbers since one of its engineers, Tracy Chou, challenged tech companies in 2013. Chou wanted tech companies to tell the world what percentage of their software engineers were women. The company set a goal of hiring women for 30 percent of its open engineering jobs in 2015, according to Bloomberg. However, only 22 percent of engineers hired with Pinterest in 2016 ended up being women.

Since 2015, $3.8 billion workplace chat startup Slack has gone from 18 percent to 24 percent women engineers, Bloomberg reported.

Ethnic diversity is also a problem. While KVUE surveyed for gender diversity, plenty of respondents mentioned a lack of ethnic diversity in Austin’s tech industry.

One phrase echoed throughout WP Engine  – on T-shirts, printed on walls – is “Diversity attracts diversity.” 

“I think having women leaders in a tech company at the percentage that we do at WP Engine is rare when I look across the entire spectrum of tech, so, I think that is just a signal to the organization the appreciation of diversity just overall,” Dugan said.

To the side of the front desk at WP Engine, which is 30 percent non-white, a large poster is pinned against a wall with a list of values. Once a year, each employee is expected to sign the poster as a commitment to work according to those values. Dugan said this communication of values establishes a strong company culture that brings in diverse employees.

“And so we’re really looking for people who believe in those value sets: To be customer inspired, built to last, do the right thing,” Dugan said, “And we feel like interviewing for that and making sure we have that core set will give us that diverse set across a variety of different measures.”

Other leaders in tech believe diverse employees need to be intentionally sought throughout the hiring process. 

Y-Vonne Hutchinson, a diversity consultant for tech companies and co-founder of Project Include from California who was quoted in a recent Bloomberg article, said companies should not shy away from the idea of affirmative action.

Hutchinson is a black woman whose mother got a federal job partly because of affirmative action.

“Affirmative action gets a lot of blowback, but it was one of the most successful ways of getting people from under-represented groups into jobs and institutions they were excluded from,” Hutchinson told Bloomberg.

But companies need to be careful when it comes to intentionally hiring for diversity, Ruben Cantu of Austin’s LevelUp Institute said.

“A lot of people think that we should just hire people just to fill a quota,” Cantu said.

Hiring for diversity requires much more thought than that, Cantu said.

“That’s like trying to eat healthy and eating broccoli and green beans and not having a well rounded and balanced diet. ‘Well, I filled my quota on vegetables,’” Cantu said. “It has to be, ‘Yes, I have to find diverse thought and I’m going to seek out the best in that space.”

Cantu, a native Austinite born and raised on the east side of the city, started working at Apple after getting his graduate degree from the University of Texas. He said he then “went off to do my own thing.”

“As I got up the proverbial mountain, I said to myself, ‘It’s getting kind of lonely up here,” he said.

Some time later, her discovered how he could try and get some diversity at the top of that mountain. He said that more and more people were asking for career advice. When two young college students approached him and asked him to mentor them, that’s when he decided to create LevelUp Institute, a tech incubator for low-income, first generation college students.

Cantu believes he is crafting entrepreneurs who will eventually go on to create new companies and who will, in the meantime, “be some of the best employees that you could ever hire.”

Cantu, along with other leaders, said companies that don’t strive for diversity are neglecting their bottom line.

“The more diverse background you have the greater innovation opportunities you have to be competitive,” he said. “If you want to make more money, you need to be diverse. Simple, bottom line, period. The studies all point to it.”

They sure do.

Diversity: A cash cow

McKinsey & Company, a global firm with more than 10,000 consultants and nearly 2,000 researchers, found that ethnically diverse companies are 35 percent more likely to financially outperform companies that are lacking in ethnic diversity.

The same goes for companies that are gender diverse.

In that study, companies in the top quartile for gender diversity are 15 percent more likely to outperform companies in the bottom quartile for gender diversity.

According to a study from the Journal of Economics and Management Strategy that used eight years of revenue data and survey results from 1995 to 2002 from a professional-services firm with more than 60 offices in the U.S. and abroad, shifting from an all-male or all-female office to an evenly split office could increase revenue by roughly 41 percent. 

The study also found that while workers are happier in single-sex offices, diversity results in higher levels of productivity.

Researchers from The Peterson Institute for International Economics, a Washington, D.C. think tank, found that companies with at least 30 percent female executives rake in as much as six percentage points more in profits.

So the studies say diversity means profits. But candidates who are not white generally don’t reap the benefits.

Hired – a company that matches candidates with companies – used its data to look into the salaries of tech workers and the hiring market. Hired compared the hire rates and salary rates for software engineering candidates in New York and San Francisco.

The study released in 2017 found that black software engineering candidates are 49 percent more likely to get hired than the average white candidate. The average Latin candidate is 26 percent less likely and the average Asian candidate is 45 percent less likely to get hired than the average white candidate.

Hired noted that “it’s unclear if black candidates are getting more offers because they are more qualified, their preferred salaries are lower, because of diversity initiatives or a combination of those and other factors.”

While black candidates are more likely to get hired as software engineers in New York and San Francisco, their salary offer is significantly lower than that of the average white applicant, the Hired study shows. Black software engineer candidates typically are offered $115,000 and white people are typically offered $125,000.

So, the studies show that if you’re not a white male in the tech world, you’re probably making less. 

Experts said there’s another reason women may miss out on more money.

Women don’t negotiate. And many respondents to our survey were pretty forthright about that.

“I am nervous to ask for a pay raise. If I am too assertive, they might let me go and or (sic) resentment and if I am not assertive enough, they wont give me a raise,” a woman who works in marketing said. “I don't know what to do.”

How to negotiate pay

Experts say the worst that can happen when asking for a raise is that your boss will say, “no.”

“It’s much better to be rejected by the world than to be rejected by yourself,” Jane Park, the founder of Julep Beauty Inc., said at a 2016 South by Southwest panel geared toward women called, “How to Ask For Money.”

Female executives including Park at the panel said that women need to push for higher pay.

According to the Harvard Business Review, men initiate negotiations about four times more often than women. 

“Before giving someone an offer, I say to myself, ‘Well, I’m going to offer this, but I’m really willing to pay (more),’” said Kimberly Bryant, Founder of Black Girls CODE. “Oftentimes women don’t negotiate, and it bothers me so much. And the men we offer jobs to almost always know to negotiate.”

One of the panelists, Indiegogo co-founder Danae Ringelmann, said women excel in interviews with merit-based screening processes such as tests. During interview questions, the panelists said, men tend to exaggerate their qualities while women are more realistic, which oftentimes reflects negatively on them.

Once women do receive that job offer – or decide they want a pay raise within their company – founder of Julep Beauty Inc. founder Jane Park urges women to look toward an unlikely group of people for inspiration.

“A while back I went to a negotiating class. And someone compared good negotiating to how kids negotiate bed time,” Park said. “They’re not bad people. They just know what they want.”

During bed time negotiation, Park said kids never shut a conversation down, never offer an ultimatum, they keep the conversation going and they keep it positive.

“You’re trouble-shooting something together to set up long-term success,” Park said. “A contract is a safe space where you know what the rules are. What I don’t want in my employees is for them to take on a position that isn’t going to set them up for success.”

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