CURATED READS ON GEN Z IN THE WORKPLACE

Welcome to the latest edition of Mind the Gap. We hope you find our perspectives useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel

first up

There could be more to the gender pay gap than you might think.

A new McKinsey Global Institute report by McKinsey Senior Partner Kweilin Ellingrud and coauthors finds that differences in work experience account for 80 percent of the disparity between men’s and women’s pay. This means that over a 30-year career, a woman could make nearly half a million dollars less than a man would.

It may seem obvious that different work experiences lead to divergent earnings. But what is less clear are the factors that contribute to these differences in experiences in the first place—especially when you consider that women graduate from college at higher rates than men and change jobs at the same rate.

According to the report, women are more likely than men to move into lower-paying roles and to work fewer cumulative years. This is because women tend to take longer or more frequent career breaks, have a higher rate of part-time roles, or work fewer hours. And while women are just as willing as men to enter unfamiliar career territory—which is a good thing for their long-term earnings—men are still more likely to move into jobs with higher average pay. (To be sure, the report is based largely on averages, with variances apparent across different occupations and education levels, and is skewed toward respondents who work in typical office jobs.)

Despite efforts to decrease the gender pay gap at the institutional level, the research suggests this gap could persist. By 2030, a higher proportion of men will work in growing fields—such as STEM—compared with women, who are overrepresented in “shrinking” fields, such as office and administrative support. And growing fields equals higher pay.

Companies have an important role to play in creating opportunities for all employees to build skills, which leads to better job opportunities overall. In the report, Ellingrud and coauthors refer to the companies that do this well as “people + performance winners,” which means they demonstrate exceptional financial performance and increase the lifetime earnings of both their men and women employees.

For their part, Gen Z women can make savvy career moves that shrink the pay gap for themselves. Whether they are still looking for their first job or are in the early years of their career, there are five actions that Gen Z women (and men!) should keep in mind, based on the newly published McKinsey book, The Broken Rung: When the Career Ladder Breaks for Women—and How They Can Succeed in Spite of It (which, coincidentally, published today):

As the authors of The Broken Rung, Ellingrud and Senior Partners Lareina Yee and María del Mar Martínez, put it: “Ultimately, you are in control of where your career is going.” 

VISUALIZE IT

Prioritizing employee health is good for business, as high well-being scores are linked to stock performance.

WAIT, DON’T SCROLL

Adopt-a-bot. A trillion dollars later, is the so-called AI revolution real?

From the front line. Companies that shift their POV on frontline talent from operating cost to investment opportunity stand to gain a competitive edge.

Collection of contributions. In the latest edition of McKinsey on Lives & Legacies, learn about a cable TV pioneer, the woman who won a Grammy at age 95, and the youngest of the original Freedom Riders.

NOT US; STILL GREAT

Club Zed. For Gen Z, wellness clubs are the new country clubs. [Vogue]

Meme-etary policy. Central banks around the world are using social media to reach younger generations. Is it cringe or cool? [Bloomberg]

CROSSWORD

—Edited by Alexandra Mondalek, editor, New York