How women can steer toward growing industries and companies

Workplaces are full of talented, educated, and hardworking women. Many are caught off guard when, several years into their careers, they see that they are falling behind their peers, and they can’t put a finger on exactly how or why.

Women, after all, are doing everything they can to prepare themselves for successful careers. As early as kindergarten, girls on average outperform boys across all disciplines, including math. Women in almost all developed countries earn undergraduate and graduate degrees at higher rates on average than men, with better grade point averages.

Yet quite quickly after graduation, many women start losing ground in the workplace. Despite making up 59 percent of college graduates in the United States, women represent only 48 percent of those entering the corporate workforce. And then come the first promotions to management roles: For every 100 men, only 81 women are promoted.

This advancement gap persists and compounds over women’s careers, with lower representation of women at every step of the corporate-leadership ladder. We call this phenomenon the “broken rung.”

The first broken rung of the corporate ladder opens up a gender gap that widens further at every subsequent rung, including senior-leadership positions. It is that first broken rung, however, that affects the entire talent pipeline. Despite initiatives to improve gender parity in the corporate ranks over the past decades, gains have been modest. The largest improvement has been in the C-suite, where women have moved from being one in five top executives to just over one in four reporting to the CEO. But 29 percent in the C-suite is still far from gender parity.

This disparity is not due to a lack of ambition. McKinsey’s Women in the Workplace report, conducted with LeanIn.Org, and other global surveys show that over the past decade, women have consistently shown a similar desire as men to be promoted and hold leadership positions.1 Seventy percent of men and women say they are interested in being promoted to the next level; the level of ambition to be a leader, be promoted, or hold the top job is even higher among women under 30 and women of color. Yet year after year, the data shows that this level of ambition does not come to fruition. Why?

After analyzing job profiles posted online across India, Germany, the United Kingdom, and the United States and using longitudinal data to trace actual career trajectories, we made an intriguing discovery. On average, for men and women, roughly half of their lifetime earnings come from the value they bring to the table when they start their careers, including their natural talents and formal education. The other half of their earnings stem from the value of the skills and experiences gained on the job, or what we call experience capital.

As we reviewed career trajectories of men and women in the United States, it became clear that women are not building the same levels of experience capital as men; they are not amassing the specific skills and experiences on the job that they need to be promoted at equal rates and to maximize their earning potential.

On average, for every ten years that a man is in the workforce, a woman is working for 8.6 years, given that women have the majority of part-time roles, formally work fewer hours, and take more frequent and longer leaves (typically to give birth or take care of children, or to take care of parents or in-laws). In addition, women are more likely to make occupational switches—accepting jobs that are more flexible or less competitive—that decrease their income quintile. Very little of the pay gap is because of initial jobs when men and women start out.

Although skills can be built without changing jobs, they are developed and recognized the most when an individual is promoted to a new role. And so the gender gap in job moves or promotions is a long-hidden driver of the gap between women’s and men’s incomes over the course of their careers.

Companies can take important steps to fix the broken rung by making sure employees are getting equal opportunities for leadership and promotion. But waiting for companies to change is not a strategy. In the meantime, women can take individual action to build their own experience capital.  To start with understand that job change is a constant, research occupations that present opportunities, consider brand-new jobs, turn yourself into a technologist, escape a shrinking industry, explore industries with growth potential, and consider moving to where the jobs are.

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