Why Gender Equity in Tech is Critical to the Future of the U.S. Economy

The world is in the midst of the fourth industrial revolution and the pace of change is exponential. This pace of change coupled with the digital economy is fundamentally changing business models: Data is the new currency. This change is increasing the need for tech talent, beyond the traditional tech companies. For instance, 25 percent of Goldman Sachs’ employees are engineers

Tech jobs are some of the fastest growing in the United States. Computer systems design (aka tech) was the fastest growing industry in 2016, with an average sales growth rate of 18 percent, compared to 6.8 percent for all other industries. In fact, software developers were the fifth-fastest growth job in 2016, adding 130,000 new jobs for a total of 1.5MM. As well, two of the top 10 fastest growing professions between 2014 and 2024 are in tech: software developers and computer systems design and the top three hard skills noted by LinkedIn are all tech skills. This increased demand has led unemployment in tech to fall to 2 percent.

Couple these facts with the projection that by 2020 the U.S. will only produce enough graduates to fill 29 percent of computing jobs and we have a crisis coming in tech. These trends led Tim Cook, CEO of Apple to state, “Women are such an important part of the workforce. If STEM-related fields continue to have this low representation of women, then there just will not be enough innovation in the United States. That’s just the simple fact of it.”

Companies need to expand their talent pools if they are going to compete in the fourth industrial revolution and if the U.S. wants to continue to grow its economy, it needs women in tech.

Women’s Roles in Tech: By the Numbers

Women are significantly underrepresented in STEM fields, particularly in technology and engineering, which accounts for 80 percent of the jobs in STEM. The percentage of women in computing roles peaked in 1991 at 36 percent and today women hold only 26 percent of computing jobs (and yet hold 57% of professional jobs).

Meanwhile, 50 percent of women in STEM will eventually leave because of hostile work environments and the quit rate is more than twice as high for women (41 percent) than it is for men (17 percent). Not only are women leaving STEM, but the research also shows they are unable to enter the industry.

In fact, only 19 percent of CIOs at top firms are women, they make up only 6 percent of the board of directors of technology firms and hold only 11 percent of senior leadership positions in tech firms. Only two of the Fortune 500 tech companies have a female CEO: Ginni Rometty of IBM and Safra Catz of Oracle.

In the startup world, only 17 percent of startups had a female founder in 2016 (yet women-owned firms account for 31 percent of all privately held firms in the U.S.). Of the 17%, only 12 percent received venture capital funding.

Why Changing the Numbers Matters

It is well known that having a robust pipeline of female leaders is good for company financials. In the startup world, the numbers are higher. A study by First Round Capital found that startup teams with at least one female founder outperformed all-male teams by 63 percent. Another study by the Kauffman Foundation found that “(w)omen-led private technology companies are more capital-efficient, achieve 35 percent higher return on investment, and, when venture-backed, bring in 12 percent higher revenue than male-owned tech companies”. And, “women entrepreneurs bring in 20% more revenue with 50% less money invested”.

Clearly, changing the number of women in tech is not only the right thing to do — it’s the smart thing to do.

How to Bring Gender Equity to Tech

So, what can companies do to expand their talent pools?

Remove the glass ceiling currently found in tech.

While women represent 37 percent of entry-level talent in software, that number falls to less than half — 17 percent — for the C-Suite. There isn’t just a glass ceiling, it’s a lead ceiling — women aren’t even able to enter, let alone progress to leadership roles. One key action that companies can take is to ensure that promotions are fair and equitable. The research shows that men are promoted at a rate of 21 percent greater than women (the pipeline leaks early). As the organizers of the Google Workers’ Walkout requested, a commitment to end opportunity inequity includes ensuring the process is transparent.

Address salary and equity gaps for women tech.

There is currently a 5-point funding gap for women in tech and they receive only 2 percent of venture dollars. The largest round raised by a women-led startup is just 5.5 percent of the largest round raised by a male-led company ($165MM vs. $3B). However, even if women aren’t founders, they receive significantly less equity (gold in the startup world) which leads to less wealth.

Beyond the lower salary offered to women in the tech world (63 cents on the dollar of men), women significantly lag behind men as equity holders. First, there is a 15-point gap between the percentage of women who are equity-holding employees (35 percent) and the equity they hold (20 percent). On average, women hold only 47 cents on the dollar of their male peers.

If we valued men and women equitably, we could not only stem the tide of women leaving tech, we could ensure an increased rate of women entering the field.

Encourage a more diverse group to pursue tech careers.

The challenge for women starts before they reach the corporate world. It starts in college and before. In 1984, women represented 37 percent of all computer graduates, in 2015 they represented just 18 percent.

Harvey Mudd took on this problem and reversed the trend, increasing their percentage of computer science graduates from 15 percent in 2005 to 55 percent in 2016. How’d they do it? Removed barriers such as accessibility of content and student participation as well as increased the number of women on the faculty. When the work was accessible and women saw themselves represented in leadership, the numbers went up.

Conclusion: Companies need to expand their talent pools if they are going to compete in the fourth industrial revolution. If the U.S. wants to continue to grow its economy, it needs women in tech.