Published in: Research | Aug. 12, 2020
By: Christy Bieber
By 2024, women are expected to account for 47.2% of the labor force. Yet, while women have worked for more than 100 years, it will take almost 40 more before they'll close the gender pay gap and achieve equal pay with men.
The consequences of this disparity are far-reaching and last throughout women's lifetimes.
We consulted a wide variety of governmental and non-governmental sources to learn just how dire the situation is.
The troubling statistics below help to illuminate how extensive and persistent the gender pay gap is, as well as how it affects women, families, and the U.S. and global economies.
The wage gap refers to the difference in the amount of compensation women earn compared with the amount that men earn. There are actually two different wage gap numbers:
While men earn more on average than women using both metrics, the adjusted wage gap is smaller than the unadjusted one.
In the first quarter of 2020, median weekly earnings for women were 80.4% of the median weekly earnings for men.
Among the 115.9 million full-time workers earning wages or a salary in the country, median earnings for women were $857 while median earnings for men totaled $1,066, according to the Bureau of Labor Statistics.
As the chart below shows, this gap has declined substantially since the 1970s and 1980s but has remained steady or increased in recent years.
Sadly, while women had been making substantial progress in closing the wage gap -- largely due to a change in educational status and a shift towards differing roles in the workplace -- that progress has stalled.
In fact, women have yet to earn more than 83% of the median earnings of their male counterparts, despite the passage of laws such as the Lilly Ledbetter Fair Pay Act of 2009. This act strengthened existing fair pay laws by making it easier for women to take legal action in cases of gender inequality in the workplace.
Despite clear data demonstrating that women earn less than men for similar work, there's a persistent belief that the gender pay gap is a myth.
There have been many attempts to provide an alternative explanation for why women are, on average, paid less than men. Some of these include
Those who believe the gender pay gap is a myth often point to adjusted data, which takes some of these other factors into account and shows a narrower gap between men's and women's earnings.
However, simple adjustments for different career preferences or similar factors don't take into account the impact of gender discrimination on opportunities available to women throughout their careers.
For example, research has shown that women ask for raises as often as men but are less likely to receive them. And women -- particularly women of color -- are often steered away from science, technology, engineering, and mathematics fields, which tend to be higher-paying.
In-depth research into pay differentials among women and men with the same educational attainment, as well as between women and men within the same industries, also shows a wage gap among men and women who are similarly situated.
In short, women cannot close the wage gap by making different choices about their careers because those choices are shaped by social forces and because the pay gap exists across all industries and affects women at all levels of educational attainment.
If the gender pay gap isn't a myth, why does it exist? Gender discrimination is the primary cause.
Although Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of gender, women continue to experience exclusionary and damaging behavior in the workplace.
In fact, a poll conducted by Pew Research Center between July and August of 2017 revealed that as many as 4 in 10 working women report experiencing some type of gender discrimination at work.
Earning less than their male counterparts was the most common type of discrimination. But many of the other types of discriminatory behavior, such as being passed over for important assignments or receiving less support from senior leaders, can also affect women's career trajectories and cause them to receive lower wages.
The gender pay gap isn't a new phenomenon in the United States. In fact, we can see a disparity in median weekly earnings dating back to 1979.
There has undoubtedly been an improvement -- women's median earnings were 62% of men's median earnings in 1979 compared with 82% in 2019. But the wage gap has been slow to close and progress has virtually stalled for the past 13 years.
The adjusted wage gap has also been persistent, although it has dropped slowly over time. As Glassdoor's data shows, it dropped from 6.5% in 2011 to 4.6% in 2018. Unfortunately, even this smaller gap may not fully close until 2070.
The United States has one of the highest wage gaps in the developed world, but the gender pay gap is a global problem. As this data from the OECD shows, men's earnings are more than 30% higher than women's in some countries.
While there is a wage gap in every U.S. state, the gap isn't uniform.
In California and New York, the states with the smallest gaps, women earn $0.88 for every dollar that men make. In Louisiana, the state with the largest gap, they only make $0.69 for every dollar.
Let's take a look at how it breaks down by state. The National Partnership for Women and Families calculated that, around the United States, women earn $0.82 for every dollar men earn. That amounts to an annual wage gap of over $10,000 on average.
Here's how that gap looks in every state:
|State||Women's earnings for every dollar men earn|
|District of Columbia||$0.87|
Women have become more educated in recent decades. In fact, since 1982, they've earned the majority of bachelor's degrees, according to the National Center for Education Statistics.
Women have also earned the majority of master's degrees every year since 1987 and the majority of doctorate degrees each year since 2006.
Unfortunately, an increase in education hasn't closed the gender pay gap. The table below shows the wage gap at different levels of educational attainment. The data is based on median earnings in 2017 of men and women aged 25 and older.
|Metric||Less than high school gradues||High school graduates||Some college or associate's degree||Bachelor's degree||Graduate or professional degree|
|Median earnings among men||$27,219||$36,134||$43,685||$65,700||$88,708|
|Median earnings among women||$17,391||$24,159||$30,512||$45,233||$60,691|
|Women's earnings as percentage of men's||64%||67%||70%||69%||68%|
The U.S. Census Bureau looked at this information in a different way. It split people into two groups: one group has earned a bachelor's degree or higher, and the other has no bachelor's degree at all. When comparing women with a bachelor’s degree or higher to women with no bachelor's degree, women with more education face a bigger wage gap.
Researchers from Georgetown University took the Census data one step further, analyzing the gap in earnings over time for women at all education levels. Women with master's degrees are the only group that hasn't experienced a narrowing of the wage gap.
In other words, the most educated women have done the worst in terms of achieving pay.
One possible reason that education results in a larger wage disparity is that women with advanced degrees are younger than men on average. This means they've had less time in the workforce to raise their salaries and develop relevant experience that boosts earnings.
There is reason for hope, though, as data from Pew Polls shows that women's earnings in high-skill jobs are increasing more rapidly than the earnings of their male counterparts.
Women now hold the majority of jobs that require social and fundamental skills and an increasing number of women have moved into jobs requiring substantial analytical skills.
With the gender gap narrower in certain high-skilled jobs, the acquisition of specific career skills may be key to further narrowing the gender wage gap.
Another possible explanation put forth for why education hasn't fully closed the wage gap is that women tend to choose college majors that lead to less lucrative career fields.
Data from Georgetown University shows that, while more women have entered traditionally male-dominated (and higher-paying) fields, some areas of study still remain largely segregated.
However, even when women choose majors that should result in more lucrative careers, such as business or engineering, this still doesn't lead to equal pay.
In fact, Georgetown's research also showed that the wage gap is largest in some of the highest-paying fields, with men receiving a 40% earnings premium in business and a 25% premium in computers, statistics, and mathematics.
While all women experience a wage gap, most minority women are disproportionately affected, receiving an even smaller wage relative to white men than white or Asian women.
The chart below shows the wage gap among women with different racial backgrounds compared with white, non-Hispanic men.
|Race/ethnicity||Pay per dollar paid to white, non-Hispanic men||Difference in median annual pay compared to white, non-Hispanic men|
|Native American women||$0.57||$25,884|
Equal Pay Day symbolizes how long women have to work into the next year to make what their male counterparts earned in a single year.
For example, in order to equal a man's salary earned between Jan. 1, 2019 and Dec. 31, 2019, a Latina woman would have to work from Jan. 1, 2019 to Oct. 29, 2020. Here's how far women have to work into this year to earn what the average man made last year.
|Race/ethnicity||Equal Pay Day|
|Latina women||October 29, 2020|
|Native American women||October 1, 2020|
|Black women||August 13, 2020|
|Asian women||February 11, 2020|
A common explanation for the gender pay gap is that women earn less than men because they devote more time to raising children.
However, data from the Bureau of Labor Statistics reveals that a gender pay gap exists regardless of family status.
Admittedly, the gap is smaller when comparing men and women who are unmarried or with no spouse present and no children under 18. But it doesn't disappear entirely.
|Metric||Married with children under 18||Married with no children under 18||Unmarried or no spouse present with children under 18||Unmarried or no spouse present with no children under 18|
|Women's median weekly earnings||$887||$842||$628||$717|
|Men's median weekly earnings||$1,120||$1,076||$762||$761|
|Women's earnings as percentage of men’s||79%||78%||82%||94%|
However, while the motherhood penalty cannot explain the wage gap, the wage disparity between mothers and fathers is larger than the overall wage gap.
Mothers working full-time outside the home are paid $0.71 per each dollar paid to fathers. This disparity in pay between mothers and fathers also exists at every education level.
The gender pay gap has a profound impact on women. Wage disparities likely contribute to the following facts:
The gender pay gap is likely a major contributing factor to higher rates of female poverty across all age groups. Poverty levels are especially high among female-headed households.
Median income measurements show a similar trend.
The Institute for Women’s Policy Research estimates poverty rates among all working women would be cut in half if the gender pay gap was eliminated. In fact, they would fall by more than half in 36 states.
The gender pay gap has also resulted in women receiving less in Social Security benefits than men. Social Security benefits are based on inflation-adjusted lifetime earnings -- so earning less means getting lower Social Security payments.
In 2017, the average Social Security income received by women 65 and older was $14,353 compared with $18,041 for men, according to the Social Security Administration.
Women are also more likely to work part-time jobs that don't provide access to retirement savings. In addition, they're more likely to take time off of work to take care of aging and ill family members. The fact that they live, on average, three years longer than men doesn't help, either.
Fewer savings and more years spending those savings mean women face a tough time in retirement.
Unfortunately, the gender pay gap isn't the only way that women experience systemic disadvantages.
More fathers than mothers are able to remain in the labor force after having children. And while this is sometimes because women choose to stay home, in others it's because families cannot afford the childcare costs associated with having two working parents.
It's often the mother who must give up her job for this reason.
In fact, according to Gallup polls, 34% of stay-at-home mothers described earning enough to pay for childcare as a "major factor" in their decision to leave the workforce.
The COVID-19 pandemic has caused unemployment levels in the United States and around the world to skyrocket. But the pandemic hasn't affected men and women equally when it comes to unemployment.
Dr. Elizabeth Paulin, an associate economics professor at La Salle University, told KYW News Radio that the unemployment rate among men jumped to 9.7%, but women saw an increase to 12.6%.
Why the discrepancy?
Because the sectors most affected by the pandemic are ones that are largely female-dominated. Leisure and hospitality fields lost 40% of their jobs between February and May, said Paulin. And those industries largely employ women.
Women can't eliminate the gender pay gap alone -- it requires systemic change. Unfortunately, that change may be slow to come. Just 45% of Americans responding to a Pew poll believe that equal pay for men and women should be part of a society where both genders have equal rights.
However, a number of states throughout the U.S. have tried various approaches to eliminate the gender wage gap, including:
Paid leave could also help close the gender wage gap, both by enabling more women to remain in the labor force after having children and by encouraging fathers to take time off to care for children.
When men take longer paternity leave, studies have shown they become more involved in caregiving, enabling women to have more time to further their careers.
Finally, shareholder engagement could be instrumental in encouraging companies to be proactive in solving the wage gap.
Arunja Capital, for example, reported that 10 different investor groups have engaged more than 64 companies through shareholder dialogues and proposals over the past five years -- and their advocacy has helped to reduce the wage gap at some major corporations.
Ultimately, however, true change will come only when the public, private, and social sectors join forces to make women's equality a priority. Change is worth the effort, not just to help women, but to help the world's economy as a whole.
In fact, the McKinsey Global Institute found that advancing women's equality could add as much as $12 trillion to the global gross domestic product by 2025.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.