The gender pay gap is a global problem that affects millions of women around the world. It refers to the difference between the average earnings of men and women who are working, regardless of their qualifications, experience, or job type. According to the World Economic Forum, women earn on average just 68% of what men earn for the same work, and in some countries, this gap is even wider. [1]
Not only the gender pay gap is a matter of fairness and equality, but also a matter of economic and social development. It reduces women’s income potential and purchasing power, limits their access to credit and savings, increases their vulnerability to poverty and debt, and affects their retirement security. It also undermines their autonomy and empowerment, as well as their participation and representation in decision-making processes at all levels.
It is no surprise that most people would expect that a developed and prosperous country like the U.S. would have made significant progress in closing the gender pay gap over the years. However, this is not the case. In fact, according to reports; the US has been lagging behind many other countries in terms of gender pay equity and has seen little change in the past 20 years. In this article, we will examine how the U.S. fares in terms of gender pay equity, what are the main drivers behind the gap, what are the likely scenarios for the future, and what are some actionable solutions for employers and businesses to address this issue.
Measuring the Gender Pay Gap
The gender pay gap is commonly measured by comparing the average gross hourly earnings of men and women across all jobs and industries. This is also known as the unadjusted or raw gender pay gap, as it does not account for differences in factors such as education, experience, occupation, sector, or hours worked. The unadjusted gender pay gap is useful for capturing the overall inequality in earnings between men and women in the labor market.
Another way to measure the gender pay gap is by comparing the average earnings of men and women who have the same job title, seniority level, and hours worked. This is also known as the controlled or adjusted gender pay gap, as it controls for differences in individual characteristics that may affect pay levels. The controlled gender pay gap is useful for assessing whether men and women are paid equally for equal work within a given job or industry.
Both measures of the gender pay gap are important and complementary, as they reveal different aspects of the problem. The unadjusted gender pay gap reflects not only discrimination or bias in pay decisions, but also structural factors that limit women’s access to higher-paying jobs and industries, such as occupational segregation, educational attainment, work-life balance, career progression, and social norms. The controlled gender pay gap reflects whether there is direct or indirect discrimination or bias in pay decisions within a given job or industry, such as unequal performance evaluations, salary negotiations, promotions, or bonuses.
Effects of Gender Pay Gap
The gender pay gap has serious economic and social consequences for women and their families. It reduces their income potential and purchasing power, limits their access to credit and savings, increases their vulnerability to poverty and debt, and affects their retirement security.
- It takes women much longer to catch up with men’s earnings: A 20-year-old woman just starting full-time work stands to lose $407,760 over a 40-year career compared to her male counterpart. This means that she would have to work an additional 10 years to catch up to what he earned by age 60. [2]
- Women’s ability to save for retirement: Women aged 65 and older have an average annual income that is $9,374 less than men of the same age. This translates into a cumulative loss of $187,480 over a 20-year retirement period. [3]
- Children’s well-being and education: According to a report by UNICEF, children living in households where women are paid less than men are more likely to experience poverty, malnutrition, poor health care, and lower educational outcomes. The report also estimates that closing the gender pay gap could lift 50 million children out of poverty by 2030. [3]
- Hampers economic growth and development: A report by McKinsey Global Institute (MGI) revealed that advancing women’s equality could add $12 trillion to global GDP by 2025. The report also identifies the U.S. as one of the countries with the largest potential for economic gains from gender parity, with a potential increase of 19% in GDP by 2025. [4]
Gender Pay Gap in the US
The U.S. is the largest economy in the world, yet it still struggles with a persistent and significant gender pay gap. According to the Pew Research Center, women earned an average of 82% of what men earned in 2022, based on the median hourly earnings of both full- and part-time workers. This means that for every dollar earned by men, women earned only 82 cents. This gap has remained relatively stable over the past 20 years or so, with only a slight improvement from 80% in 2002.
The gender pay gap in the U.S. varies by age, race, education, occupation, and location. For example, among workers ages 25 to 34, women earned 92% of what men earned in 2022, a smaller gap than among all workers. However, among older workers, the gap widens considerably. Women age 55 to 64 earned only 75% of what men earned in the same age group. [2]
Similarly, the gender pay gap is larger for women of color than for white women. In 2021, white women earned 79% of what white men earned, while black women earned only 58%, Hispanic women earned only 54%, and Native American women earned only 60%. On the other hand, Asian women were the only group that earned more than white women, at 87%, but still less than white men. [5]
The gender pay gap in the U.S. has serious economic and social consequences for women and their families. It reduces their income potential and purchasing power, limits their access to credit and savings, increases their vulnerability to poverty and debt, and affects their retirement security. It also undermines their autonomy and empowerment, as well as their participation and representation in decision-making processes at all levels.
To address gender pay gap in the U.S., various policies and initiatives have been proposed or implemented at the federal, state, and local levels. These include enforcing equal pay laws and anti-discrimination laws, promoting pay transparency and accountability, supporting paid family leave and childcare programs, encouraging flexible work arrangements and career development opportunities for women, raising the minimum wage, and strengthening collective bargaining rights for workers. However, more action is needed to ensure that women are paid fairly and equally for their work and contribution to society.
Gender Pay Gap Issue in the Near Future
What will the gender pay gap look like in the near future? Will it narrow or widen? Will it vary by sector or region? Will it affect different groups of women differently? These are some of the questions that researchers and policymakers are trying to answer, using various methods and scenarios.
One way to project the future of the gender pay gap is to use historical trends and current data to estimate how long it will take to close the gap at the current rate of progress. According to Pew estimation, it will take another 39 years, or until 2060, for women to reach pay parity with men in the U.S. [6] However, this estimate assumes that the gap will continue to narrow at a steady pace, which may not be realistic given the fluctuations and stagnations observed in the past.
Another way to project the future of the gender pay gap is to use simulations and models that incorporate various factors and assumptions that could affect the gap, such as changes in labor force participation, education, occupation, hours worked, family responsibilities, and discrimination. According to this approach, the Institute for Women’s Policy Research (IWPR) estimates that it will take until 2059 for women to reach pay parity with men in the U.S., but this varies by state and race/ethnicity. For example, women in Florida are projected to reach pay parity by 2038, while women in Wyoming will have to wait until 2153. Similarly, white women are projected to reach pay parity by 2055, while Hispanic women will have to wait until 2224. [7]
These different approaches show that the future of the gender pay gap is uncertain and depends on various factors and choices that could either accelerate or hinder progress toward gender equality. However, they also show that the gender pay gap is unlikely to disappear anytime soon without concerted and sustained efforts from all stakeholders, including governments, employers, workers, civil society, and individuals. Therefore, it is imperative to continue monitoring and measuring the gender pay gap, as well as implementing effective policies and practices that can reduce it.
Actionable Solutions for Gender Pay Gap
1. Promote Pay Transparency and Accountability
One of the main challenges in tackling the gender pay gap is the lack of reliable and comparable data on wages and salaries across sectors, occupations, and levels. Pay transparency can help to expose and correct pay disparities, as well as to raise awareness and encourage dialogue among employers and employees.
Pay transparency can be achieved through various means, such as requiring employers to report and publish their pay data by gender, conducting regular pay audits and reviews, establishing equal pay certification systems, and creating online platforms and tools that allow workers to compare their pay with others.
2. Enforce Equal Pay Laws and Anti-Discrimination Laws
Many countries have laws that prohibit discrimination on the basis of sex and mandate equal pay for equal work or work of equal value. However, these laws are often poorly implemented or enforced, leaving many women without effective legal recourse or protection. To ensure that women have access to justice and redress, governments need to strengthen their legal frameworks and institutions, provide adequate resources and training for law enforcement agencies and judiciary bodies, raise awareness and educate workers and employers about their rights and obligations, and facilitate access to legal aid and support services for victims of discrimination.
3. Support Paid Family Leave and Childcare Programs
Among many reasons why women earn less than men, one of them is because they often take time off or reduce their hours to care for children or other family members. This can affect their career progression, earnings potential and retirement savings. To address this issue, governments need to provide adequate and affordable paid family leave and childcare programs that enable both women and men to balance their work and family responsibilities, without compromising their income or career opportunities. Such programs can also benefit employers by reducing employee turnover, absenteeism and stress, as well as increasing productivity, loyalty and diversity.
4. Encourage Flexible Work Arrangements and Career Development Opportunities for Women
Another reason why women earn less than men is that they often work in lower-paying jobs and industries than men, due to factors such as occupational segregation, educational attainment,2 and work experience. To address this issue, employers need to offer flexible work arrangements that allow women to choose when, where and how they work, according to their preferences and needs.
Flexible work arrangements can include teleworking, part-time work, job sharing, compressed work weeks, flexible hours and schedules. Employers also need to provide career development opportunities for women, such as mentoring, coaching, training, education, networking and leadership programs that can help them advance their skills, knowledge, and potential.
Conclusion
The gender pay gap is a persistent and pervasive issue that affects millions of women around the world. It has negative impacts on women’s income, wealth, health, education, career opportunities, and retirement security. It also hampers the growth and competitiveness of businesses and economies, as it wastes the potential and talent of half of the population.
The US is one of the countries with a high level of gender pay gap, despite being a large and advanced economy. The gap varies widely across occupations, industries, sectors, age groups, education levels, and races/ethnicities. The gap is influenced by both direct and indirect discrimination or bias in pay decisions, as well as structural factors that limit women’s access to higher-paying jobs and industries.
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Citations:
1. 52 Gender Pay Gap Statistics In 2023 – Forbes Advisor
2. Gender pay gap remained stable over past 20 years in US | Pew Research Center
3. Global Gender Gap Report 2022 | World Economic Forum (weforum.org)
4. How advancing women’s equality can add $12 trillion to global growth | McKinsey
5. The U.S. Gender Pay Gap Has Barely Budged in 20 Years | Kiplinger
6. The Gender Wage Gap Endures in the U.S. | Pew Research Center
7. How big is the US gender pay gap? | World Economic Forum (weforum.org)
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