Mind the Gap

The Gender Wage Gap

The gender wage gap is a measure of pay disparity between men and women. While it can be measured in different ways, the data is clear: women are paid much less relative to men (about 80 cents per dollar).

What is the gender wage gap?

The gender wage gap is a measure of what women are paid relative to men. It is calculated by dividing women’s wages by men’s wages, and this ratio is often expressed as a percent, or in dollar terms. This tells us how much a woman is paid for each dollar paid to a man. This gender pay ratio is often measured for year-round, full-time workers and compares the annual wages of the median “typical” man with that of the median “typical” woman. Measured this way, the current gender pay ratio is 0.796, or, expressed as a percent, it is 79.6 percent (U.S. Census Bureau 2016). In other words, for every dollar a man makes, a woman makes about 80 cents.

The gender wage gap provides a good overview of what is going on with typical women’s earnings relative to men’s. But it does not tell us what the wage gap is between men and women doing similar work, and whether the size of the gap derives in part from differences in education levels, experience levels, and other characteristics of working men and women. To round out our understanding of the disparity between men’s and women’s pay, we also consider “adjusted” measures of the gender wage gap.

Adjusted wage gap estimates control for characteristics such as race and ethnicity, level of education, potential work experience, and geographic division. These estimates are made using average wages rather than median because it requires standard regression techniques. Using data from the federal government’s Current Population Survey Outgoing Rotation Group, or CPS ORG, but making these adjustments, we find that the wage gap grows, with women on average paid 21.7 percent less than men. The unadjusted penalty for the average woman is 17.9 percent. The measured penalty actually increases when accounting for these influences because women workers, on average, have higher levels of education than men.

Women earn less than men at every wage level

How much does the gender pay gap cost women over a lifetime?

The average woman worker loses more than $530,000 over the course of her lifetime because of the gender wage gap, and the average college-educated woman loses even more—nearly $800,000. Woman’s losses will vary significantly based on a variety of factors—including the health of the economy at various points in her life, her education, and duration of periods out of the labor force—but this estimate demonstrates the significance of the cumulative impact.

How does motherhood affect the gender wage gap?

Research has consistently shown that women with children are paid less than women without children and men with or without children. Even after researchers control for variables such as education and experience, they find that mothers are paid approximately 4.6 percent less on an hourly basis than women who are not mothers. Compared with their counterparts 40 years ago, first-time mothers today are older and have more education and work experience; after giving birth, they are less likely to leave the labor force and more likely to return to work quickly. Despite women’s greater experience, education, and attachment to the labor force, the motherhood pay penalty persists.

The Fatherhood Bonus & The Motherhood Penalty
The Wage Penalty for Motherhood

How do women of different races and ethnicities experience the gender wage gap?

When we compare the wages of white women and women of color with wages of white men, white and Asian women fare better than their black and Hispanic counterparts. White non-Hispanic women are paid 81.0 percent and Asian women 89.8 percent, of what non-Hispanic white men make. But the shares are much lower for black and Hispanic women, at 65.3 percent and 57.6 percent, respectively.

Black and Hispanic women experience the biggest pay gaps

How might the gender wage gap affect the retirement security of America’s working women?

According to the U.S. Department of Labor, women’s lower lifetime earnings means that they receive lower Social Security payments and experience fewer opportunities to save for retirement. Average annual Social Security benefits for women are only $13,392, and the annual median income in retirement for women is only $14,000, well below the $19,000 to $29,000 that a single person needs to live in retirement, depending on geographic area.
Because of their care responsibilities, women are more likely to move in and out of the workforce. This weakens their earnings power, and as a result, women have less retirement wealth than men, both in traditional pensions and employer savings accounts such as 401(k)s. In 2010, women’s income from defined-benefit employer pensions was about 33 percent less than men’s.

Women age 65 and older are 80 percent more likely than their male counterparts to be living in poverty. And widowed women are twice as likely as widowed men to be living below the poverty line.

That may be a key reason why elderly women are more likely than elderly men to be economically vulnerable (defined as earning less than twice what they would need to earn to be above the supplemental poverty measure).

Although the pay gap has narrowed, progress has stalled

Over the past three and a half decades, substantial progress has been made to narrow the pay gap. Women’s wages are now significantly closer to men’s, but in recent years, that progress has stalled. From 1979 to the early 1990s, the ratio of women’s median hourly earnings to men’s hourly median earnings grew partly because women made disproportionate gains in education and labor force participation. After that, convergence slowed, and over the past two decades, it has stalled.

Progress in closing the gender pay gap has largely stalled

President Trump has also said that he believes in equal pay for equal work, but during an interview in November 2015, Trump explained:

Here is the problem. If you start getting involved with government on ‘this one gets this pay and this one gets that pay,’ and then you say — ‘Where does it all start?’ Because you could have a woman that’s much better than a man, or you could have a woman that’s not as good as man, if you sort of say, ‘Everybody gets equal pay,’ you get away from the whole American Dream. You get away from capitalism in a sense.
I can tell you, that I have women, honestly that are just, in many cases, they’re better than men, and I pay them more than men. And to a certain extent, people have to go out there, they have to fight for themselves … I don’t know if people agree with me, once you get where everybody gets the same, I mean, you’re into a socialistic society.

This simplistic definition of “equal pay” disregards the economic, racial, and societal motivations for the existing wage gap described in this article.
On March 27, Trump revoked the 2014 Fair Pay and Safe Workplaces order then-President Barack Obama put in place to ensure that companies with federal contracts comply with 14 labor and civil rights laws. The Fair Pay order was put in place after a 2010 Government Accountability Office investigation showed that companies with rampant violations were being awarded millions in federal contracts.
In an attempt to keep the worst violators from receiving taxpayer dollars, the Fair Pay order included two rules that impacted women workers: paycheck transparency and a ban on forced arbitration clauses for sexual harassment, sexual assault or discrimination claims. The Fair Pay order made employers submit salary details to the government that would show any massive wage gaps. It also made employers show overtime and deductions on paychecks so workers could make sure they were being paid exactly as they were supposed to.
Trump’s executive order on federal contractors lifted this mandate on paycheck transparency, requiring employers to detail earnings, pay scales, salaries, and other details. The Fair Pay order Trump overturned was one of the few ways to ensure companies were paying women workers equally to their male colleagues.

Gould, Elise, Jessica Schieder, and Kathleen Geier. “What is the gender pay gap and is it real?,” http://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real/#epi-toc-40, Economic Policy Institute, Accessed April 4, 2017 at 11:44.
Tunney, Kelly. “Trump Once Said Equal Pay For Women Was The Opposite Of The American Dream,” Bustle, https://www.bustle.com/p/trump-once-said-equal-pay-for-women-was-the-opposite-of-the-american-dream-48837, Accessed April 4, 2017 at 13:45.
O’Hara, Mary Emily. “Trump Pulls Back Obama-Era Protections For Women Workers,” NBC News, http://www.nbcnews.com/news/us-news/trump-pulls-back-obama-era-protections-women-workers-n741041, Accessed April 4, 2017 at 14:04.

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