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The Gender Wage Gap – Do Men Really Earn More Than Women?

March 24, 2021, is a little-known holiday. It’s called Equal Pay Day — the date on which the earnings of women catch up with the amount earned by men in 2020.

The difference between women’s and men’s earnings is called the gender wage gap or gender pay gap — and there’s a lot of disagreement about what causes it.

Right-leaning politicians and social scientists argue that it simply reflects the different career choices made by women. By contrast, those on the left point to biases and social norms that are holding women back.

There’s something to be said for both sides. The pay gap isn’t simply a matter of gender discrimination, but it isn’t solely a matter of choice either. Its causes are complex, and understanding them is key to figuring out how to make the workplace work better — for men as well as women.

Measuring the Gender Pay Gap

Part of the problem with discussing the gender pay gap is that sources don’t even agree on how big it is. The numbers vary depending on how you measure women’s and men’s earnings.

You get different results if you count yearly or hourly earnings, if you look at all fields together or each one separately, and if you control for factors such as experience and education.

The most commonly cited figure is that women earn around $0.82 for each dollar men earn. This number is based on income tables from the U.S. Census Bureau showing that in 2019, women’s median earnings were only 82% as high as men’s. On average, men working full-time and year-round earned about $10,900 more than full-time female workers.

Other organizations have found similar numbers. When the Institute for Women’s Policy Research (IWPR) compared weekly earnings, it found that women made about 81.5% as much per week as men in 2019. And a 2019 report from the Pew Research Center put women’s earnings for 2018 at 85% of men’s earnings.

However, other calculations find a much smaller gap. For instance, a 2020 analysis by PayScale shows that when you look at men and women working in similar jobs with similar levels of experience, the wage gap shrinks to just 2%. However, even this “controlled gender pay gap” is wider in some professions than others.

Variations in the Gender Pay Gap

The overall picture of the gender pay gap gets more complicated the more ways you try to break down the data. The gap varies widely based on a variety of factors, such as:

Work Hours

According to the Census Bureau, women who work full-time and year-round earn 82% as much as their male counterparts.

However, if you look at all workers, the gap increases. In 2019, the median yearly income for all working women in America — both full-time and part-time workers — was only 66% as high as the median for men.

Age

Both men and women tend to earn more as they grow older and gain work experience. However, women’s earnings don’t keep pace with men’s as they age.

Figures from the Bureau of Labor Statistics show that women ages 16 to 24 earn a median of $596 per week, while men this age earn $625 — a gap of less than 5%. However, this gap rises to 13% for women ages 24 to 34, 15% for ages 35 to 44, and 20% for ages 45 to 54.

After age 55, earnings start to drop for both sexes. The gender pay gap peaks at 21% for workers ages 55 to 64 before dropping back down to 15% after age 65.

Race

The pay gap is typically larger for women of color than it is for white women.

A 2020 IWPR fact sheet shows that compared to white men, white women earn around 80% as much, Black women earn 64% as much, and Hispanic women earn 59% as much. Only Asian-American women did better than their white counterparts, earning 95% as much as white men.

However, when you compare women to men of the same ethnicity, the picture looks different.

Black women take the lead, earning 92% as much as Black men. Hispanic women earn 88% as much as Hispanic men, and Asian women earn only 80% as much as Asian men.

Location

The gender wage gap also varies across different parts of the country.

A map drawn up by the American Association of University Women (AAUW) shows that the gap is smallest in California and New York, where median annual earnings for women are 88% as high as men’s. It’s biggest in Wyoming and Louisiana, where women earn only 70% as much as men.

But even this gap looks small when you compare it to the pay disparities between men and women in other countries.

A 2020 report from the World Economic Forum (WEF) shows that worldwide, women earn an average of $11,000 per year, measured in terms of purchasing power, compared to $21,000 for men. On a global scale, the pay gap is nearly 48%.

Changes in the Gender Pay Gap

Although sources differ on the actual size of the gender pay gap, there’s one thing everyone agrees on: It’s smaller than it used to be.

A 2018 AAUW report contains a chart that tracks the size of the gender wage gap over the years from 1960 through 2017. It shows that in the 1960s and 1970s, women were only earning around $0.60 for every dollar earned by men.

Women’s earnings rose swiftly in the 1980s and 1990s. By 2001, the gap had dropped to around $0.25 on the dollar. Based on those numbers, social scientists projected women would be earning the same income as men by the year 2059.

Unfortunately, progress since then has slowed. Between 2001 and 2017, women’s pay increased to only 82% of men’s. At the rate it’s rising now, the AAUW estimates, the gender pay gap won’t be closed until 2106.

The coronavirus pandemic shifted this trend somewhat. In 2020, the weekly wage gap fell to 17.7%, the IWPR reports. However, this happened mainly because women in low-wage service jobs were much more likely to be laid off during the pandemic than their higher-earning peers. Once the pandemic ends and these employees go back to work, the gap could widen again.

Women’s wages are also rising faster in some parts of the country than in others. The Status of Women in the States page run by the IWPR estimates that in 2038, Florida will be the first state to achieve gender pay parity, while Wyoming won’t have equal wages for women until 2153.

However, even if the gender pay gap is taking a long time to close in many parts of the U.S., at least it’s narrowing.

On a global scale, by contrast, the gap is growing wider. The WEF estimates that it will be over 250 years before women are the economic equals of men around the world.


Reasons for the Gender Pay Gap

In theory, men’s and women’s wages in the U.S. should be equal. In 1963, Congress passed the Equal Pay Act, which required all employers to pay male and female workers the same wage for the same work. More than 50 years later, the gender pay gap has indeed shrunk, but it certainly hasn’t disappeared.

Why does the gap persist, and why is it so big in some cases and so small in others? The answer isn’t simple.

There are several factors involved, including the fields men and women work in, the hours they work, time spent caring for children, education level, and continuing gender discrimination.

1. Occupational Segregation

Men and women tend to choose different career paths.

As the AAUW reports, men are highly represented in fast-growing, high-paying fields like construction and software development. Women are much more likely to work in fields like teaching or health care, which typically don’t pay as much for workers of the same skill level.

According to the IWPR, nearly 4 out of 10 women work in traditionally female-dominated occupations, while more than 4 out of 10 men work in male-dominated fields. Women more often choose social jobs that involve working with people, while men are more likely to work with things.

Some people see the fact that the gender pay gap depends partly on differing career choices as evidence that there’s nothing unfair about it. After all, if women simply prefer jobs in lower-paying fields, that’s their choice. But there are two problems with this assumption.

First, as discussed below, occupational segregation doesn’t account for all of the gender pay gap. Even within the same field, women are consistently paid less than their male coworkers.

Second, the career choices men and women make reflect society’s assumptions about gender roles. Society tends to label certain jobs, such as auto repair, as “men’s work.” Jobs such as nursing or teaching are more likely to be considered “women’s work.”

From an early age, young girls are subtly — or sometimes not so subtly — steered toward “womanly” professions and boys toward “manly” ones. If there were more women currently working as mechanics and more men working as nurses, people of both sexes entering the workforce would probably be more open to both career paths.

Assumptions about women’s roles at home can affect their career choices too.

Society still tends to view raising children as mainly a woman’s job, and this can lead women to seek jobs with flexible schedules that make child care easier. It can also lead employers to hire women for this kind of job, whether it’s what they prefer or not.

2. Shorter Hours

Occupational segregation alone can’t explain the gender pay gap. The AAUW, the IWPR, and Payscale all report that women’s median earnings are less than men’s in all fields, even female-dominated ones.

Economist Claudia Goldin of Harvard University calculates that 85% of the pay gap is due to differing wages for men and women in the same field.

Goldin found one major reason women earn less is that they tend to work shorter hours. For one thing, women — especially those with children — are more likely to work only part-time.

However, even among full-time workers, those who work more hours — say, 50 hours per week instead of 40 — often earn much more for each hour worked.

This is especially true in high-paying fields like business and finance. Men in these fields are more likely than women to take on long hours, so they earn more. According to the IWPR, finance has a bigger gender pay gap than any other field, with women earning only 66% of what their male colleagues make.

However, there are exceptions to this rule. Goldin notes that in science and technology jobs, which often have flexible work hours, women earn similar wages to their male colleagues.

For instance, Goldin says that in pharmacy — one of the highest-paying fields for both women and men — there is “almost no penalty for low hours,” and the pay gap is very small.

3. Family Responsibilities

One of the main reasons women work shorter hours than men is that they tend to devote more time to caring for children. Some of them even drop out of the labor force temporarily to become stay-at-home moms.

Goldin says this is one of the biggest factors behind the gender wage gap, even though most women don’t spend many years away from the job.

However, even when working moms don’t take time off from work, they still see a drop in wages. Women with children tend to earn lower wages compared to colleagues who have no kids, a phenomenon known as the motherhood penalty.

According to a 2018 Newsweek story, when a woman becomes a mother, her income drops by an average of 4%. This gap increases with every additional child. Thus, a woman with two children would earn, on average, 8% less than her childless female colleagues.

Men, on the other hand, often get a fatherhood bonus. After they become fathers, their wages actually go up by around 6%.

A pair of charts drawn up by Insider shows women with children typically earn $30 less per week than women without children, while men with children earn $189 more per week than men with none.

A 2016 U.S. Senate report on the gender pay gap speculates that this happens because employers associate motherhood with “lower levels of commitment and professional competence.” They assume moms are going to put their kids ahead of their work, so they aren’t willing to pay them as much.

In support of this theory, Newsweek notes women are less likely to get a job interview if their resumes imply that they have children.

By contrast, when it comes to dads, employers make just the opposite assumption. They see men with children as more settled and thus more committed to their jobs.

The “mommy penalty” creates a vicious circle for working moms. Child care costs can be very high, so it often makes sense for one parent to take time off to care for the kids. Mothers fill this role most often, in part because the mother usually earns less and it’s easier to get by without her salary.

But then, the fact that so many women take time off to care for kids just gives employers more reason to see mothers as less committed to their work. This gives them an incentive to pay women less, and so the cycle continues.

4. Educational Attainment

In the past, women often fared worse in the workplace because they had less education than men.

In general, workers with more education earn higher salaries. Back when women were less likely to have college degrees than men, their lack of education cut them off from some of the highest-paid careers.

However, since around 1980, the education gap between men and women has all but disappeared. In fact, according to the 2018 AAUW report, women now earn college degrees and graduate degrees at higher rates than men. Increasing education among women is one of the reasons the wage gap is smaller today than it was 40 years ago.

Unfortunately, while higher education has helped narrow the gap for women as a whole, women still earn less than equally educated men. In fact, the gap is slightly wider among more educated women.

According to the AAUW report, in 2017, women who never finished high school earned an average of 77% as much as men with no high school diploma. By contrast, women with college degrees or better earned only 74% as much as college-educated men.

Payscale reports the same trend, although the pay gap it finds is smaller. It also finds that the gap varies based on the degree. Female MBAs earn 75% as much as male MBAs, while women with law degrees earn 87% as much as male lawyers.

Payscale notes that the controlled gender pay gap — the gap between women and men with the same job title — is much smaller, around 1% for a bachelor’s degree.

The uncontrolled pay gap probably reflects the fact that educated women are taking less demanding jobs than men, perhaps because of family responsibilities. The motherhood penalty could also play a role.

Educational attainment is also tied to race and ethnicity. According to the AAUW, white and Asian women earn more than Black and Hispanic women partly because they tend to have more education.

However, white women still earn more than Black or Hispanic women with similar levels of education. Education can counteract racial inequality but not wipe it out.

5. The Glass Ceiling

A final reason women tend to earn less than men is that there are fewer of them at the top levels of companies where the pay is highest.

According to the nonprofit group Catalyst, only 6.2% of all CEOs at S&P 500 companies are female. The unseen barrier that keeps women from being promoted to the top is often called the “glass ceiling.”

Studies show that women tend to hit the glass ceiling fairly early in their career paths. According to the 2020 Women in the Workplace study by LeanIn.org and McKinsey & Company, women in 2019 were 15% less likely than men to be promoted to management.

This gap between men and women only increases as you work your way up the corporate ladder. The study found that at the start of 2020, women made up only 33% of upper-level managers, 29% of vice presidents, 28% of senior vice presidents, and 21% of C-level executives.

Here, again, the numbers are still worse for women of color. They hold roughly 18% of all entry-level positions, but only 12% of management positions and 3% of C-suite positions.

Moreover, the study says, women who make it to the top level often face discrimination once they get there.

Senior-level women receive more criticism than men and have to work harder to prove their competence. They’re much more likely than senior-level men to feel pressured to work more and to experience burnout.

Although women haven’t reached gender equality in the workplace, until recently, the numbers were trending in the right direction. From 2015 through 2020, the number of women in management grew by two percentage points overall, and up to four points at the highest levels.

However, the coronavirus pandemic reversed this trend, as many women left their jobs to care for children. For the first time in years, there were more women than men dropping out of the labor market.

If these women don’t return to work, or if they lose out on promotions due to their time off, it could undo all the gains made in the past five years.


Final Word

The gender pay gap has far-reaching consequences for women and their finances. Because women earn less throughout their careers, they lag behind men in terms of saving and investment. They’re less likely to have an adequate emergency fund or save enough for retirement.

But the pay gap doesn’t just cause problems for women. It also hurts the millions of families that depend on women’s wages. And it discourages women from entering the workforce, hurting the economy as a whole.

Figuring out how to fix the gender wage gap isn’t simple. The Equal Pay Act was a good first step, but as we’ve seen, equal pay for equal work doesn’t automatically add up to equal outcomes for men and women.

The pay gap has many causes, and thus it has many possible solutions. Closing it could involve changes in the workplace, like more flexible work hours, and in society itself, like creating more options for child care.

These changes won’t be easy to bring about — but in the long run, they could make America a better place for all workers, male and female alike.

Amy Livingston
Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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