OPINION: Gender Pay Gap – Statistics, Trends, Reasons and Solutions

Would you wager that a man gets paid more for doing the same job as a woman? We’ll discuss the latest insights relating to the gender pay gap–the facts, the figures, and where to go from here.

Table of Contents

You may have heard the old statistic that women make just 77 cents on the dollar compared with men. That oft-cited statistic is one of many surrounding this idea of the gender pay gap–the idea that women get paid less than men for the same work.

So do men and women actually get paid differently for the same work? Or are other factors at play in these headline-grabbing statistics? And if women are paid less, why is that? Finally, what can women actively do to close this gap (if it actually exists)? We’ll look at all of this in this below.

Statistics on the Gender Pay Gap

The statistic cited above–that women make 77 cents on the dollar compared with men–is actually out of date. The latest study from the Institute for Women’s Policy Research noted that the 80 cents on the dollar figure usually cited is actually an overestimation for many women. In many segments of the population, women earn just 49 cents on a white man’s dollar. That said, white women earn about 79 cents per dollar compared with white men.

That broad pay gap is even wider for women of color compared with white men. African American women earned just 62.5 cents on the dollar, and Hispanic women earned just 54.4 cents on the dollar.

However, the above statistics are very broad. They look at the median salaries of all full-time, year-round workers. And much of the pay gap is embedded in the different industries in which men and women work. If more women tend to work in low-wage industries–and they do–then of course their average wages are lower than men’s.

With that said, even within an industry and with similar qualifications, there’s a gap between what women and men make.

Adjusted Wage Gaps

Economists talk about “adjusted wage gaps” when they adjust for additional factors like education, age, or industry. The 2016 report from the Economic Policy Institute says that the general wage gap may be the most helpful to look at because it’s an understandable snapshot of women’s wages versus men’s. However, even when adjusted for factors like education and experience, the pay gap persists.

In fact, the Economic Policy Institute notes that women workers, on average, have higher levels of education than men, but they still experience a pay gap. And even same-industry analyses show that women earn less than men. The American Association of University Women’s report on the gender wage gap showed that women in higher-paid industries actually experience a more severe gap in wages.

For instance, a female financial manager makes, on average, $65,237 per year, while her male counterpart earns $100,575. And among physicians and surgeons, women make an average of $171,880 while men make an average of $234,072. Over time, these gaps have a huge impact on what women make in a lifetime.

A few studies show results out of line with these general findings. One, for instance, shows that there is no pay gap between male and female chief executives at publicly-traded companies. It is a pretty small sample size to compare, given that there were only 21 female executives in the study compared to 382 male executives.

Motherhood and the Wage Gap

The Institute for Women’s Policy Research noted that the penalty for taking time out of the labor force for women is hefty and getting worse. Women who took just one year off had earnings 39% lower than women who worked all fifteen years between 2001 and 2015. Women take at least a year off work at almost twice the rate of men, often to perform caring duties.

And polling of individuals backs that up. About four in ten mothers reported to Pew in 2013 that they had taken a “significant amount of time” off of work or needed to reduce their work hours to perform caring duties. About a quarter said they needed to quit at some point to take care of family responsibilities.

In contrast, only 24% of men in the same poll said they’d taken time off to care for a child or another family member.

While the majority of women rejoin the workforce at some point during motherhood, they still pay a penalty for becoming mothers. According to the Economic Policy Institute, research shows that mothers are paid less than both women without children and men in general, even if those men are fathers. Controlling for other factors, women who are mothers are paid 4.6% less hourly than women without children.

Women now become mothers, on average, at older ages. So they often have more education and experience, and they’re less likely to leave the labor force after giving birth. And they generally come back quickly. But even still, women pay a financial penalty for being mothers.

A study from Harvard showed that some of this pay gap may have more to do with perceptions of working mothers than reality. For instance, mothers were considered less committed to their jobs than non-mothers, while fathers were considered to be more committed than non-fathers. This may have to do with our culture’s persistent belief that men should be the ones to provide financially for their families, even when that isn’t the case for a particular family.

The same study also showed that mothers are held to higher standards of punctuality than childless women or men, regardless of their parental status. And visibly pregnant women are seen as less competent than non-pregnant women or men in the same position.

By contrast, men who become fathers are perceived to be more committed to their jobs, actually do put in a few more hours at work per week, and often get a pay bump. Research also shows that dads are more hireable than men without children.

The Bottom Line on the Pay Gap

Even when controlling for a host of factors, from age to experience to education to industry to time in the field, women consistently make less than their male counterparts. In some locations and industries, the gap is smaller than 80.5 cents on the dollar. But in many locations and industries, it’s much larger.

As Pew Research Center points out, the most difficult factors to measure in this issue, including discrimination, are likely the most influential on the persistent pay gap. In a 2017 Pew survey, 42% of women experienced discrimination in the workplace because of their gender.

And the Economic Policy Institute points out that the effects of gender discrimination on women’s pay don’t just show up in employer’s pay-setting policies and practices. Women are often steered towards lower-paid careers, expected to balance the challenges of parenthood and work more fully than men, and guided to expect lower pay all along. All these factors can influence a woman’s career choice and path from the beginning, funnelling more women into lower-paid jobs and making them less likely to fight for equal wages once they get there.

But the bottom line is that no matter how you slice it, it appears a gap does exist.

Trends in the Pay Gap

Over time, the gender pay gap has shrunk considerably. In the 1960s, women made just over half of what men made, on average. We’ve obviously come a long way since then. With that said, the pay gap has mostly stalled since 2000. It’s gone up about a nickel per dollar since that time, even as individual companies have worked to reverse the trend.

Some large companies like CRM leader Salesforce have worked to close the gender pay gap in a public and visible way. Two female executives at Salesforce drove an initiative to close pay gaps within their company. And now the company has a global Equal Pay Day each year. They do a thorough analysis and adjust pay gaps for gender, racial, location, or other issues.

Again, the pay gap is closing, due in part to more visibility of the issue. But it’s not closing fast enough in the past several years, and we still have a long way to go both in general and in specific industries.

The Pay Gap Around the Country

Gender discrimination in the workplace is unconstitutional. But states don’t enforce these laws in standardized ways. Add that to the fact that different states have different industry trends, and you get wage gaps that vary wildly from state to state. This chart from the AAUW shows the general gender pay gap in states across the nation.

It can be interesting to see what the gender pay gap is in your state compared with other states in the U.S.:

Gender pay gap USA map

Factors that Contribute

We’ve already discussed some of the factors that contribute to the gender wage gap. And it’s difficult to control for all of these factors separately. So it’s impossible to say exactly how much weight to give each of these factors in the gender pay gap. With that said, here are some of the factors researchers acknowledge have at least some impact on this inequality:

  • Discrimination: We can control for every other factor listed here and still come up with a wage gap. That means that at least some of the gap is due to discrimination in companies’ hiring and wage-setting practices. Again, it’s hard to figure out exactly what percentage of the wage gap is directly due to discrimination, but at least some of it is there.
  • Job Choices: Women often work in lower-wage industries than men. In fact, many of these jobs are seen as traditionally feminine, including jobs that involve caring for the elderly and the young. Some estimates say occupational differences account for nearly half of the wage gap.
  • Different Hours: Women tend to work fewer hours per day than men, on average. Full-time working women, on average, work about 35 minutes less per day than their male counterparts. With that said, in the highest-paid industries, especially, a reduction in hours results in a disproportionate reduction in salary. And there’s no evidence whether working that extra 35 minutes actually makes men more productive than women at some types of work.
  • Family Responsibilities: Women are much more likely than men to take time off work to care for others, either their children or their parents or other aging relatives. Understandably, this time off work can reduce women’s income over time. But the workplace reaction to men becoming fathers–often a pay bump–exacerbates the pay gap.
  • Negotiation: Women are less likely than men to negotiate their starting salary or raises, which can contribute significantly to the wage gap in higher-earning fields. Some try to explain this away as a confidence issue, and that may be some of the problem. In general, women are less self-assured than men. But one study from Harvard showed that women may be smart to hold back on negotiations, as negotiating aggressively can come at a social cost for women. Women negotiating for themselves can feel a real social backlash in the workplace that may disadvantage them over the long term.

What Can Women Do?

As a woman, writing this article is pretty disheartening. I’m a happy employee and freelancer. I’m more productive as a 30-something mother than I’ve ever been before. (Seriously, if you want to get something done, ask a mom.) And I’m the primary breadwinner in my family by quite a bit. But I know this gender wage gap has almost certainly affected me and probably will continue to do so in the future.

But that’s not to say that we are completely helpless to change the situation, either for ourselves or for our daughters. Here are some steps women can take to get equal pay for themselves now and to change these statistics globally in the future:

  • Evaluate your own company. If you believe one exists, push for an analysis of the gender wage gap at your company.
  • Advocate for all women. As we noted above, negotiating for your own salary can be tough and can come with a social backlash. However, women are expected to advocate on behalf of others. If you’re in a management-level position, try advocating for equal pay adjustment to those below you on the pay scale. These types of changes can take place company-wide and make a huge impact for every woman.
  • Encourage others to participate. Many of you colleagues (male and female) may be frustrated with the gender pay gap as you are. So if you can educate and onboard others to the cause, we can all move forward together.
  • Vote. It’s easy to get caught up in huge headline issues when deciding how to vote. But you should dig into your representatives’ policies on equal pay, as well. Currently, the United States doesn’t have precise laws in place to reduce the gender pay gap. One example of a potential law to consider is the Paycheck Fairness Act. This act means that employers will have to be more transparent about wages for potential employees. This can reduce the likelihood of women getting a lower starting salary because they made lower wages in a previous job or fail to negotiate well. This isn’t the only legislative way to reduce the pay gap, but it’s one good option.
  • Discuss salary and compensation. Many companies discourage employees from discussing their salary and compensation. But being more transparent can open up more people to seeing and fighting against the gender wage gap and other wage gaps that exist.
  • Advocate for better parental leave policies. If your workplace has a terrible parental leave policy, work to change it. Having better leave–including paid maternity leave–helps women stay on their feet financially and makes them more likely to come back to the workplace. But dads should get–and be encouraged to take–parental leave, as well. When dads take leave, they show that its important, drive down imbalances between men and women taking parental leave from the workplace, and are more likely to continue pitching in at home over the long term.
  • Talk to your daughters and other young women. Some of the gender pay gap is because of what we expect of young women versus young men. If we raise a generation of daughters ready to advocate for themselves and find true partners in the fathers of their future children, we’ll go a long way towards reducing the gender pay gap in the future.

What Can Men Do?

For men, the to-do list has a lot of the same action items. Advocate on behalf of the women in your life, including the ones you work with. If you’re in a position of power at your place of work, push for these changes to be made, and pay attention to how you vote. But here are a few other ways men can help:

  • Take responsibility at home. Often times working moms reduce their work hours because they carry more of the load at home. Women consistently do more chores at home and spend more time caring for children than men, even when both parents work full-time. Taking on more of the work at home can allow at least one woman in your life to bring more of herself to her job, thus reducing, little by little, the idea that moms, in particular, are less committed at work.
  • Advocate for others at work. As with women in management-level positions, it’s important to advocate for equal pay to those below you on the pay scale, especially if you believe a pay gap exists in your company.
  • Set an example for your children. When children see their dads participate in all aspects of raising children and managing the home, they’re more likely to follow suit. If we raise a generation of boys who expect to help around the home and take care of their own children, we’ll also raise a generation that expects women to equally participate and be compensated in the workplace.

Summary

As a working mom with a full-time job, two kids, and a true partner, I know how big of a deal this issue is. It’s nuanced and messy, as with most things in life. But it’s essential that we as a culture spend time discussing issues like the gender pay gap and what we can do about it.

Even with an excellent partner at home and being my family’s primary breadwinner, I feel the pressure to be the perfect mom and to over-perform at work to meet a very high standard. My hope is that as we better understand this issue and work towards changing it, my daughter will be paid equally for working hard at whatever career she chooses.

The opinions expressed by the author are hers alone and do not necessarily reflect the opinions of DoughRoller.

Topics: Personal Finance

The post OPINION: Gender Pay Gap – Statistics, Trends, Reasons and Solutions appeared first on The Dough Roller.