Inside the Gender Wage Gap

Despite all the strides women have made toward equality in the American workplace, the gender pay gap remains frustratingly persistent. According to the most recent available Census Bureau data, from 2018, women working full-time and year-round earned, on average, just 82 cents for every dollar earned by a man. 

An 18-cent difference may not seem like much, but it adds up an awful lot. Over the course of a year, women's median annual earnings were $9,766 less than men's, according to the Census Bureau. If that 18-cent hourly difference were to hold up over the course of a 40-year career, a woman would end up earning about $407,760 less than a man.

The gap widens or narrows based on race and locale, but it persists across all categories. Some breakdowns:

• Asian women face the smallest wage gap, earning 97% of what white men earn. White women earn 80%, Black women earn 66% and Hispanic women earn 58%.
• Black women earn 89.4% of what Black men do; Hispanic women make 84.8% of what Hispanic men do.
• Among the states, the biggest wage gap in the nation is in Wyoming, where the gender pay difference is 30.9%. Louisiana is close behind at 30.8%.  California has the smallest pay gap at 12.2%.
• A report from the American Association of University Women that looked at salary disparities in 25 major metropolitan areas across the U.S. found the largest gender gap in Seattle and the smallest in Los Angeles.

What causes this consistent disparity in pay? Beyond the simple explanation of sex discrimination, experts think there are three primary reasons:

• Traditional “women’s” jobs.  Jobs that have traditionally been held solely by women, such as home health aides and child care workers, tend to offer lower pay and fewer benefits than traditionally male blue-collar jobs, such as building and construction. These differences even hold true to an extent to the jobs men and women tend to hold in white-collar, corporate positions.
• Differences in years of experience. Since women are far more likely to take time off from their careers for child-rearing or caregiving, they tend to accumulate fewer years of work experience than men, which means they have fewer chances at promotions and raises.
• Fewer working hours. Those family obligations also mean that women tend to work fewer hours. While that’s accounted for in the wage figure that illustrates the wage gap, it also means lower hourly wages and fewer chances for advancement.
  

There is some good news, though: In recent decades, the gender gap has been narrowing. Because women’s wages increased faster than men’s from 1980 to 2018, the disparity shrunk significantly over that time. Women’s earnings rose by 45% from 1980 to 2018, while men’s wages increased just 14%. So in 1980, the average hourly wage of women was 67% of the average hourly wage of men, whereas it’s moved up to 82% in the most recent figures.

We’re moving in the right direction. Unfortunately, the Institute for Women's Policy Research estimates that the gender pay gap will not be fully erased until 2059. Until we reach that kind of equity, women need to control what they can by making the best decisions for themselves, their families and their future. If you’re concerned about how you will be able face these headwinds, as always, your Baird Financial Advisor is a great place to start.