In 25 Years, the Pay Gap Has Shrunk by Just 8 Cents

Mar 24, 2021
In The News

Megan Rapinoe is a two-time World Cup champion who has played to sold-out stadiums around the globe; what she has in common with nearly every American woman is that she’s underpaid.

On Wednesday, Ms. Rapinoe testified during a hearing held by Representative Carolyn B. Maloney to examine economic harm caused by gender inequalities, particularly for women of color.

Today is All Women’s Equal Pay Day, Ms. Maloney said. But it’s not Equal Pay Day for all women.

Black women would have to work until Aug. 3, 2021, to earn what men made in 2020. For Latina women, the date doesn’t come until Oct. 21.

“This is a disgrace,” Ms. Maloney said. “And it has long-term consequences for women and families.”

Wage discrimination isn’t limited to any one sector or income level.

Take Ms. Rapinoe, whose fight for equal pay has become something of a calling card for the U.S. women’s team, and who played a central role in the team’s lawsuit on unequal pay filed in 2019.

“One cannot simply outperform inequality,” she said. “Or be excellent enough to escape discrimination.”

If it can happen to me, she said, “it can — and it does — happen to every person marginalized by gender.”

In Her Words looked at the history of Equal Pay Day, the reasons for the wage gap and what can be done to close it.

What is Equal Pay Day?

It’s a symbolic day that illustrates how far into the current year American women would need to work to earn what their male counterparts earned last year. Put another way, because there is a disparity in what women and men are paid, women would need to work around 448 days to earn what men earn in just 365 days.

Race plays a part, too: For Black and Hispanic women, the numbers are worse. For Asian women, the numbers skew a bit better.

Estimates vary on how much the wage gap will cost an American woman over the course of her career. The National Women’s Law Center puts it at $406,280 in lost income on average, but that number can top $1 million for Hispanic women and is just shy of $1 million for Black and Native American women.

How did it become a thing?

Equal Pay Day was established in 1996 by the National Committee on Pay Equity. Today marks the 25th. But debates around pay equity date back much further than that.

Carolyn York, secretary-treasurer of the National Committee on Pay Equity, pointed out in an email that in 1942, as huge numbers of women began replacing men in the work force, the National War Labor Board urged employers to make “adjustments which equalize wage or salary rates paid to females with the rates paid to males for comparable quality and quantity of work on the same or similar operations.” But two decades on, in the 1960s, women were still earning only around 59 cents for every dollar a man made.

Do other countries have a gender wage gap?

Of course they do. According to this O.E.C.D. study, the United States falls behind Canada and ahead of Mexico. In addition to Canada, other countries that have a smaller pay gap than the United States are Romania, Colombia, Belgium, Costa Rica, Denmark, Norway … the list goes on. And on.

Has the pay gap narrowed over time?

Yes, but not by much. We’re talking pennies. This year, it’s estimated that American women will earn around 82 cents for every dollar that a man earns. A decade ago in 2011, it was 77 cents. In 1996, the first “official” Equal Pay Day, it was around 74 cents. And this top-line number doesn’t account for differences in earnings among different racial groups.

How is the wage gap number calculated?

The pay gap refers to the ratio of female to male median annual earnings for full-time workers. Think of it as a fraction: The numerator is the difference between male and female median earnings, and the denominator is male median earnings. The actual number might look different depending on the source it’s coming from, because some sources factor in characteristics like age, family size, education level and industry.

“We treat this issue as if you could summarize it in one number,” said Claudia Goldin, an economics professor at Harvard University. “It’s the headline,” not really the full picture.

Are there jobs where women are better paid than men?

Not according to C. Nicole Mason, president of the Institute for Women’s Policy Research. When men enter female-dominated sectors like nursing or education, the job begins paying more, she explained. But the inverse is not true: “When women enter male-dominated spaces, they don’t get paid more than men.”

How long will it take to close the pay gap if we do nothing about it?

Mark your calendars for 2059; if current trends continue, the gender wage gap is expected to close in a mere 38 years. For Black and Hispanic women, the deadline is a whole century away. If we do nothing, “my daughter, and daughter’s daughter, will not see pay equity in their lives,” Dr. Mason said.

So what exactly explains the gap?

There are many factors at play, according to the American Association of University Women.

One of them is that the fields in which women dominate tend to pay less than fields dominated by men. This is irrespective of education or skill required.

The “motherhood penalty” also complicates the wage gap. Moms are less likely to be hired, they receive lower salaries when they are, and are less likely to be tapped on the shoulder for promotion. (Ironic given research suggests moms are some of the most productive employees.)

And women work around two-thirds of the low-paying jobs in the United States; jobs that not only put workers at an economic disadvantage, but also tend to be more unstable.

There is also “invisible labor” — things like caregiving responsibilities and household chores — that women do in addition to their full-time work. “Women perform up to 30 percent more unpaid labor,” Dr. Mason said. Not to put too fine a point upon it, but “unpaid labor is unpaid.” And it’s very hard — if not impossible — to do both your job and take care of the household at the same time.

There’s also good old-fashioned sexism at play: Even when men and women are performing the exact same jobs, women tend to receive less compensation thanks to overt or unconscious biases, as well as stereotypes that make it more difficult for women to negotiate.

The pay gap is caused by a “layering effect” of all of these things, said Kimberly Churches, the CEO of the American Association of University Women. Ultimately, “this really is how we value women and how we value women of color in our society,” she said.

Did Covid make it worse?

In a year of devastating job loss, especially for women — hence the talk of a “she-cession” — the Institute for Women’s Policy Research released a piece of research that seemed, on its face, like good news. In 2020, it found the weekly gender wage gap for full-time workers shrunk to 17.7 percent from 18.5 percent. Seems positive, right? Not so fast.

As Ms. Goldin of Harvard explained, if the female labor force is reduced, but most of those reductions are from the bottom part of distribution (restaurant servers and retail workers, for instance), then women’s wages relative to men’s will rise.

This manifests as an overall rise in women’s wages. And that’s what happened here.

But underneath the top-line number, Dr. Mason pointed out, many, many lower-paid female workers are struggling.

What should companies do about it?

Closing the wage gap demands an investment of time and resources.

First, companies can audit workers’ pay and collect data to determine the levels of disparity between their male and female workers, said Serena Fong, a vice president at Catalyst. Salesforce, for example, committed to reviewing all its workers’ salaries in 2015, and over the following years spent more than $9 million on adjustments to give women equal pay.

Salary bands, which give the range of pay for a given role, can also help level the playing field between male and female workers in salary negotiations. (Though broadly speaking, a wide salary band can provide “too much range to pay people unequally,” Dr. Mason said.)

And governments?

The Equal Pay Act, passed nearly 60 years ago, made it illegal to discriminate by sex in setting wages. But in practice, it can be hard for women to know whether they’re actually being paid equally. It’s not common to ask your colleagues what they make while you’re chatting by the water cooler.

In the last decade, more than a dozen states and the District of Columbia have adopted legislation prohibiting pay secrecy in the workplace. Still, a 2017-18 survey found that nearly half of full-time workers were discouraged or prohibited from talking about their pay, meaning more legislation and enforcement is needed.

Ms. Churches also supports passing the Paycheck Fairness Act at a federal level, “so we can ban the use of salary history questions in the hiring process.” Such questions “just compound women’s lack of earnings going forward as they negotiate their salaries.”

And individuals?

Ask your colleagues how much they make, as awkward as that may sound.

Negotiation is also key. Research shows that women who consistently negotiate their salaries make more than $1 million more over the course of their lifetimes, compared with those who don’t. But of course, Covid hasn’t helped: A new survey from AnnElizabeth Konkel of Indeed suggests women feel even more uncomfortable asking for a raise or promotion than they did prepandemic.