Women’s Equality Day: The Current State of the Pay Gap

Equal Pay Day was March 31, but as the world was slipping into the grips of a global pandemic, you might have missed it. Today presents another opportunity to assess equality in the workplace through Women’s Equality Day, so we thought we’d take this opportunity to do just that.

In recent years, a great deal of attention has been paid to closing the pay gap between female workers and their male counterparts, but very little progress has actually been made. For all the lip service paid to creating equity in compensation and all the time that has passed since the Equal Pay Act of 1963, female workers in 2020 continue to be undervalued by employers, a truth that has been especially exacerbated by the pandemic.

Many of the industries most severely impacted by the pandemic are dominated by females. A good example of this is hospitality where 70% of positions are held by women who make 79% of what men in the same field do. In other female dominant areas of the labor market, such as nursing and grocery store workers, females make less than male counterparts as well.

The progress that has been made is laid out in the chart below from the Department of Labor. As you can see, women's wages have risen, but still trail men by significant margins. 

The most recent data from the U.S. Census Bureau has indicated that the median income for females is just under $10,000 less annually than for a man. But these numbers can be even more stark when broken down further.

Payscale looks at it another way. They calculate an uncontrolled gender pay gap, looking at the median salaries of all men and women to establish a difference. Here, a woman makes 81 cents for every dollar a man makes. This does not take into account the difference in positions, the fact that executive boards and management positions are disproportionately filled by men. While that is changing it does still play a factor.

On the other hand, Payscale also looks at a Controlled Gender Pay Gap, which examines the difference in salary for men and women with the same qualifications and in the same position. Here, women make 98 cents for every dollar a man makes. While that number is close to equal, it remains unequal and with no rationale behind it.

The causes for the gender wage gap that are often cited are disappearing. For example, women are more routinely breaking into industries that were once male dominant such as STEM fields. They are less commonly being funneled into specific roles that suit gender norms. Additionally, years of experience is changing quickly as norms around having a child and what that entailed for women when it came to their work has changed.

That said, the treatment of women who have families is still unsupportive in the workforce as a whole. Women are still often placed under pressure to function as the primary caregiver to children and older adults, distracting from their ability to work. Access to paid family leave and child care assistance lags behind the rest of the world. This puts them in a position where part time work or lower paying jobs may be what is most readily available to women.

Ethnicity

Women of color fair even worse in the workplace than their white female colleagues. While discrimination based on gender has long been illegal, it remains an issue in today’s workplace. The Society for Human Resource Management (SHRM) recently conducted an analysis of pay based on race, outlining how regardless of gender, black individuals make less than whites. But for black women, the gap was far greater, earning just 63 cents for every dollar a white male makes. While that number is appalling, the gap is even larger yet for Hispanic and Native American workers according to Census data.

READ: Why Pay Transparency Alone Won't Eliminate the Wage Gap Between Men and Women

This has a compounding effect over the life of a career. According to the Center for American Progress, if the pay gap is not addressed for black women, over the course of a 40 year career, they’ll make close to $1 million less than a white male counterpart. When we talk about generating wealth and how women in those communities sustain families, these numbers matter a great deal.

Position

You might be tempted to think that as women climb the ladder they get closer to their male colleagues in terms of pay. But studies show that women, and especially women of color, start at a significant disadvantage that is tough to make up and doesn’t close at all.

In the end, the pay gap in many cases actually becomes wider for women. In a Controlled Gender Pay Gap, women at executive level make 95 cents to every dollar a man makes. Uncontrolled that number dips to 69 cents.

Industry

In looking at full time employees, a graphic from Statista shows the gap between men and women’s wages broken down by industry. The most startling gaps were in the finance and insurance sector and the professional and technical services space.

Wages were looked at in terms of weekly pay, with men in finance averaging $1,500 per week and women around $923. The smallest gap was in construction (males at $870 a week and women at $862).

Location

Where a person lives can also contribute to the pay gap. Some states are worse than others as research from career mapping service Zippia pointed out last year. Using data from the Bureau of Labor Statistics and the American Community Survey, researchers measured the pay gap in all 50 states and the District of Columbia. While Louisiana led the way with a 31% pay gap, the vast majority of the 15 biggest gaps were in predominantly rural states such as Utah, West Virgina, Wyoming, North Dakota, Indiana, Idaho, Montana, Oklahoma and Alabama.

Among the best states for addressing the gender pay gap were Florida (14.6%), New York (12.9%), Washington D.C. (12.3%) and California (12.2%).

Closing the Gap

While there is a long way to go on closing the pay gap, progress has been made. Further progress can be driven by taking some key steps to addressing this systemic issue. Some useful techniques are to perform pay audits that more deeply examine racial biases and self-audits of pay decisions. Merit pay increases, levels of starting pay and promotional pay increases need to all be measured to detect patterns that feed this cycle.

Additionally, recruitment teams can have a big impact by eliminating the practice of asking applicants about past earnings. Basing the way women are compensated by what they made in the past is ultimately flawed given that it is well established that they have been undervalued in the market. Known as a salary history ban, this practice has been shown to help close gender and racial pay gaps according to research from Boston University.