How the Gender Pay Gap Works

By: Melanie Radzicki McManus  | 
banner at an Equal Pay Day event
"Finally close the wage gap!" is written on a banner at an Equal Pay Day event at the Brandenburg Gate in Berlin, Germany. Equal Pay Day is worldwide and is intended to draw attention to the wage gap between women and men. Paul Zinken/picture alliance via Getty Images

Would you work three months every year for free? If you're an American woman, you just might. Every March or April, one Tuesday is dubbed Equal Pay Day by the National Committee on Pay Equity (a coalition of groups working toward equal pay for all sexes and races). This 24-hour period symbolizes the gender pay gap, showing how far into the next calendar year women must work to earn the same amount of money as men. Similar days are also commemorated across the world.

The National Committee on Pay Equity has been holding an Equal Pay Day in the U.S. since 1996, but the issue of gender-based pay differences has been around long before that [source: National Committee on Pay Equity].

Advertisement

While comprehensive data on gender inequities in pay wasn't collected until 1950, research shows women were earning a mere 30 cents per dollar compared to men during America's early years, when its economy was largely driven by agriculture. During the Industrial Revolution (1820 to 1850) women fared better, netting 50 percent of the wages men took home; by the early 20th century, that rate inched up to 56 percent (i.e., women earned 56 cents for every dollar men earned).

Despite the fact that Congress mandated equal pay for equal work in 1963, the wage gap remained at 60 percent for years. In the 1980s it began to climb again, rising to around 70 percent by 1990. But some 30 years later (the latest available statistics are for 2020), the gap had only nudged up to 83 cents per dollar, according to the U.S. Census Bureau. This is only slightly better than 2015, when the gap was around 80 cents per dollar.

Economists say one-third to one-half of the gender pay gap may be explained by differences in education, experience and the number of hours worked. But the reason for the remainder is a bit of a mystery, although many say it's due to gender discrimination. To put the pay gap in perspective, consider this: In 2019, a typical 25-year-old woman employed full-time earned $5,000 less per year than her male counterpart. If that gap persists until those employees hit age 65, she would have lost out on more than $406,000 compared to the man, an astonishing figure.

The gender gap is even steeper for women of color. In 2020, according to census data, white non-Hispanic women working full-time, year-round earned median annual incomes that were 79 percent of what their white, non-Hispanic, male counterparts scored. For African American women, the figure dipped to 64 percent; for Hispanic females, it was a dismal 57 percent. (While these discrepancies are big, the gaps are less than they were five years ago.) As far as Asian women were concerned, the American Association of University Women, which compiles these stats using census data, wrote, "It is not possible to compare this year's pay gap between Asian women and white, non-Hispanic men with last year's due to limitations in this year's data collection" because of COVID-19. However, in 2017, Asian women earned about 85 percent of what white males did, higher than even white women.

Women of color are so far down in the wage gap, the American Association of University Women pegged "Equal Pay Day" for African American women as happening in September and in December for Latinas in 2022.

How is the Gender Pay Gap Determined?

Equal Pay Rally
Rallying for equal pay is not a new concept. Back in 1954, this group demonstrated in London for the cause. © LAURENT GILLIERON/Keystone/Corbis

The gender pay gap figure is typically calculated by first adding together all of the annual salaries of women who are working full-time, year-round, then finding the median salary — that is, the salary that's in the exact middle, with 50 percent of the women earning more than that figure and 50 percent earning less. Then the same calculation is made for men working full-time, year-round. Once those two figures are determined, you can compare them and calculate the pay gap [source: Glynn].

As an example, let's look at income data for 2020. According to the U.S. Census Bureau, in 2020 the median salary for men working full-time, year-round was $61,417, while the similar figure for women was $50,982. This translates to a wage gap of roughly 17 cents per dollar. Or, to put it another way, women earned 83 percent of what men were taking home that year. Some attribute the narrowing pay gap not so much to women's salaries increasing but more to men's salaries decreasing [source: Gillman].

Advertisement

While this is the most commonly used method to compute the gender wage gap, it's not the only one. Sometimes weekly salaries are used for comparison purposes, which nets slightly different results [sources: Semega, et al., Glynn]. For instance, the Bureau of Labor Statistics calculates using median weekly earnings and has the pay gap ranging from 78 percent to 81 percent, depending on the age group of the men and women being compared.

Keep in mind that you can't look at one statistic and make sweeping characterizations about pay inequities. Here's a quick example why. In 2020, U.S. Census Bureau data showed females heading a household solo earned a median income of $49,214, while men heading a household sans spouse netted $67,304. That's a gender wage gap of 36 cents per dollar, potentially telling a different story about the reason behind pay inequities.

Criticisms of the Gender Pay Gap Theory

Not everyone agrees that there is a true gender pay gap. For starters, the calculations compare the salaries of all working women to all working men, yet these women and men don't all hold the same jobs. That is, the figure isn't comparing male doctors with female doctors or male electricians with female electricians. And even if it were, most employees have different educational and employment backgrounds, two factors that greatly impact salary [source: Glynn].

Another point to keep in mind is that both women and men tend to cluster around certain occupations. About 45 percent of all working women are employed in just 20 fields, including secretaries and teachers; among men, one-third work in the top 20 male occupations, which include truck drivers, managers and supervisors. Overall, the cluster of occupations women favor tend to pay less than those favored by men. Some experts say such job-clustering accounts for about half of the gender pay gap [source: Glynn].

Advertisement

Childcare is another reason men and women don't always earn the same amount of money when working at the same occupation. If a woman takes time off after giving birth, for example, she will have less tenure than her male counterparts when she returns to the workforce and may lose out on wage increases. Some experts add that more women than men seek jobs that are close to home and that offer flexibility and personal fulfillment, which creates competition for these types of jobs and thus holds down wages. Men are also more likely to take on jobs that are dangerous or physically demanding, but offer greater pay, like truck driving or construction work.

Critics also point out that when you compare the wages of men and women with similar credentials who are working in similar fields, there isn't much of a wage gap at all (although the men will almost always out-earn the women). A 2021 PayScale report put the difference at 2 percent when controlling for men and women working the same jobs with the same qualifications. However, there were some fields where the pay gap was virtually non-existent, (like legal professionals and health care support workers) and others like farming and fishing where the gap was as big as 92 percent [source: PayScale].

Nevertheless, some say that after controlling for similar education, occupation and work experience and race, there is still a 38 percent wage gap that cannot be explained by measurable factors [source: Holmes and Corley]. Of the 111 occupations tracked in one study in 2019, there were a scant five where women earned more than men. These included counselors and fast food workers.

Narrowing the Gender Pay Gap

Barack Obama, Lilly Ledbetter
U.S. President Barack Obama stands with Lilly Ledbetter on the seventh anniversary of the signing of the Lilly Ledbetter Fair Pay Act, at the White House, Jan. 29, 2016. Mark Wilson/Getty Images

One of the reasons the gender pay gap continues to exist is that many women have no idea they're receiving discriminatory pay. If you're a woman and don't know that you're being paid less than the guy one cubicle over who has the same experience as you and is performing the same job, then how can you ask for fair treatment? Experts say the way to combat this is to start discussing salaries with your coworkers, family and friends. Unfortunately, many Americans, especially mid-level employees at private corporations, where salaries aren't public information, shy away from talking about their wages [sources: Narrow the Gapp, Wolgemuth].

In some countries, people are much more open about their salaries. But in the U.S., too often income is linked with success and self-worth. Thus, people with low incomes are embarrassed to disclose that fact, while many rich folks decline to say anything out of guilt or fear of resentment.

Advertisement

In May 2015, Lauren Voswinkel created the hashtag #talkpay and encouraged people to tweet their job titles, experience levels and salaries to help combat wage discrimination. Shortly after that, the Twitter handle @talkpay_anon debuted, which lets people post to #talkpay anonymously. A quick read of the #talkpay tweets reveals a wide variety of income information, plus ideas on ways in which women can boost their bottom line, such as negotiating pay increases. (Some critics of the gender wage gap theory say part of the reason for it is that men are better salary negotiators) [source: Fleming]. Websites have also popped up that let you compare your salary with that of others, such as Comparably and PayScale.

A 2020 survey by Glassdoor showed 70 percent of working adults across seven countries believe that men and women should be paid equally for equal work. California has a law requiring businesses to pay people the same wage for doing "substantially similar work" regardless of job titles [source: Isidore]. California also passed a law in 2018 that prohibits employers from asking prospective employees about past or current salaries. This was already enacted in some other states as well [source: HR Dive].

In 2014, then-President Barack Obama also signed an executive order barring federal contractors from punishing employees who compared their salaries, plus a presidential memorandum requiring those same contractors to submit employee compensation data (e.g., pay, sex, race) so the government can see if there's any wage discrimination going on [sources: Kahn, The White House, Domonoske].

Hopefully, all of these actions will pay off. Because if the gender pay gap continues closing at the same glacial rate, it will be around 2058 before parity is finally reached [source: Narrow the Gapp].

Originally Published: Apr 2, 2019

Lots More Information

Author's Note: How the Gender Pay Gap Works

Gender pay gaps are interesting. As someone who is self-employed, it's hard to compare my earnings with another writer because our jobs are typically so different. I choose to write for consumer media and not so much for corporations, where the pay is better. I supplement my writing with editing jobs and proofreading; others add speaking and teaching to pad their bottom line. But here's one interesting thing. The freelance writing field is heavily dominated by women. Yet many of the top-paying, most prestigious publications routinely assign their most desirable features to men. An editor at one of these magazines said he was not biased toward men at all. Rather, more male writers were submitting lead-feature ideas than women. In his opinion, women writers were just as skilled as men, but more intimidated to query his magazine. There is likely some truth to that. However, after decades of working in this field and hearing and observing writer-editor interactions, there is definitely some measure of bias against women, at least among some editors and at certain publications.

Related Articles

More Great Links

  • Coukos, Pamela. "Myth Busting the Pay Gap." U.S. Department of Labor Blog. June 7, 2012. (March 11, 2016) http://blog.dol.gov/2012/06/07/myth-busting-the-pay-gap/
  • DeNavas-Walt, Carmen and Bernadette Proctor. "Income and Poverty in the United States: 2014." U.S. Census Bureau. September 2015. (March 10, 2016) https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf
  • Domonoske, Camila. "To Shine A Light On Salary Gaps, Obama Wants Companies To Disclose Pay Data. National Public Radio. Jan. 29, 2016. (March 23, 2016) http://www.npr.org/sections/thetwo-way/2016/01/29/464856100/to-shine-a-light-on-salary-gaps-obama-wants-companies-to-disclose-pay-data
  • Dubner, Stephen. "The True Story of the Gender Pay Gap." Freakonomics. Jan. 7, 2016. (March 7, 2016) http://freakonomics.com/podcast/the-true-story-of-the-gender-pay-gap-a-new-freakonomics-radio-podcast/
  • Fleming, Olivia. "Why Can't We Talk About How Much We Make?" Elle. May 22, 2015. (March 17, 2016) http://www.elle.com/culture/career-politics/a28515/why-cant-we-talk-about-how-much-we-make/
  • GlassDoor. "The Gender Pay Gap — Is It Real? New Survey Uncovers Employee Sentiments and Perceptions Across the Globe." Feb. 10, 2016. (March 17, 2016) https://www.glassdoor.com/blog/the-gender-pay-gap-is-it-real-new-survey/
  • Glynn, Sarah Jane. "Explaining the Gender Wage Gap." Center for American Progress. May 19, 2014. (March 7, 2016) https://www.americanprogress.org/issues/economy/report/2014/05/19/90039/explaining-the-gender-wage-gap/
  • Goldin, Claudia. "Gender Gap." Library of Economics and Liberty. (March 11, 2016) http://www.econlib.org/library/Enc/GenderGap.html
  • Isidore, Chris. "California toughens its equal pay law." CNN. Dec. 29, 2015. (March 23, 2016) http://money.cnn.com/2015/12/29/news/economy/california-equal-pay-law/
  • Kahn, Mattie. "Obama Announces New Measures to Narrow the Gender Pay Gap." Elle. Jan. 29, 2016. (March 11, 2016) http://www.elle.com/culture/career-politics/news/a33637/obama-new-measures-gender-pay-gap/
  • Narrow the Gapp. "Women in the U.S. make 83 cents to the dollar men earn doing the same job." (March 11, 2016) http://narrowthegapp.com/
  • National Committee on Pay Equity. (March 11, 2016) http://www.pay-equity.org/day.html
  • Patten, Eileen. "On Equal Pay Day, key facts about the gender pay gap." Pew Research Center. April 14, 2015. (March 7, 2016) http://www.pewresearch.org/fact-tank/2015/04/14/on-equal-pay-day-everything-you-need-to-know-about-the-gender-pay-gap/
  • PayScale. "Do Men Really Earn More Than Women? ." (March 7, 2016) http://www.payscale.com/gender-lifetime-earnings-gap
  • Pickert, Kate. "Lilly Ledbetter." Time. Jan. 29, 2009. (March 10, 2016) http://content.time.com/time/nation/article/0,8599,1874954,00.html
  • The New York Times. "Women Still Earn a Lot Less Than Men." April 14, 2015. (March 7, 2016) http://www.nytimes.com/2015/04/14/opinion/women-still-earn-a-lot-less-than-men.html?_r=1
  • The White House. "FACT SHEET: Expanding Opportunity for All: Ensuring Equal Pay for Women and Promoting the Women's Economic Agenda." April 8, 2014. (March 17, 2016) https://www.whitehouse.gov/the-press-office/2014/04/08/fact-sheet-expanding-opportunity-all-ensuring-equal-pay-women-and-promot
  • The White House. "Your Right to Equal Pay." (March 11, 2016) https://www.whiteh ouse.gov/equal-pay/career
  • U.S. Bureau of Labor Statistics: "Highlights of women's earnings in 2016" August 2017 (April 10, 2018)https://www.bls.gov/opub/reports/womens-earnings/2016/pdf/home.pdf
  • United States Department of Labor. "Earnings." (March 23, 2016) http://www.dol.gov/wb/stats/earnings_2014.htm#Ratios
  • Warren Farrell. "Summary." (March 7, 2016) http://www.warrenfarrell.net/Summary/
  • Wolgemuth, Liz. "Why Do You Keep Your Salary Secret?" U.S. News & World Report. June 19, 2008. (March 17, 2016) http://money.usnews.com/money/careers/articles/2008/06/19/why-do-you-keep-your-salary-secret
Featured