The Great Divide: Shrinking the Gender Wage Gap

July 19, 2021
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Author: Mike Scherpenberg

While women now make up 47% of the workforce, there is still a sizable difference in pay between men and women in the U.S. This discrepancy in pay is known as the gender wage gap. Not only does this gap affect current take-home pay, the long-term effect of lower Social Security payments impacts women throughout their lives.

U.S. women still earn a lower median wage than men, by a significant amount.

The pay inequality issue is not unique to the U.S. Most countries have similar challenges with a significant difference between the salaries of men and women, although the difference has decreased globally in recent decades.

The Current State of the Gender Wage Gap

The reported pay gap varies depending on the data used. Some studies compare only full-time workers while others include part-time workers. Differences also appear when considering level of education, location, occupation and ethnicity. A study by the U.S. Census reports that among full-time year-round workers, women earn approximately 18% to 20% less than men at the median pay across occupations. Women would have to work many extra days into the new year to make the same annual income as men, and a national Equal Pay Day was created to bring attention to this fact.

Key Factors Contributing to the Gender Wage Gap

Factors like education, occupational segregation, and work experience have contributed to the gap and helped to close it as conditions have improved over the decades. The gender pay gap does not measure bias based on ethnicity, which is known to correlate with lower income, making the gap even larger. The difference in wages is also substantial for older workers.
Bias and discrimination can be challenging to measure, but many studies suggest they are still significant elements.

A gender pay gap exists across almost all industries and occupations but can vary greatly, especially by occupation. While the gap itself may vary by state or region, there are consistent trends. Industries dominated by men tend to have higher wages than those where women make up the majority of the workforce. Women make up around 15% of the architectural and engineering fields, 18% software development, 38% in law practice, and about 40% in management. By contrast, 60% of accountants are women, 62% of pharmacists are women and women tend to dominate careers like social services (68%), and education and human resources at 70%.

The wage gap is still painfully obvious when viewed by education level and gender. Examining median income (the income level in the middle of a list of ranked incomes) by education level from two cities - Los Angeles and Dallas - the gender pay gap ranged from a high of 36% to a low of 24%. These LaborIQ® figures blend all occupations and aggregate by education level, which varies from the national median gap of 18% to 20% that's calculated from occupation median wages.

Gender-wage-gap-LA-2020
The median income in Los Angeles-Anaheim-Long Beach ranged from $20,901 for women with less than a high school education to $103,023 for men with a post-graduate education. The population in this metro skews heavily younger, with 16% in the age group 18- 24.

Gender-wage-gap-DFW-2020-LaborIQ
The median income in Dallas-Fort Worth-Arlington in 2020 ranged from $20,754 for women with less than a high school education to $102,577 for men with a post-graduate education. The population over age 18 in this metro is relatively evenly spread across age groups.

Parenting can have a substantial impact on career paths. Mothers are twice as likely to take time off for maternity leave or long-term child-rearing by leaving the workforce for several years. A multi-year break from the workforce can negatively impact future earning potential or career advancement because of missed opportunities to build experience.

According to Forbes, there are several additional factors that contribute to the gender wage gap.
1. Statistically, women are more likely to accept lower-paying jobs or work fewer hours.
2. The necessity for non-wage benefits may be more important for women workers.
3. Women are more likely to face conscious and unconscious bias.
4. Women tend to have less time outside the work week due to child care and household responsibilities.

How Workplaces Can Help Close the Gender Wage Gap

There are several solutions for narrowing the gap in pay between men and women. The first and most effective is to offer the same rate of pay to any applicant for a role. This will not only help to resolve the gender wage gap, it will also help to create equity across other discriminatory classes, putting your organization on higher moral and legal ground. Offering fair and competitive compensation for any job should attract a variety of applicants, which will also help contribute to fulfilling your diversity initiatives.

Once an employee has joined your company, a continuation of pay equity is demonstrated through your organization’s dedication to diversity, equity and inclusion, through performance reviews as well as opportunities for training and advancement.

For employees already on your payroll, it is never too late to perform compensation benchmarking to get a fact-based understanding of how your current salaries compare to market rate and identify your gender pay gaps. Using a tool such as LaborIQ will enable you to easily compare compensation for your employees by job, experience, education and location against current market rates for those roles.

Additionally, workplaces can level the playing field by ending policies that prevent employees from sharing wage and benefit data and being more transparent about salaries. Eliminating the use of salary history in the hiring process, completing pay negotiations, and regularly reviewing internal compensation trends with third-party, non-biased auditors can provide fair pay for everyone.

Offering education assistance and student loan payment benefits can help all employees, including women, more easily afford a higher education, which generally leads to better pay. Although women are currently outpacing men in obtaining higher education, they have a more challenging time paying off student loans due to the difference in annual income.

Equal pay, diversity and inclusiveness will continue to be vital factors in the success of workplaces in the coming years. According to a 2020 survey by Pew Research, 45% of respondents believe equal pay is crucial to obtaining gender equality in the workplace. The gender pay gap has only narrowed slightly in the past decade. Companies must begin implementing reform in pay and hiring practices to achieve these goals.

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Show Me the Money: Pay Transparency Pros and Cons

Does Your Business Use These Inclusive Workplace Practices?

How to Make Diversity Goals Fit Your Organization