Gender Pay Gap in 2018: The Long And Winding Road to Parity

Gender Pay Gap in 2018: The Long And Winding Road to Parity

The International Women's Day, we bring you an in-depth analysis of the gender pay gap in 2018.

It's 2018, and despite nationwide efforts to reduce and ultimately eliminate the gender pay gap, it persists. At the same time, considerable progress has been made in achieving equal pay. But a drill of various statistics indicates that only some of the pay gap can be attributed to outright discrimation, and some to tangible differences in the occupations between men and women.

For starters, the gender pay gap is real. But it's much more complex situation than most of us understand. Let's look at where we're at on this issue, where we've come from, and where we seem to be going.

Where we stand on gender pay gap in 2018
According to the U.S. Department of Labor, women who worked full-time, year-round earned 79 percent as much as their male counterparts as of 2014.

On the surface, it looks like a bleak statistic, especially after decades of efforts to close the gap. But a closer look at the numbers shows there are many subcategories making up the gap that may be more important than the gap percentage itself. After all, the 79 percent figure reflects the wage gap experienced on a one-to-one basis, between all working men and all working women. It doesn't take into account education, occupation, or application of that occupation under various circumstances.

A deeper analysis of the numbers show that the gap is part carryover from the less enlightened past, but also the result of current undeniable circumstances.

Where we've come from on the gender pay gap
If we focus on the 79 percent figure, the situation seems hopeless. But when we look back over the past half-century, we see a much more optimistic outcome.

The gap gender pay started being discussed at a length back in the early 1960s. It was then that the federal government passed the Equal Pay Act of 1963. The Act:

...prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions.

The Act certainly hasn't eliminated the gender pay gap, but it has facilitated substantial improvement.

In 1964, one year after the Act was passed, the gender pay gap was 59 percent. The increase to the current level of 79 percent, though far from optimal, does represent substantial improvement. Put another way, women's earning have erased about half the gender pay gap in the past 50 years.

The relevant question is, can we continue making progress? (the answer, of course, is yes).

Where we're going with the gender pay gap
It's possible, given another 50 years, that the gender pay gap will be completely overcome. And in fact, it's estimated that women will reach parity by 2059 or 2119. That's a 60-year gap, which is more than a bit concerning.

Unfortunately, the trend of recent years is indicating that the narrowing of the gap is slowing. There are two factors contributing to this slowdown.
The first is likely to be the stagnation of wages in general.

Tighter payrolls restrict the ability of women to move up the pay scale, as well as it does for men. This has become a real situation, going all the way back to the early 1970s, and it has multiple causes, from global wage arbitrage to automation.

Brookings provides this grim assessment of wages:

After adjusting for inflation, wages are only 10 percent higher in 2017 than they were in 1973, with annual real wage growth just below 0.2 percent. The U.S. economy has experienced long-term real wage stagnation and a persistent lack of economic progress for many workers.

But beyond the general wage stagnation, it’s also likely that the “easy gains” in income—the low hanging fruit—has already been picked. Women moved into the labor market in force in the 1970’s and 80’s. Many have attained college degrees, and moved into positions once held exclusively by men. But that general trend has largely been absorbed, and future gains are likely to be more measured.
Gender pay gap drill down

Now that we’ve discussed the big picture of the gender pay gap, let’s take a look at individual factors contributing to it. You may find some shocking revelations here—I know I did.

The gap is worse among the college educated!

Education increases a woman’s earnings capability, but doesn’t reduce the gender pay gap. In fact, the gender pay gap is actually wider among college-educated women than it is for women in the general workforce.
That’s ironic, because more women now hold college degrees than men. As a 2015, 40.7 percent of adult women hold college degrees, compared to just 36.4 percent for men.

At the same time, women with bachelor’s degrees or higher, earn an average of $1,064 per week, which is only 75 percent of the average of $1,420 per week for men. Once again, the gender pay gap for all workers is 79 percent. Translation: higher education results in an even greater gender pay gap.

The higher level of college attendance in recent decades has certainly increased pay for women. But it has apparently increased pay for men at an even higher rate.

Geography plays a role

The gender pay gap isn’t uniform across the country. It’s much smaller in some states than in others. For example, the five states where the gap is narrowest include:

New York, 89 percent
California, 88 percent
Florida, 87 percent
District of Columbia, 86 percent
Vermont, 86 percent
The five states where the gap is greatest include:
Oklahoma, 74 percent
Montana, 73 percent
West Virginia, 72 percent
Utah 70 percent
Louisiana, 70 percent
The effect of race on the gender pay gap

The gender pay gap is more pronounced between races than any other factor. The gap in four major ethnic groups looks like this:

Asian, 87 percent
White, non-Hispanic, 79 percent
Black or African American, 64 percent
Hispanic or Latina, 58 percent
Age—a complicated contributing factor

Among younger workers, median earnings for women are nearly identical to those for men. But as the age level increases, the gap gets wider.
It looks like this:

20-24-year-olds, 96 percent
25-34-year-olds, 89 percent
35-44-year-olds, 83 percent
45-54-year-olds, 78 percent
55-64-year-olds, 74 percent
65 and older, 76 percent
What the numbers indicate is that early in life, men and women are nearly equal in pay. But as they move into middle age, the gap begins to widen.

One possible explanation is that younger women are better educated, and benefiting from greater pay equality. If that’s the case, the gender pay gap should disappear going forward, as the current group of under 35-year-old women earn at higher levels.

But another possibility is that “traditional” compensation practices are more entrenched among older workers. If that’s true, then the gap is unlikely to improve among women who are currently over 35, but rather only for the younger cohorts behind them.

Other factors driving the gender pay gap

Not all of the factors driving the gender pay gap are the result of historic biases. The Department of Labor offers several explanations for the persistent gender pay gap. Not all will be easily overcome.

Occupational segregation

This the tendency of women and men to work in different occupations. Men tend to be disproportionately employed in higher-paying occupations, while women hold the majority of positions in lower paying careers.

For example, among higher-paying occupations, men hold 75 percent of the jobs in computer and mathematical occupations. The percentage is similar for industrial production managers. Men hold nearly 2/3 of the positions as financial analysts and personal financial advisors.

Comparisons of occupations within the same field are also telling. For example, nearly 65 percent of dentists are men, but almost 95 percent of dental hygienists are women. Men hold 60 percent of the positions as physicians and surgeons, while women hold nearly 92 percent of the jobs in medical records and health information.

In many traditionally high paying career fields, men dominate in the higher-paying positions, while women hold the vast majority of supporting careers.

The situation is even more pronounced outside the college norm occupations. For example, women hold only three percent of the construction and extraction trades. This includes carpenters, masons, electricians, and plumbers. These are occupations that pay well above average, and are completely dominated by men.

There are few high paying career fields similarly dominated by women. As such, occupational segregation adds a permanent dimension to the gender pay gap. Some fields may be more difficult for women to enter. But we also can’t discount the possibility that women are not drawn toward those fields, and the outcome is more a result of personal choice than limitation.

“Overwork” occupations

These are defined as occupations that typically require working 50 or more hours per week. It’s a contributing factor to the gender pay gap because men are more likely to hold overwork occupations. These positions are especially common in professional and managerial occupations.

Women are more likely to avoid these kinds of occupations. At least some of the reason for that hesitation is the greater tendency of women to engage in unpaid family and childcare work at home. This is seen as a persistent contributing factor to the gap, and one not easily overcome.

This may have roots in tradition. Men more easily embrace the concept of the “all-encompassing career”, while women seek life balance. There are women working in overwork occupations, but less commonly than men.

Caregiving responsibilities

Women are far more likely than men to either take time out of their careers to care for children and family members, or to carry a lighter workload in an attempt to do double duty. Leaving the workforce, particularly early in one’s career, can slow career progress.

This is a somewhat confusing factor, given that 68 percent of women with children under six are in the workforce. But there are two possibilities. One is that women with young children may shy away from more challenging career assignments. The other is that employers are often less willing to promote a woman in her childbearing years, or one who already has children.

Negotiating behavior

This is a factor that is difficult to quantify. But research indicates that differences in negotiating behavior between men and women have an effect on pay levels. The more aggressive negotiating behavior of men results in higher starting salaries and larger wage increases. Women are less likely to negotiate aggressively, or to question salaries offered by employers or bosses.

There are no statistics to back up this factor, and evaluation seems to be more intuitive than categorically factual. But it is cited as a common contributing factor to the gender pay gap.

Where do we go from here?

Statistically speaking, the gender pay gap is very real. What’s less certain are the actual causes. It seems that we’ve reached the point where the easier progress in closing the gap has already been accomplished. Future reductions in the gap will be harder to come by, particularly if we’re hit by another economic downturn. Wages in general have been stagnating for many years, affording less room for improvement.
Some states have passed additional laws to equalize pay between the genders. It remains to be seen if they’ll have a material effect on closing the gap.

One thing that does seem clear, however, is that women have more control over their pay than previous generations. For example, a woman can choose to go into one of the higher-paying fields, like information technology or engineering.

Other career fields, like the trades, may be more difficult to enter. Part of the problem is that the perception remains that the trades represent “man’s work”. It’s an indication that gender bias continues to be a problem in the workforce.

Whatever the future of the gender pay gap may be, this is a good time to celebrate the progress that has already been made and talk about what is to come.

Not only has the pay gap been reduced by 50 percent in the past 50 years, but there are many career fields where women have achieved parity, based on similar education, experience, and responsibility levels.

It’s not a perfect outcome, but progress is certainly being made. And in the end, that progress can be attributed to the millions of women who are pressing forward into the career world, blazing new trails and earning higher pay.

Keep up the good work!