The gender pay gap: Four little words to describe a straight-up chasm of injustice. Here’s where it stands right now, according to 2020 Census data: Women overall make just 83 cents for every dollar men make. And those numbers are even lower for women of color, specifically: Black women make 64 cents, Native American women make 60 cents, Latinas make 57 cents, and AAPI women make anywhere from 52 to 90 cents for every dollar white men make. (Say nothing of the gender wealth gap, aka how much women own compared to men, arguably the more important stat.)
The good news: The pay gap has narrowed slightly — you might remember a time when the commonly cited stat was 78 cents to a man’s dollar. The bad news: It narrowed because a disproportionate number of low-wage workers lost their jobs and / or left the workforce during the pandemic. 😒 Based on earnings trends, it’s looking like another 37 years (until 2059) for women’s earnings to reach the same level as men’s.
Fired up yet? Us, too. Here’s what you need to know about the pay gap — and what needs to be done to close it.
The pay gap is structural, not individual
First things first: This. is. a. systemic. issue. While each of us (especially women) can (and should) ask for more money at work, it’s worth noting that ~negotiating more~ isn’t going to close the pay gap overall. Much like ditching plastic straws doesn’t even begin to alleviate the worst causes of climate change, individual action won’t cut it.
The biggest changes must come from people in power — politicians, CEOs, and the like. So yes, the more power you have, the more power you have to help close the pay gap.
A lot of factors cause the gender and racial pay gaps
Including, but not limited to:
Bias. Various studies have shown that all else being equal, unconscious bias leads to higher pay for men.
The “broken rung.” Women are promoted to manager levels (and get the accompanying raises) at far lower rates than men.
Interrupted salary curves. Whether or not they have a choice in the matter, women take more career breaks than men. In white-collar jobs, that’s usually thanks to things like traditional gender roles and the fact that women’s salaries tend to be the lower of the two in a household (talk about a vicious cycle). But also, 95% of low-wage workers — who are predominantly people of color — do not get paid leave. If you’re a woman in a low-wage job and you have a baby, or you get injured and have to take time off, you’re effectively going to be forced to quit your job.
Having children, having aging parents, having a pandemic, all of the above — whatever the reason, career breaks also mean breaks in earnings growth. It’s hard to keep gaining if you drop out of the workforce and then have to reenter it.
Flatter salary curves. Even women who don’t take career breaks stop getting raises more than a decade earlier than men. Yup.
Centuries of legal oppression, compounded when you factor in race. Women of color, particularly Black and Native American women, have been denied basic economic rights — from slavery, Jim Crow, and being denied land sovereignty and equal access to education, to modern-day biases within the public and private sectors that dictate who gets to build wealth and how.
How to close the pay gap
For employers — aka the people on the structural side of things — the answer is simple: Just close it. Just … pay women more. The end.
What women can do in the meantime
At work …
Ask. for. more. Here’s some advice on asking for a raise. You deserve it. (Also, freelancers: Increase your rates.) For inspo, remember: Closing your personal pay gap isn’t just about how much you made last year, or this year, or next year in isolation — it’s about the cost of being underpaid over the course of your career. All told, that cost could be hundreds of thousands — or even millions.
Ditch dead ends. Not everyone’s in a position to do this, of course, but if you’ve been strung along, or told that a raise just isn’t going to happen … it might be time to leave that job. Here’s how to negotiate a shiny new job offer, too.
Advocate. Is there a pay gap at your company? Do women seem to be missing from higher levels of the organization? Does HR explain organization-wide salary bands to everyone? Do they post salary ranges on job descriptions? Get together with your coworkers and ask HR for transparency and / or action.
… and off the clock
Talk about money with your friends. When we ditch the taboo, everyone’s better off. Here’s how to start the convo.
Get the men in your life to spill their salaries. And / or other people in your industry. The more we know about how much others make, the more we’ll know where our own salaries fall.
Prioritize your financial wellness. From building a strong financial foundation, to putting future-oriented plans in place, to improving your money mindset, practicing financial wellness helps to create stability and confidence.
Closing the pay gap is good for everyone — not just women+
If the pure injustice of women being paid less than they deserve isn’t enough for you (or the people you’re advocating to), consider a few final stats.
First, women tend to reinvest a lot more of their income into their families and communities — one report found that it was almost 90% of their income, compared to just 35% for men. But also, true gender wealth equality has been demonstrated to lead to more economic growth and better development outcomes — put another way, countries’ improvement efforts are more successful when women have more money. In fact, McKinsey found that the global economy could be between $12 trillion and $28 trillion larger in 2025 if women were employed at the same rate, in the same roles, with the same pay as men.
All that’s left is to make it happen.
© 2022 Ellevest, Inc. All Rights Reserved.
All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.
Information was obtained from third-party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.
The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.
Ellevest Membership fees are as follows: Ellevest Essential is $1 per month, Ellevest Plus is $5 per month, and Ellevest Executive is $9. Other fees as described in Ellevest’s Wrap Fee Program Brochure and the Ellevest Membership Terms and Conditions Agreement will continue to apply.