The Wage Gap
The
wage gap pervades societies in America and around the world. It results from several factors, including gender, race and ethnicity, disability, access to education, and age.
What is the wage gap?
On average, women and minorities earn less than men in every single occupation for which there is sufficient data provided. In 2018, women made only 82 cents to every dollar made by men (a gender wage gap of 18%). For minorities and women of color specifically, the wage gap is even wider. Since the Equal Pay Act was signed in 1963, the wage gap has been closing at an exceedingly slow rate. (Note: Asians and other races are not included in this study due to lack of sufficient wage gap data.)
How is it calculated?
The wage gap for women is calculated by adding the annual salaries of women who work full-time, and finding the median salary. The pay gap is commonly reported as a percentage and compares the difference between figures for men and women. A similar process is used when calculating the wage gap for minority groups.
Why does it exist?
A large reason for the wage gap for women and minorities is attributed to discrimination in hiring and pay descions. They are constantly overlooked by employers who tend to favor white males. Moreover, women and minority-dominated industries tend to attract lower wages. Social pressure and bias often discourage members of these demographics from pursuing higher-paid, male-dominaated careers.
How does COVID-19 come into play?
As a result of the economic shutdown and ensuing quarantine, many industries have been suffering. In particular, research shows that unemployment rates are rising faster for women and people of color. These demographics are overrepresented in industries that have been hit hardest by the pandemic, and are often at the top of company layoff lists.
Graphs
The line graphs here depict male/female and white/black/Hispanic median pay rates per hour from 1973 to 2019. By clicking on any of the names or legend tabs of the groups, you can choose certain ones to study.
What insights can we glean about pay statistics from these graphs?
It is very much apparent that the wide wage gap for women and minorities continues to remain a prevalent issue today. The difference in the wage gap continues to shrink (indicated by the decreasing distance between lines) – but only at an infinitesimally slow rate. The uncontrolled gender pay gap, for example, has only decreased by $0.07 since 2015. The controlled gender pay gap accounts for years of experience, industry, and location, and it has only decreased by $0.01 since 2015.
In 2020, women earn 81 cents for every dollar earned by men.
The coronavirus pandemic forced unemployment and layoffs for certain industries, and obligated a large portion of the population to work remotely. As a result of the tentative workplace situation, women have a higher risk of suffering decreases in earnings in comparison to men. When taking into account unemployment risk by industry, women make up a larger sector in Education and Health Services, Library and Training, Office and Administrative Support, and Personal Care and Services, which all faced reduced hours or suspension. Moreover, women are more likely than men to take time off from work or resign in order to take care of family members and children.
The wage gap widens for people of color.
When data is uncontrolled, people of all races and ethnic groups earn less than white men. According to the graph, blacks and Hispanics earn over 25% less than whites. Moreover, people of color, particularly women, start out further behind in pay during the beginning of their careers.
In order to remedy this, it is important to encourage pay gap transparency. According to
payscale.com, for women who agreed that their organization’s pay practices are transparent, the gender wage gap was virtually nonexistent, with women making between $1.00 and $1.01 for every $1.00 that a man makes. Pay gap transparency counters inequity by prompting organizations to update their compensation practices and develop a thought-out, data-driven approach to promoting equality for employees.
Please head to Combining Two Economic Ideas to learn more.