What Is the Gender Pay Gap and Is It Real?
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Working women are paid less than working men. A large body of research accounts for, diagnoses, and investigates this “gender pay gap.” But this literature often becomes unwieldy for lay readers, and because pay gaps are political topics, ideological agendas often seep quickly into discussions.
This primer examines the evidence surrounding the gender pay gap, both in the literature and through our own data analyses. We will begin by explaining the different ways the gap is measured, and then go deeper into the data using hourly wages for our analyses,1 culling from extensive national and regional surveys of wages, educational attainment, and occupational employment.
Why different measures don’t mean the data are unreliable
A number of figures are commonly used to describe the gender wage gap. One often-cited statistic comes from the Census Bureau, which looks at annual pay of full-time workers. By that measure, women are paid 80 cents for every dollar men are paid. Another measure looks at hourly pay and does not exclude part-time workers. It finds that, relative to men, typical women are paid 83 cents on the dollar.2 Other, less-cited measures show different gaps because they examine the gap at different parts of the wage distribution, or for different demographic subgroups, or are adjusted for factors such as education level and occupation.
The presence of alternative ways to measure the gap can create a misconception that data on the gender wage gap are unreliable. However, the data on the gender wage gap are remarkably clear and (unfortunately) consistent about the scale of the gap. In simple terms, no matter how you measure it, there is a gap. And, different gaps answer different questions. By discussing the data and the rationale behind these seemingly contradictory measures of the wage gap, we hope to improve the discourse around the gender wage gap.
Why adjusted measures can’t gauge the full effects of discrimination
The most common analytical mistake people make when discussing the gender wage gap is to assume that as long as it is measured “correctly,” it will tell us precisely how much gender-based discrimination affects what women are paid.
Specifically, some people note that the commonly cited measures of the gender wage gap do not control for workers’ demographic characteristics (such measures are often labeled unadjusted). They speculate that the “unadjusted” gender wage gap could simply be reflecting other influences, such as levels of education, labor market experiences, and occupations. And because gender wage gaps that are “adjusted” for workers’ characteristics (through multivariate regression) are often smaller than unadjusted measures, people commonly infer that gender discrimination is a smaller problem in the American economy than thought.
However, the adjusted gender wage gap really only narrows the analysis to the potential role of gender discrimination along one dimension: to differential pay for equivalent work. But this simple adjustment misses all of the potential differences in opportunities for men and women that affect and constrain the choices they make before they ever bargain with an employer over a wage. While multivariate regression can be used to distill the role of discrimination in the narrowest sense, it cannot capture how discrimination affects differences in opportunity.
In short, one should have a very precise question that he or she hopes to answer using the data on the wage differences between men and women workers. We hope to provide this careful thinking in the questions we address in this primer.
A summary of some key questions and answers in this primer
Given that gender wage gaps are strikingly persistent in economic data, it is natural to then ask, “What causes these gaps?” And, further, “Do women’s own choices and labor force characteristics drive the gender wage gap, or are women’s opportunities for higher pay constricted relative to men?” Although this paper will largely focus on empirical data to answer questions about the size and scope of the gaps for different groups of women, we will use the data to shed light on some of these “why” questions.
How much do women make relative to men? A typical, or median, woman working full time is paid 80 cents for every dollar a typical man working full time is paid. When evaluated by wages per hour, a typical woman is paid 83 cents for every dollar a man is paid. Both of these measures are correct, but examining women’s earnings per hour is our preferred way of looking at the wage gap.3
Is the wage gap the same whether you are a front-line worker or a high-level executive? There is much greater parity at the lower end of the wage distribution, likely because minimum wages and other labor market policies create a wage floor. At the 10th percentile, women are paid 92 cents on the male dollar, whereas women at the 95th percentile are paid 74 cents relative to the dollar of their male counterparts’ hourly wages.
Does a woman’s race or ethnicity affect how much she makes relative to a man? Asian and white women at the median actually experience the biggest gaps relative to Asian and white men, respectively. But that is due, in part, to the fact that Asian and white men make much more than black or Hispanic men. Relative to white non-Hispanic men, black and Hispanic women workers are paid only 65 cents and 58 cents on the dollar, respectively, compared with 81 cents for white, non-Hispanic women workers and 90 cents for Asian women.
Can women close the wage gap by getting more education? It appears not. Women are paid less than similarly educated men at every level of education. And the wage gap tends to rise with education level. This, again, in part likely reflects labor market policies that foster more-equal outcomes for workers in the lower tier of the wage distribution. It also may be affected by certain challenges that disproportionately affect women’s ability to secure jobs at the top of the wage distribution, such as earnings penalties for time out of the workforce, excessive work hours, domestic gender roles, and pay and promotion discrimination.
Can women close the gap by choosing different occupations? Partly, but these “choices” stem from a lifetime of decisions shaped by economic and social forces.
Men constitute greater shares of certain types of jobs, or occupations, and women greater shares in others. Some say that these differences in how men and women are distributed across occupations explain much of the gender wage gap. In truth, it explains some of the gap, but not nearly as much as is assumed. And even when we reduce the size of the measured gap by controlling for occupational distributions, that does not mean that the remaining gap provides a complete view of the role of discrimination on women’s wages. Gender discrimination doesn’t happen only in the pay-setting practices of employers making wage offers to nearly identical workers of different genders. It can happen at every stage of a woman’s life, from steering her away from science and technology education to shouldering her with home responsibilities that impede her capacity to work the long hours of demanding professions.
Women who work in male-dominated occupations are paid significantly less than similarly educated males in those occupations. So even recommending that women choose better-paying occupations does not solve the problem.
Are women in unions, relative to their male peers, better or worse off? Working women in unions are paid 89 cents for every dollar paid to unionized working men; nonunionized working women are paid 82 cents for every dollar paid to nonunionized working men.
Do women with children pay a “motherhood penalty”? Yes, and not just in terms of hourly wages.
After giving birth, women’s pay lags behind pay of similarly educated and experienced men and of women without children. There is no corresponding “fatherhood penalty” for men.4
Outside the labor market, mothers are also charged a time penalty. For example, among married full-time working parents of children under the age of 18, women still spend 50 percent more time than men engaging in care activities within the home. Among child-rearing couples that include a woman either working part time or staying at home to parent, the burden of caring for family members is even more disproportionately borne by women. This higher share of domestic and care work performed by women suggests that cultural norms and expectations strongly condition (and often restrict) the labor market opportunities of women. Indeed, it likely plays a role in the lower labor force participation of mothers relative to men or women without children.
The higher share of domestic and care work performed by women is also a disadvantage for women in high-prestige, high-wage jobs in which employers demand very long hours as a condition of work.
Does a shrinking wage gap unequivocally indicate a good thing—that women are catching up to men? Unfortunately no. Because the gender pay gap has both a numerator (women’s wages) and a denominator (men’s wages), one cannot make firm normative judgments about whether a given fall (or rise) in the gender pay gap is welcome news. For example, about 30 percent of the reduction of the gender wage gap between the median male and female worker since 1979 is due to the decline in men’s wages during this period.
If we counted benefits, would women be doing less bad relative to men? The gender pay gap in cash wages would not disappear by factoring in other employee benefits because women are less likely than men to have employer-provided health insurance and have fewer retirement resources than men.
The gender pay gap is a fraught topic. Discussions about it would benefit greatly from a thorough review of the empirical evidence. The data can answer only precise questions, but the answers can help us work toward the broader questions. This paper aims to provide this precision in search of broader answers. Readers can access the data we analyze and report in this paper in the EPI State of Working America Data Library. By making the data publicly available and usable, we hope to advance constructive discussions of the gender pay gap.