The Gender Wage Gap: A Historical Look and Ways To Combat Wage Disparity in the Workplace
The wage gap is nothing new. Today, on International Women’s Day, we want to bring it to the forefront of the conversation to fully understand the impact and how to combat wage discrepancies for women. Due to many factors, women have consistently lagged behind men in pay scales, and this is especially true for minority groups such as African American women and other women of color.
To fully understand the impact of the wage gap, we must first know the history and definition in this context. For our purposes, the wage gap will refer to the difference in earnings between different groups. Specifically, the wage gap between men and women is most commonly referenced in this article. The history is not only long but also complicated - intertwined with social, economic, and legal challenges and changes of the last century.
Written By
Kristen Ahlenius
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A History of the Wage Gap
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In 1890 only 2.5 percent of married white women were reporting earnings. The gender wage gap began to draw attention around this time as women entered the workforce more rapidly. In the United States, women earned 54 cents for every dollar earned by men in 1910.*
*Goldin, C. (1990). Understanding the Gender Gap. -
As you might recall from your high school US history class, women’s labor force participation rose around this period. Women's wages remained low and were about 60% of men’s wages at this time.*
*Bureau of Labor Statistics (Various years). -
The Equal Pay Act of 1963 aimed to abolish wage disparity based on sex. The 1960s marked a significant advancement in financial gender disparity. In 1970, women still earned 62% of what men earned.*
*Institute for Women's Policy Research (2018). -
The turn of the century yielded little progress in the gender wage gap. Despite more women gaining higher education and entering professional fields, the wage gap still remained at 71%.*
*Bureau of Labor Statistics (Various years). -
The new millennium brought further awareness and action. Progress remained slow as women’s median full-time weekly earnings equated to 81% of men’s in 20052 and 82% in 2017.*
Factors Contributing to the Wage Gap
Data should never come without additional context. As such, we must recognize the wage gap isn’t solely a result of discrimination. Various factors contribute to the discrepancy:
- Occupational Segregation:
Women and men tend to work in different occupations, with female-dominated jobs often paying less. - Educational Attainment:
Although women are now more likely to attain higher education, different fields of study contribute to wage disparities. - Work Experience:
Women are more likely to have breaks in their careers, often due to caregiving responsibilities, which can affect their earning potential. - Unconscious Bias:
Hiring and promotion decisions might be influenced by gender biases, impacting women’s career progression.
The Wage Gap’s Impact on Retirement
The wage gap can significantly impact the ability to save for retirement. Some of the factors to consider include, but are not limited to:
- Reduced Lifetime Earnings
The wage gap, simply put, means that individuals in a disadvantaged group will earn less than their counterparts. The reduction in earnings translates to less disposable income available for saving. - Lower Retirement Contributions
In many systems, retirement savings are tied to a percentage of earnings. If you earn less, both your contributions and your employer’s matching contribution (if one is provided) will be lower. - Loss of Compound Interest
Less money to save for retirement means a reduced ability to take advantage of compound interest over time. The snowball effect grows greater the longer the wage gap exists. - Part-Time Work and Career Breaks
Women are more likely than men to reduce their hours and seek part-time work or take a career break. Often times, this leads to periods of inactivity in saving for retirement either because options are not provided through their employer or the reduction in income makes it hard to set aside money for retirement. - Longer Life Expectancy for Women:
Statistics show that women tend to live longer than men. The combination of the gender wage gap and a longer life expectancy means that women are more likely to need to stretch their savings over a longer period of time. - Economic Disparities Among Minority Groups
It is essential to note that the wage gap often intersects with other social and economic disparities. For example, women of color might face both gender and racial wage gaps, further compounding any combination of the aforementioned challenges.
Even with less disposable income, saving even a little can go a long way toward having a secure retirement. Making contributions to accounts like Pension Fund’s Traditional or Roth IRAs early on in your career means your money will grow with interest and Good Experience Credits even in times when you aren’t able to save.
Overcoming the Wage Gap
While the wage gap presents challenges, there are opportunities to combat disparity.
- Sharpen your negotiation skills.
Effective negotiation can help bridge the wage gap. Women are less likely than men to negotiate salaries, which can put them at an economic disadvantage from the jump. - Do your research.
Know what the salary range is in the city or area you work in. This simple step can help increase your confidence when asking for a higher salary. - Seek mentorship.
Seek out mentors who can help pave the way. These mentors can help with negotiation skills, improve your networking skills, and provide guidance based on their experience. - Double down on financial education.
Despite the wage gap, women can continue to improve their financial literacy. Financial literacy is a national problem not exclusive to one gender over another. By seeking out financial education, you can make better financial decisions, which can be higher stakes in lower financially stable situations. Pension Fund offers Your Money Line for free to all members, so they can take control of their financial lives.
The history of the gender wage gap is complex. It encompasses the social norms of the period, economic factors, and legal regulations. The effects are real and lasting on the impacted individuals’ financial wellness and ability to save for retirement. It reflects broader social inequities that follow people throughout their lives and into their retirement years. Despite progress, a significant disparity remains, reflecting underlying societal values and structures. Efforts to address these root causes and to promote equity in the workplace are essential for closing the wage gap.