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The Gender Pay Gap Has Closed 5 Cents Since 2015 — But Don’t Celebrate Yet

Topics: Data & Research

PayScale’s latest report, The State of the Gender Pay Gap 2019, shows that the gender pay gap has closed 5 cents since 2015. However, women still only make 79 cents for every dollar earned by men, comparing all women with all men.

The controlled gender pay gap seems to tell a slightly happier story. When we control the data for compensable factors like job title, years of experience, industry and location, women earn 98 cents for every dollar earned by men with similar credentials.

The problem is that women are less likely than men to hold high-paying job titles. The structural barriers that prevent women from working in high-paying occupations or holding executive roles are what’s known as the opportunity gap. It’s why there’s such a great divide between the uncontrolled data – the 79-cents-to-the-dollar stat we’re used to hearing – and the controlled data, in which we compare the earnings of similarly credentialed women and men.

What Is the Opportunity Gap?

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Women are underrepresented in higher-paying fields, such as Engineering and Computer Science, and over-represented in lower-paying occupations, such as Personal Care & Service, Education and Office & Administrative Support. This is called occupational segregation, and it may be partly due to assumptions employers make about which roles are a good fit for men and women. Hiring managers and other decision-makers may unconsciously funnel women toward lower-status, lower-paying jobs.

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But there are other barriers preventing women from advancing in their career. Lack of social support – including mandatory paid parental leave and federally subsidized childcare – means that women are more likely than men to press pause on their careers in order to care for minor children or ailing family members. A Merrill Lynch report found that women who do so may lose as much as $1 million over the course of their lifetimes in earnings, investments and retirement savings.

It’s no surprise that women move up the corporate ladder more slowly than men and take career breaks more often. They are significantly less likely to become C-suite executives than men, per PayScale’s report:

At the start of their careers (age group 20-29), 74 percent of men and 75 percent of women are in individual contributor roles. However, a much smaller proportion of women reach the manager/supervisor level or higher by the middle of their career.

By mid-career (age range 30-44), 47 percent of men are managers or higher, while only 40 percent of women reach this level. By late career (age 45+), 57 percent of men are managers or higher, while only 41 percent of women reach this level.

Few women ever make their way to C-suite. By late career (age 45+), eight percent of men have risen to an executive level position, compared to three percent of women.

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The Opportunity Gap Is Worse for Women of Color

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Black, Hispanic and American Indian/Native Alaskan women earn 74 cents for every dollar earned by White men. Native Hawaiian women earn 79 cents to that dollar, and Asian women earn 93 cents.

The controlled data – where we compare only women and men with similar job titles, years of experience, etc. – shows narrower gaps. (97 cents to the dollar for Black or African American women’s earnings; 98 cents for Hispanic women’s earnings.) But again, the opportunity gap means that fewer women of color work in higher-earning occupations and roles.

In PayScale’s report, 56 percent of White men were individual contributors (ICs). Among White women, 62 percent occupied those roles. Women of color were more likely to stagnate in those positions: 63 percent of American Indian women, 66 percent of Hispanic women, 67 percent of Black women and 72 percent of Asian women identified themselves as individual contributors.

Only 2 percent of Black, Hispanic and Asian women held C-level roles, compared with 3 percent of White women and 6 percent of White men.

Significantly, PayScale’s sample included only women with at least a bachelor’s degree. Level of educational attainment is not the reason these workers are getting left behind.

Per Pew Research:

About two-in-ten black adults (21%) and 16% of Hispanics say that in the past year they have been treated unfairly in hiring, pay or promotion because of their race or ethnicity; just 4% of white adults say the same. And while 40% of blacks say their race or ethnicity has made it harder for them to succeed in life, just 5% of whites – and 20% of Hispanics – say this. Some 31% of whites say their race or ethnicity has eased the way toward their success.

Further, PayScale’s research shows that women, particularly women of color, earn less than men even at the beginning of their career, when the playing field should be even. White women at the individual contributor level earn 81 cents for every dollar earned by white male ICs. Black, Hispanic and American Indian individual contributors earn 77 cents for every dollar earned by white men working at the same level.

Only Asian women earned more at this stage of their career: Asian women individual contributors earned 2 percent more than White male ICs. However, the report notes that, “it is important to keep in mind that the demographic group ‘Asian’ covers many different ethnic groups that are not treated equally in the workplace.”

The Changing Nature of Work

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A recent Upshot article entitled, Women Did Everything Right. Then Work Got ‘Greedy.,’ dissects how work has changed, just as women became more qualified than ever to hold high-paying jobs. Claire Cain Miller explains that while “American women of working age are the most educated ever … it’s the most educated women who face the biggest gender gaps in seniority and pay.”

PayScale’s research shows that the gender pay gap grows as workers climb the corporate ladder. Part of the problem may be that high-earning jobs – managerial, executive and C-suite roles, as well as those in high-paying occupations in law, tech, etc. – increasingly demand long hours and constant availability from workers.

Cain Miller writes:

Just as more women earned degrees, the jobs that require those degrees started paying disproportionately more to people with round-the-clock availability. At the same time, more highly educated women began to marry men with similar educations, and to have children. But parents can be on call at work only if someone is on call at home. Usually, that person is the mother.

This is not about educated women opting out of work (they are the least likely to stop working after having children, even if they move to less demanding jobs). It’s about how the nature of work has changed in ways that push couples who have equal career potential to take on unequal roles.

Working constantly at these high-status jobs pays off: while 40 years ago, employees who worked more than 50 hours a week earned 15 percent less per hour than their colleagues, now they earn 8 percent more. This “overwork premium” means that families often must sacrifice one career to invest in another.

The Problem With a Culture That Insists on Overwork

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“There’s no gender gap in the financial rewards for working extra long hours,” writes Cain Miller. “For the most part, women who work extreme hours get paid as much as men who do.”

However, she notes that only 6 percent of mothers work those hours, compared with 20 percent of fathers. The uncontrolled gender pay gap – that 79-cents-on-the-dollar statistic – partly results from this discrepancy.

But, it would be a mistake to conclude that women are “choosing” to work fewer hours, or selecting lower-paying jobs. In many cases, families may be making the best of a bad situation. One of the working mothers Cain Miller interviewed mentioned that working two more equitable jobs wouldn’t yield the same earnings.

“Being willing to work 50 percent more doesn’t mean you make 50 percent more, you make like 100 percent more,” she said. “The trade-off between time and money is not linear. It took a long time to get myself to the point of accepting that.”

Some families may decide to invest in the mother’s career, instead of the father’s. But given occupational segregation and unconscious bias on the part of employers and employees, it’s more likely that the father will put in those 80-hour weeks.

That’s arguably bad for everyone. Not only does it sideline the mother’s career and future earnings, and make her more financially dependent on her spouse, but it’s also stressful for the father. A study published in The Lancet found that workers who put in more than 55 hours per week have a 13 percent greater risk of coronary heart disease and a 33 greater risk of stroke.

Long hours at work also produce diminishing returns. Research from Stanford University showed that employee output drops dramatically after 55 hours per week. The team found that workers who put in 70 hours a week produced almost nothing during those additional 15 hours.

So, while overwork may be associated with a pay premium, it probably shouldn’t be. Employers may not be gaining as much as they think by pressuring workers to be available around the clock. Meanwhile, insisting on 24-hour availability might be helping to perpetuate the gender pay gap.

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Jen Hubley Luckwaldt
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