The 2020 Gender Pay Gap Report Reveals that Women Still Earn Less for Equal Work

PayScale is pleased to announce the launch of the Gender Pay Gap Report for 2020. This is one of our most popular and extensive reports of the year, focused on the difference in earnings between men and women when comparing equal pay for equal work (when the data are controlled for compensable factors) as well as holistically (when the data are uncontrolled).

Between January 2018 and January 2020, nearly 1.6 million people took PayScale’s online salary survey, providing information about their industry, occupation, location and other compensable factors. They also reported demographic information, including age, gender, and race.

PayScale launches the Gender Pay Gap Report in advance of Equal Pay Day, which occurs on March 31, 2020 for the United States. Equal Pay Day was started by the National Committee on Pay Equity (NCPE) in 1996 to highlight the gap between men and women’s wages and raise awareness of how far into the year the average women must work to earn what the average man earns in the previous year.

The Findings: Statistically, Women Are Still Paid Less

PayScale’s Gender Pay Gap Report shows that men and women still aren’t receiving equal pay for equal work, as women are making $0.98 to every $1 that a man makes when all factors that influence compensation (position, job level, years of experience, etc.) are controlled. This figure has remained unchanged since 2016. When data are not controlled, women are shown to make $0.81 to every $1 a man makes, demonstrating that more women occupy lower paying positions than men. This figure has increased 2 percent since our Gender Pay Gap Report last year, progress which is significant but underwhelming given the attention that has been put on the gender pay gap in recent years following the #MeToo and #TimesUp movements that began in 2017 and 2018 respectively as well as several pay equity lawsuits being fought be some of America’s biggest companies.

The agonizingly slow close of the gender pay gap is more disconcerting considering that The Equal Pay Act — a law enforced by the EEOC requiring that men and women be given equal pay for equal work — was signed into law in 1963, almost 60 years ago. In 1963, women made $0.59 for every $1 a man made. Progress in closing the gender wage gap was made initially. However, progress has slowed. Since 2015, the uncontrolled gender pay gap has only decreased by $0.07.

Why the Gender Pay Gap is Important

Not everyone believes the gender pay gap exists. According to a survey by SurveyMonkey of 8,566 American adults in 2019, 46 percent of men and 30 percent of women believe that the gender pay gap is “made up to serve a political purpose” and is not a “legitimate issue”.

Part of the confusion lies in misuse of the term “gender pay gap.” The media sometimes reports the uncontrolled gender pay gap figure of $0.81 to $1 and then uses the phrase “equal pay for equal work.” This is inaccurate, as “equal pay for equal work” applies only to the controlled gender pay gap, which is currently $0.98 to every $1 earned by a man.

Doubtless, the difference of 2 cents seems insignificant to many. While the controlled wage gap may seem small, it is a gap with statistical significance and represents a difference in pay between men and women for reasons that cannot be attributed to compensable factors. In other words, women are paid 2 percent less than men due to no attributable reason other than gender. In addition, what often gets lost in translation is what the uncontrolled wage gap truly represents — that women are less likely to hold high-level, high-paying jobs than men. In terms of impact on earnings over a lifetime, PayScale’s analysis found that women stand to lose $900,000 on average over the course of a 40-year career for the uncontrolled group and $80,000 for the controlled group.

Detractors often claim that the difference in wages between men and women is explained by life choices rather than discrimination. In particular, it is claimed that women choose to work part-time or work in less demanding jobs with more flexibility in order to have children and care for families and that this reality negates the importance of a gap in wages between the genders.

While this is somewhat true, the conclusion that the gender pay gap doesn’t matter or that women’s choices negate the existence of systemic barriers to opportunity is false.

It is true that more women choose careers in part-time or lower paying occupations. But this is evidence of occupational segregation. The uncontrolled gender pay gap is useful for demonstrating the impact of women being under-represented in higher paying occupations or failing to be promoted to more senior roles. What it suggests is that the opportunity for women is narrower than it is for men or that the encouragement given to women to pursue high paying occupations is lacking, especially in occupations that break standard gender norms.

The data also show that women are paid less than men even in lower paying occupations. For example, according to PayScale’s 2020 Gender Pay Gap Report, waitresses make $0.86 compared to every $1 male waiters make even when all data are controlled. Women who assemble electronics make $0.84 to every $1 men in the same occupation make. Women artists make $0.89 to every $1 made by male artists. Women in higher paying occupations also make less, such as women anesthesiologists, who are shown to make $0.83 to every $1 a man makes. This is evidence of women not earning equal pay for equal work.

It is also true that women experience a drop-in compensation as a result of having children. The Motherhood Penalty is a well-documented phenomenon showing that women with children earn less than women without children. Men with children, however, sometimes make more than men without children. According to Equal Pay Today, mothers make $.70 to every $1 fathers make.

All of this is to demonstrate the gender pay gap is very real and suggestive of penalties levied against women for stepping out of gender norms, or in anticipation of women fulfilling gender norms by eventually becoming mothers and caretakers. However, the gaps experienced by women vary by occupation. They also vary by other factors.

Women of Color Experience a Wider Gender Pay Gap

Women of color face additional barriers in getting fair pay and advancing in the workplace compared to white women. In the 2020 Gender Pay Gap Report, we took a close look at the intersection of gender and race and examined how the gender wage gap differs for women of various races.

In the United States, the gender pay gap for women varies by demographic. In 2020 for the uncontrolled group, compared to each $1 earned by a white man:

  • American Indian and Alaskan Native women earned $0.75
  • Asian-American women earned $0.95
  • African and Black American women earned $0.75
  • Hispanic women earned $0.75
  • Native Hawaiian and Other Pacific Islander women earned $0.80
  • White women earned $0.81

The 2020 Gender Pay Gap report also examines the opportunity gap and found that women across all races and ethnicities were more represented in the individual contributor group than white men, showing that women, and especially women of color, have more difficult advancing to managerial and executive roles than white men.

Impact of the Coronavirus on Women’s Earnings

Given the significance of the Coronavirus pandemic of 2020, PayScale also looked at the impact of the gender wage gap on occupations most vulnerable to financial risk. For example, women elementary school teachers and flight attendants make $0.92 for every $1 a man makes when all compensable factors are controlled. These occupations are currently under threat of furloughs, unpaid time off, or layoffs given school closures and travel bans to flatten the curve during the pandemic. Women also make up a greater percentage of the labor force in occupations such as Community & Social Services, Education, Library & Training, Office & Administrative Support, and Personal Care & Services. All of these occupations are likely to suffer in this time of economic uncertainty.

The Gender Pay Gap can also be felt among healthcare practitioners. Female family doctors (GPs) make $0.94 for every $1 a male family doctor makes. Meanwhile, nurses – which are 90 percent female – make $0.98 to every $1 a male nurse makes. Again, this is when all compensable factors are controlled, meaning that there is no discernible reason for the differences in compensation other than gender.

Why the Gender Pay Gap Matters to Employers

Most employers want to pay women fairly in comparison to men. The obstacles that result in the gender pay gap are often unintentional and invisible. They can be driven by unconscious bias, outdated compensation practices that rely on past salary history, or negotiation tactics or expectation of self-advocacy for raises and promotions that favor men.

Employers should care about the gender pay gap because paying workers fairly is the right thing to do – for men as well as women. Employers should also care about compliance with federal and state laws and take active steps to manage pay equity as part of standard compensation planning for all employees. Any woman making less than any man doing the same job that can’t be justified by documented, compensable factors can log a complaint with the EEOC or sue for pay equity under the Equal Pay Act. It is therefore in an employer’s best interest to make sure compensation practices are strategic and to monitor internal pay equity regularly for issues.

PayScale offers pay equity analysis with multivariate regression testing on your up-to-date employee data as part of advanced reporting with our MarketPay product.  If you are interested in learning more about pay equity analysis and particularly how to obtain buy-in from executive leadership or your legal team, we also recommend that you download our whitepaper: How to Advocate for Pay Equity Analysis.

Learn more from PayScale’s 2020 Gender Pay Gap Report.