Yesterday, March 14, 2023, was Equal Pay Day, a day that is symbolic of how far into the next year women must work to earn the same amount of money that men did in the previous year. It is also the 60-year anniversary of the Equal Pay Act, which was passed in 1963 to legally require that women be paid the same as men when doing the same job.
In observance of Equal Pay Day, Payscale has updated our annual Gender Pay Gap Report for 2023, which analyzes employee-sourced salary data from our online salary survey to show what women earn compared to men. In 2023, the gender pay gap closed by one cent. It’s now $0.83: the amount that women make compared to every $1 men make, holistically.
Payscale’s gender pay gap report also analyzes the controlled gender pay gap — what should be “equal pay for equal work” when accounting for job function — which is $0.99 for every $1 men make. This is still a gap, and the gender pay gap (both uncontrolled and controlled) widens for women of color as well as when women age and climb the corporate ladder, which they do at lower rates than men.
However, not everyone understands gender pay gap research, why it is meaningful, or what should be done about it. Every year, we get questions about the gender pay gap, such as whether it’s real or made up to suit a political purpose.
So, let’s talk about it.
The history of Equal Pay Day
Equal Pay Day is meant to raise awareness about the gender pay gap, how persistent it has been since the Equal Pay Act was signed into law in 1963, and the ongoing struggle for pay equity. The goal is to activate change to close the gap and ensure that women are paid fairly for their work.
In 1963, women earned $0.59 for every $1 men earned. By 1996, women still only made $0.68 for every $1 men earned. In the late 1990s, Equal Pay Day was established by the National Committee on Pay Equity (NCPE) in the United States to raise awareness about how the gender pay gap has not closed despite legislation that makes pay discrimination unlawful.
Other countries observe their own versions of Equal Pay Day, because it has become a global movement aimed at highlighting the persistent inequalities in pay, working conditions, and social norms that disadvantage women. The goal is to advocate for policies and practices that support equal pay and opportunity for all. Today, the gender pay gap is studied all over the world.
Is the gender pay gap real?
According to a survey of 8,566 Americans conducted in 2019 by SurveyMonkey, 46 percent of men and 30 percent of women do not believe the gender pay gap is real or meaningful. They think that the research is “made up” to serve a political agenda.
However, the gender pay gap is very real — with research to back it up. Numerous studies and data sources conducted or managed by separate institutions (Payscale, Pew Research, and the U.S Census Bureau, to name a few) consistently show that, on average, women earn less than men — and their numbers are close to identical if not exactly the same each year. The gap exists across different industries, job levels, and educational backgrounds and is even wider for women of color. As previously mentioned, gender pay gap research is also conducted outside of the United States.
So why do some people think the gender pay gap is a myth?
One reason is that they may not understand the data and methodology that supports the existence of a gender pay gap. There is also often a lack of understanding about how the gap is calculated and what factors contribute to it, leading some to question its validity or dismiss it altogether. This issue is worsened by inaccurate news media reporting on the gender pay gap, which often conflates the “uncontrolled” gender pay gap with women not getting “equal pay for equal work.” This is not accurate, because the uncontrolled gender pay gap does not account for job function. The uncontrolled gender pay gap — sometimes called the opportunity gap — actually measures the types of jobs that women have compared to men and how “women’s work” is valued compared to men’s.
Another reason people don’t think the gender pay gap is real is because they believe that the gender pay gap is a result of individual career choices and working preferences — that women choose to work in lower-paying jobs or take time off for caregiving responsibilities. While these factors do contribute to the gender pay gap, studies have shown that a pay gap still exists even when they are controlled for, suggesting that discrimination and bias also play a role.
More importantly, the idea that women are predisposed to work in lower-paying jobs or must take time off work to have or raise children is sexist. This expectation does not apply to men, despite the fact that men are parents as often as women. Acknowledging the assumption that women “belong in the home” rather than the workplace because they must take on the brunt of childrearing responsibilities is central to understanding societal discrimination against women. The uncontrolled gender pay gap is a way to reveal and measure the extent and impact of this bias.
It is important to recognize that the gender pay gap is a complex issue with multiple contributing factors. Denying its existence or dismissing it as a non-issue only serves to perpetuate inequality and hinder progress towards gender equity.
Is the difference in pay meaningful?
People who question the gender pay gap sometimes argue that the difference in pay is not meaningful.
To illustrate the impact of the gender pay gap, Payscale looked at lifetime earnings for women compared to men and the total loss of wealth due to the gender pay gap over a 40-year career. At the median, women stand to lose $900,000 in lifetime earnings compared to men ($70K when controlled), and even that is probably a gross underestimate as this calculation assumes nothing more than a 3 percent annual base pay increase and no promotions in 40 years. In reality, Payscale’s gender pay gap research shows that the gap widens as women age and progress through their careers. It is also wider for women of color. The gap does not close with education either, except for those with a law degree when data are controlled.
To demonstrate the impact of the controlled gender pay gap in concrete terms, Payscale looked at the top 20 jobs with the widest gaps and lost earnings. For example, women bartenders make only $0.80 for every dollar men bartenders make. Waitresses make only $0.82 for every dollar male waiters make. When looking at higher-paid positions, the trend persists: Women physicians and surgeons in the “all other” category (top jobs align to ONET job descriptions) make $0.88 on the dollar, which translates to annual losses of $35,000 a year on average for women in this job category. Although this data is based on averages and would need to be assessed for actual people with these jobs, any pay disparity based on gender is illegal and unacceptable.
Will the gender pay gap ever close?
Payscale also looked at the gender pay gap over time and found that it is narrowing, but at a glacial speed. When stretched out over years, the gender pay gap doesn’t appear to be closing at all, as the Pew Research Center also intimated in their gender pay gap report. It is important to acknowledge that different institutions conducting this research on different data sets come to the same conclusion: The gender pay gap has not closed and is moving in that direction at an unbearably slow rate.
However, there is good news. The gender pay gap is starting to close in certain pockets.
For example, Payscale analyzes the gender pay gap by location and found that the gender pay gap has closed in the Los Angeles, Portland, San Diego, San Jose, and Washington, D.C. metro areas when data are uncontrolled (as well as controlled), which has never been the case until this year.
If you look at just where the gender pay gap has closed only when data are controlled, it is even more promising. In addition to now being closed in more metro areas (Cleveland, Miami, New York, Tampa), it has also closed for several industries including Real Estate, Technology, Engineering & Science, and Healthcare. It has closed for Transportation & Material Moving, Building, Grounds Cleaning, & Maintenance, Education, Training, & Library, and Legal occupations as well.
The controlled gender pay gap even closes for some racial minorities in 2023, including Asian women, Hispanic women, and Native Hawaiian and Other Pacific Islander women. It has narrowed to $0.99 for American Indian and Native Alaskan women and Black or African American women. The gender pay gap is also $0.99 for white women.
Why is gender pay gap research important?
We can hope that the data showing that the gender pay gap is starting to close persists in subsequent years and is corroborated by other research to generate a trend. However, the fact that the gender pay gap is narrowing and even closing when data are controlled does not mean that gender pay gap research is no longer relevant.
Gender pay gap research raises awareness on inequality between the genders. It important because the gender pay gap is a measurement of societal discrimination against women. Researchers are unable to find any other reason that fully explains the gender pay gap. This does not mean that discrimination is intentional; it can result from unconscious bias. It can also be influenced by women lacking the confidence to apply for higher-paying jobs or negotiate higher salaries due to gender norms.
In addition, pay is not the only way in which women can be discriminated against. Even if the controlled gender pay gap closes next year or in any year after, the uncontrolled pay gap will still illuminate the fact that women and men are not equally represented in higher-paying jobs.
There are several other reasons why gender pay gap research is still important:
Wealth inequality: Women, on average, don’t just earn less than men. They also have less wealth than men. In fact, the gender wealth gap is much larger than the gender pay gap. A study by the Federal Reserve Bank of St. Louis (Note: St. Louis is a metro area with one of the largest gender pay gaps, according to Payscale’s study) found that the median wealth of female respondents was just $0.55 for every dollar of male respondents’ wealth. In other words, female respondents suffered a 45 percent penalty in median family wealth compared to male respondents. The gender pay gap contributes to the gender wealth gap, making it harder for women to achieve financial independence, build wealth, and support themselves and their families.
Inequality in the workplace: The gender pay gap is often a reflection of other forms of gender discrimination in the workplace, such as the underrepresentation of women in leadership positions and the undervaluation of traditionally female-dominated professions. Payscale’s gender pay gap research looked at women in job levels compared to men and found that a greater percentage of women are still individual contributors as they get older compared to men. In fact, men 45 years or older are twice as likely to be executives than women 45 years or older. Payscale’s gender pay gap research also finds that women make less than men in every occupation, regardless of whether that occupation is dominated by men or women.
Societal norms: Societal norms and expectations around gender roles can perpetuate the gender pay gap, and vice versa. In other words, what we as a society think about women impacts how women are treated, and how women are treated impacts what we think about them. The devaluation of women is systemic and rooted in the historical dominance of men over women. These are the men who benefited by subjugating women to a supportive role “in the home.” “Traditional” societal norms and expectations around gender roles can hold women back from opportunities they might otherwise pursue and prevent them from achieving their full potential — which includes (and is evidenced by) how much they are paid compared to men.
Social justice: Gender equality is a fundamental human right. Research on the gender pay gap gives us a numerical understanding of how much we are failing to treat people equally regardless of gender. Addressing the gender pay gap is an important step towards achieving gender equality, promoting social justice, and creating a fairer and more equitable society.
What can close the gender pay gap?
Closing the gender pay gap is not only possible; it is imperative. However, doing so will take a concerted effort — including pushing for new or reinforced legislation related to pay transparency and/or pay equity — which is why raising awareness of the gender pay gap is so important.
Pay transparency legislation
Pay transparency can take several forms, such as disclosing salary ranges for job positions, sharing total rewards statements with employees, reporting employee compensation data to government agencies, and sharing the results of pay equity analysis with employees or shareholders to demonstrate that the organization provides equal pay for equal work.
In the United States, pay transparency legislation has been introduced at both the federal and state levels. For example, the Paycheck Fairness Act introduced in Congress in 2019 (but hasn’t yet passed) would strengthen existing equal pay laws and increase pay transparency requirements for employers. Multiple states, including California, Massachusetts, and New York, have enacted pay transparency laws in the past year that require organizations to post pay ranges in job advertisements — a trend that looks to expand in 2023.
This is good news, because pay transparency has been shown to be effective in closing the gender pay gap — regardless of whether it is required by law. A pay transparency study by Payscale found that the gender pay gap closes for organizations that employees rated as “highly transparent” about their pay practices in our online salary survey. Another study conducted in the early 2000s and published in 2018 found that when firms in Denmark were required to report pay data by gender, the gender pay gap was reduced by 7 percent.
Pay transparency has a positive impact on the gender pay gap because employers are more deliberate and conscientious in how they determine pay when they know that information is going to be shared with all employees. In order to post pay ranges to job advertisements with confidence, organizations need to make sure that current employees are being paid fairly or they risk losing them when trying to hire new ones. This means investing in compensation strategy and pay equity.
Pay transparency can also help close the uncontrolled gender pay gap. When pay ranges are published in job advertisements, women and other historically disadvantaged groups are more likely to apply to higher-paying jobs and negotiate for higher pay with confidence.
The case for greater investment in pay equity and DEIB
By increasing accountability around pay practices, companies can help ensure that all employees are paid fairly and equitably — including women and other historically marginalized groups. This is accomplished as part of a pay equity initiative. Pay equity involves analyzing the pay of employees in different job categories to determine whether there are any gender-based pay disparities. If any are found, steps can then be taken to address and eliminate them.
While pay equity analysis can help close the gender pay gap, it is important to note that it is not a one-time fix. It requires ongoing monitoring and evaluation to ensure that pay disparities do not re-emerge over time. Forward-thinking organizations will take steps to make pay equity central to compensation strategy and pay-increase planning to ensure that pay remains equitable with every hire, pay raise, and promotion across the organization.
Pay equity should also be a central part of a Diversity, Equity, Inclusion, and Belonging (DEIB) strategy that seeks to discover and root out discriminatory practices. Unconscious biases, gendered stereotypes, and systemic inequalities can contribute to pay disparities between men and women. Therefore, pay transparency policies should be complemented by other measures, such as anti-discrimination training, diverse hiring practices, and flexible work arrangements to promote greater gender equity and economic opportunity for all employees.
Conclusion
Employers concerned about the gender pay gap should invest in pay equity and pay transparency solutions, such as those offered by Payscale. Pay equity analysis is an important step in closing the gender pay gap, but it should be part of a broader set of efforts to promote gender equity and economic opportunity for all employees. Pay transparency can also help elevate the importance of pay equity and expedite the closing of the gender pay gap.
The gender pay gap is real, and gender pay gap research is essential. It allows us to monitor gender equality over time and provide statistical evidence for policy reform and improved workplace practices. It also offers a basis for shifting societal norms around gender roles and promoting greater equity and economic opportunity for all. It is important to continue this research so that pay inequities — and the systemic reasons for those inequities — can be comprehensively addressed.
