The State of the Gender Pay Gap in 2021

The State of the Gender Pay Gap in 2021

 

New survey data from PayScale reveals how organizations perceive pay equity and what they are doing around diversity, equity, and inclusion (DEI).

Download our special DEI report

Executive Summary

In observance of Equal Pay Day (March 24, 2021), PayScale has updated our Gender Pay Gap Report for 2021 with additional data on the Racial Wage Gap to fully explore the intersectionality of pay inequity.

Since we have started tracking the gender pay gap, the difference between the earnings of women and men has shrunk, but only by an incremental amount each year. There remains a disparity in how men and women are paid, even when all compensable factors are controlled, meaning that women are still being paid less than men due to no attributable reason other than gender. As our data will show, the gender pay gap is wider for women of color, women at higher job levels, and women in certain occupations and industries.

The economic turmoil fueled by the COVID-19 pandemic and stay-at-home policies has disrupted various occupations and industries, many of them female dominated. In addition, women and people of color have disproportionately faced unemployment throughout this crisis. Women’s labor force participation is at a 33-year low as more women take on caretaker roles at home due to remote schooling. When women do return to the workforce, they may face the unemployment penalty. This penalty refers to the lower wages typically observed when people return to the workforce from unemployment. Because of this, COVID-19 may impact the gender and racial pay gap for years to come.

Our research shows that the uncontrolled gender pay gap, or opportunity pay gap, which takes the ratio of the median earnings of women to men without controlling for various compensable factors, has decreased by $0.08 since 2015. In 2021, women make only $0.82 for every dollar a man makes, which is one cent more than they made in 2020. However, this improvement could be attributable to lower paid women leaving the workforce due to layoffs or family care. The opportunity pay gap measures the barriers women face in attaining the higher paying positions of power that men often hold in society.

The controlled gender pay gap, which controls for job title, years of experience, education, industry, location and other compensable factors, measures equal pay for equal work. The controlled pay gap has also decreased since 2015, but only by $0.01. Women in the controlled group make $0.98 for every $1.00 a man makes, meaning that women are still making less than men even when doing the exact same job.

To illustrate the importance of the gender pay gap in more detailed terms, we also looked at the top 20 jobs with the highest gender pay gap. Here, the controlled gender pay gap increased to as much as $0.78 for positions such as Waiters and Waitresses, showing that the gender pay gap is very real and larger for women in certain occupations – especially in the wake of the COVID-19 recession.

Download our special DEI report

The State of the Gender Pay Gap in 2021

In 2021, women earn 82 cents for every dollar earned by men.

This figure is representative of the uncontrolled gender pay gap (sometimes referred to as the “opportunity pay gap”), which looks at the median salary for all men and women regardless of job type or employment characteristics. As PayScale’s crowdsourced data weights toward salaried professionals with college degrees, the uncontrolled gender pay gap reported is likely smaller than what occurs in the overall workforce, which includes more lower paid and hourly workers. For analysis by race, we look at only those with at least a bachelor’s degree.

Among our sample, the median salary for men is roughly 18 percent higher than the median salary for women. This figure represents a 1 percent improvement from 2020 and an 8 percent improvement from 2015, when the median salary for men was roughly 26 percent higher than the median salary for women. However, we can’t necessarily take this improvement at face value.

Due to the economic turmoil of COVID-19, women, especially women of color, have disproportionately faced unemployment at higher rates than in typical years. As more women of color, women at lower job levels, or women who are paid less leave the workplace, it may ultimately move the average median pay for women up – slightly closing the gap between men and women’s pay overall. When unemployed women do return to the workforce, they could face a disproportionate wage penalty from being unemployed compared to men, suggesting that the gender pay gap could widen again in subsequent years. Because of the disproportionate impacts of unemployment on women, we must be cautiously optimistic in recognizing this smaller pay gap as an improvement of equitable outcomes for women in the workforce.

What is the gender pay gap once all compensable factors such as experience, industry and job level are accounted for? It’s not zero.

In fact, when men and women with the same employment characteristics do similar jobs, women earn $0.98 for every dollar earned by an equivalent man. In other words, a woman who is doing the same job as a man, with the exact same qualifications as a man is still paid two percent less for no attributable reason. This controlled gender pay gap is the same as last year. The closing of the controlled gender pay gap has slowed in recent years, shrinking by only a fraction of one percent year over year. It has shrunk a total of $0.01 since 2015.

How much do women make compared to men?

Uncontrolled gender pay gap

This “opportunity pay gap” measures median salary for all men and all women.

Controlled gender pay gap

This measures median salary for men and women with the same job and qualifications.

The Gender Pay Gap Over Time

Using PayScale’s compensation data sourced from online profiles

Uncontrolled Gender Pay Gap (Opportunity Pay Gap):
Measures median salary for all men and all women regardless of job type, seniority, location, industry, years of experience, etc.

Controlled Gender Pay Gap (Equal Pay for Equal Work):
Measures pay for men and women with the same job and qualifications.

Why are women paid less than men?

Why is the uncontrolled pay gap so much larger?

The uncontrolled pay gap is an indicator of how gendered wealth and power is within a society and is driven by many forces. Occupational segregation is one large driver of the overall pay differences between men and women. For example, education and healthcare support are female-dominated occupational groups while architecture & engineering is a male-dominated occupational group. Education occupations have much lower median pay than engineering occupations, which helps explain the large differences we see in average pay for men and women when data are uncontrolled

Occupational segregation can be influenced by gender and racial stereotypes. As an example, women are often perceived as caretakers or bad at math. Such perceptions can lead to a lack of confidence and steer life decisions from a young age. For example, research shows that girls consistently receive undeservedly lower scores in math than boys, which could ultimately serve to discourage them from pursuing STEM careers. Likewise, girls are much more likely to face expectations of caring for children or elders within a family or community. Ultimately, the skills they gain in these areas from an early age could propel them into service-oriented careers such as healthcare support and education workers.

Men and women choosing different careers doesn’t mean that the uncontrolled pay gap is less significant than the controlled pay gap. The uncontrolled pay gap reveals the overall economic power disparity between men and women in society. Even if the controlled pay gap disappeared – meaning women and men with the same qualifications were paid equally – the uncontrolled pay gap could persist if high paying positions were disproportionately accessible to men.

The opportunity gap, which we discuss in more detail below, also explains the uncontrolled pay gap. This measurement is an indicator of the barriers women and people of color face in attaining the same positions of power and prestige as white men. Gender and racial biases can create obstacles to hiring, raises, referrals, promotions, and leadership. Due to the social expectations placed upon women to be mothers and caretakers, women often step out of the workforce and are penalized later on when they return to their careers. The overall differences in women’s and men’s pay and career outcomes goes beyond gender preferences and can only be explained holistically through gender and racial bias.

The state of the racial wage gap in 2021

Uncontrolled observations of the racial wage gap show women of all races and ethnic groups earn less than white men. Men of color generally earn less than white men, but all men out earn the women within their racial ethnic group. American Indian and Alaska Natives see the largest uncontrolled pay gaps relative to white men; women in this group earn $0.69 and men $0.86 for every dollar earned by a white man. Possibly influenced by the COVID-19 recession, this pay gap has worsened by 6 cents from last year for women, when American Indian and Alaska Native women had a pay gap of $0.75.

Equal pay for equal work is not a reality for many people of color. When we control for education, years of experience, occupation and other compensable factors, most men and women of color still earn less than white men. The controlled racial pay gap is a comparison of pay between white men and people of color who have the same job and qualifications. As we see below, our research into the racial wage gap shows us that racial bias persists in the U.S. workforce.

Among the controlled group, Black men and women have some of the lowest earnings compared to white men. Black women earn $0.97 for every dollar earned by a white man with the same job and qualifications. Black men see a controlled pay gap of $0.99. The median pay for white men in our sample is $75,000, thus the controlled median pay for Black women is $73,000 – 97 percent of white men’s earnings in the same job. For Black men, controlled median pay jumps to $73,900. This suggests a $2,000 pay disparity for being a Black woman and a $1,100 pay disparity for being a Black man. As we see from our analysis on lifetime earnings later on, these differences in annual earnings can amount to hundreds of thousands or even millions of dollars less for people of color over the course of their careers.

Download our special DEI report

The Racial Wage Gap

Uncontrolled

Controlled

The Covid-19 impact on the racial and gender pay gap

COVID-19 has had profound and unprecedented effects on the U.S. economy, which have disproportionately impacted women and people of color, highlighting the vulnerabilities and systemic injustices they have historically faced in the U.S.

According to the Bureau of Labor Statistics (BLS), the unemployment rate for Black or African Americans in 2020 was at 11.4 percent. For Hispanics, it was 10.4 percent. Asian workers, 8.7 percent. For whites, it was 7.3 percent. These shocking unemployment rates are often more than double the rates observed in 2019. In almost every group, with the exception of Black or African American males, women have higher unemployment rates than men. The pandemic has only exacerbated the pressures and expectations women face to take care of family and children, given the shift to at-home schooling.

The higher rates of unemployment seen by women and people of color only worsen the gender and racial pay gaps. In PayScale’s prior research on unemployment penalties, we found that on average and controlling for relevant factors, those who were unemployed at the time of receiving a job offer make 4 percent less than someone who was not unemployed. In addition, those unemployed for longer periods face larger unemployment penalties. Someone who was unemployed for more than a year experiences a 7.3 percent wage penalty.

BLS Unemployment Rates in 2019

BLS Unemployment Rates in 2020

The uncontrolled pay gap widens among laid off workers

In fact, we found that respondents who reported being laid off at some point during the COVID-19 crisis saw larger pay gaps compared to those who were not laid off. In the uncontrolled group, women who were laid off earned $0.79 for every dollar earned by men who were laid off. When controlling for compensable factors, women earn $0.98 to an equally qualified man’s dollar. In other words, unemployed men who returned to the workforce saw higher job offers than unemployed women returning to the workforce. This is in comparison to those who were not laid off, but still had their work hours decrease, where women saw an uncontrolled pay gap of $0.88 and controlled pay gap of $0.99.

Rather than layoffs, some organizations might have turned to pay cuts. Those with decreased pay saw larger pay gaps. Women who experienced pay cuts had an uncontrolled pay gap of $0.80 whereas women with increased pay had an uncontrolled pay gap of $0.88. This suggests that women experienced steeper pay cuts than men and that hazard pay or other pay increases helped women close the gap to men’s earnings; however, such pay increases might only be a temporary response to the pandemic.

The uncontrolled pay gap widens among workers with decreased pay

A deeper dive into the gender pay gap

Explore the gender pay gap by data cut

The gender pay gap widens with job level and age

The pay gap widens as women progress in their career, with women at the executive level making $0.94 to every dollar a man makes even when data are controlled. In the uncontrolled group of executives, women make a shocking $0.70 to every dollar a man makes. This is an improvement of only $0.01 since last year in the uncontrolled group and $0.01 worse in the controlled group.

Pay gaps often widen by age and job level, a sign of white men’s salaries increasing at a faster rate than other groups as they progress in their career. In looking at the career progression for women holistically, it’s clear that the gender pay gap widens as women ratchet up the corporate ladder, creating an even greater deficit in possible lifetime earnings at higher salaries than the median.

Gender wage gap by age

Women also tend to move up the career ladder at a slower pace than men. We call this phenomenon the opportunity gap. For example, a roughly equal percentage of men and women begin their careers as individual contributors, i.e. they do not manage people. In 2021, 75 percent of men and 76 percent of women ages 20 to 29 are in individual contributor roles. However, by age 30 to 44, 36 percent of men became supervisors or managers while only 30 percent of women did. Finally, men are much more likely to be directors or executives than women by age 45 or older. A total of 7 percent of women make it into an executive level role at any time of their lives while 12 percent of men do.

The opportunity gap widens as women progress through their career

Career Progression: Men

Career Progression: Women

Assumptions about what kinds of work women are best suited for is often based on gender norms and can preemptively funnel women into lower-level and lower-paid positions. The most predominant gender norm is that women are meant to have children and will eventually become mothers and homemakers (whether or not they actually do or want to), which can also result in assumptions about their proficiency, productivity levels, or commitment to their careers. Women who return to the workforce after having children are also shown to incur a wage penalty. This is the motherhood penality or the childbearing penalty. Some research suggests that having a child (or having the potential to bear children) is the primary or true cause for the gender wage gap. Indeed, a study commissioned by Bright Horizons and published in 2019 found that 41 percent of employed Americans perceive working moms to be less devoted to their work and a third judged them for needing a more flexible schedule. Men, conversely, do not experience a penalty in compensation after becoming parents. Some men are paid more after having children.

How does your pay compare?

Women of color face even wider gaps in career growth opportunity

Race and gender still limit opportunities to advance

(includes only those with at least a bachelor’s degree)

We also looked at the opportunity gap by race and found that most women of color are more likely to stagnate in their careers than white women.

Women across all races were more represented in the individual contributor group than white men. Sixty-six percent of Black or African American women and 67 percent of Hispanic women are individual contributors compared to 62 percent of white women, suggesting that Black or African American women and Hispanic women have a harder time climbing the corporate ladder than white women. For comparison, 59 percent of white men in our sample are individual contributors, which is up one percent from last year.

The opportunity gap offers a key insight into workplace racial bias and how it plays out in corporate America. Asian professionals, for example, lag dramatically behind other groups in attaining leadership roles despite higher earnings in general. Asian women are most likely to be individual contributors at 73 percent. Although Asian women are closer to pay equity with white men than white women overall, only two percent of Asian women make it to the executive level while four percent of white women did. It is also important to keep in mind that the demographic group “Asian” covers many different ethnic groups that are not treated equally in the workplace, which likely is contributing to an increase in income inequality among Asians.

From these metrics, it stands to reason that Asian workers are often perceived as highly capable and end up earning higher pay yet face other unfair perceptions that dissuade promotions. Indeed, race is consistently shown to have a high influence in getting call backs or interviews or a job. Racial bias can also occur in employee referrals and performance reviews, other factors that influence receiving promotions or job offers. In other words, while merit may seemingly be the basis for hiring decisions, the perception of other’s merit is first filtered through racial bias.

Women of color start out further behind in pay, which worsens with career progression

Our research indicates that the playing field isn’t equal at the beginning of careers. Although not everyone starts out at the individual contributor level and some people remain individual contributors (ICs) for the duration of their career, our research found that white, female ICs earn $0.83 for every dollar earned by a white male individual contributor. When controlling for compensable factors, a white female individual contributor makes $0.99 to every $1.00 her white male counterpart makes.

However, the pay gap is wider for women of color at every job level. We also observe that many pay gaps seen by women of color have widened since last year, a possible result of pay cuts or unemployment disproportionately affecting these women amidst COVID-19. For example, Pacific Islander women at the director level saw the uncontrolled pay gap widen by as much as $0.10, from $0.83 last year to $0.73 in 2021. When controlling for compensable factors, Hispanic execs saw the pay gap widen from $0.97 to $0.94. Overall, we find that there have been larger fluctuations in the pay gaps measured for women of color than in typical years.

Controlled difference in earnings on the dollar to white men by race and job level

For the most part, the gender pay gap widens for the majority of racial and ethnic groups as women move up the corporate ladder, though not to the same degree. The largest uncontrolled pay gap is for American Indian and Alaska Native women who, as executives, earn $0.60 for every dollar a white male executive earns. Even when we control for compensable factors, American Indian and Alaska Native women who are executives get paid $0.91 for every dollar a white man with the same qualifications is paid. The large difference between the uncontrolled and controlled pay gap implies that American Indian and Alaska Native women and white men work in different types of organizations even when they both hold senior positions.

Additionally, we know that unconscious bias often seeps into performance reviews and pay increase decisions and that biases disproportionately affect people of color. In 2018, PayScale conducted research to understand workers’ experiences when asking for a raise. We learned that all races are equally likely to ask for a raise from their current employer, but women of color were 19 percent less likely to have received a raise than a white man, and men of color were 25 percent less likely. Our analysis controlled for other factors that affect the likelihood of receiving a raise, like tenure and job level.

Highly educated women earn less than highly educated men

Higher education does not lead to pay equity. The gender pay gap sees minimal or no improvement at higher education levels compared to a high school degree, which has a controlled pay gap of $0.98. While other degree levels share this pay gap, some have larger pay gaps. MBAs and Health Professional Doctorates see a controlled pay gap of $0.96. Bachelor’s degrees come closer to pay parity when controlling for compensable factors and see a pay gap of $0.99.

The largest uncontrolled gender pay gap is for those with MBAs. Women with MBAs take home $0.76 for every dollar men with MBAs take home. This may be indicative of the motherhood penalty or more general bias against highly educated women or women in particular occupations or industries. This gap decreases to $0.96 when we look at the controlled pay gap.

Women with a law degree see the smallest uncontrolled gender pay gap, although still substantial. Women with law degrees earn $0.87 for every dollar earned by men with a law degree.

Gender pay gap by education level

The gender pay gap by occupation

Uncontrolled observations of the gender pay gap show women are paid less than men in every occupational group we examined. Data from the Bureau of Labor Statistics show that women make up the majority of the workforce in support, service, and wellbeing-related occupations such as community & social services, education, training & library, healthcare practitioners, healthcare support, office and administrative support, and personal care & services.

Although it might stand to reason that the gender wage gap would be smaller in occupations where women dominate, the data showed no such pattern. For example, women hold the majority of legal occupations at 52 percent women and 48 percent men. However, legal had the largest uncontrolled gender wage gap in the study ($0.63), suggesting that women and men don’t hold the same job levels or titles within the legal profession.

Education, training & library occupations have the second largest uncontrolled pay gap, despite that women make up the vast majority of educators. Women in these jobs earn $0.71 for every dollar earned by men, a $0.01 larger pay gap since last year, even though 74 percent of these workers are women. Although women represent a larger portion of this sector’s workforce, many teach primary education. Most men, however, teach secondary education, where head coaching and administrative duties are more available than in elementary school settings. Such leadership opportunities open doors for superintendent and administrative roles with higher salaries. These disparities are compounded when taken with the harmful stereotypes that women are poor leaders or bad with finances, two pejoratives that thicken the glass ceiling.

Healthcare support occupations, another female dominated sector, has the smallest uncontrolled pay gap. These women earn $0.96 for every dollar earned by male healthcare support workers. Women make up 85 percent of workers in this sector, yet still do not see the same earnings as the other 15 percent of their male colleagues. 

When data are controlled, the gender wage gap for 2021 closes for the legal profession, architecture & engineering, and education occupations. Women in these sectors earn $1.00 for every dollar earned by men when controlling for compensable factors. The controlled pay gap for healthcare support workers is $0.98. Meanwhile, farming, fishing, and forestry occupations have the largest controlled gender pay gap in 2021. Even after controlling for various compensable factors, women in these occupations make only $0.92 for every dollar an equivalent man makes. The controlled pay gap is also substantial for Installation, Maintenance & Repair ($0.94), construction and extraction ($0.95), and production ($0.95).

Gender pay gap by occupation

The gender pay gap by industry

When looking at the gender pay gap by industry, female dominated sectors continue to see some of the largest pay gaps. Finance & insurance, comprising 53 percent women, has the largest uncontrolled wage gap ($0.76), followed by agencies & consultancies ($0.82), healthcare ($0.84), retail & customer service ($0.85), and transportation & warehousing ($0.86). With the exception of transportation & warehousing, all of these are female majority industries. Industries with the smallest uncontrolled wage gaps include arts, entertainment & recreation ($0.95) and real estate & rental/leasing ($0.93).

When controlling for compensable factors, technology and engineering & science achieve pay equity. While technology and engineering & science do not have a great reputation in terms of equity, they are the only industries to achieve pay parity at the controlled pay gap. However, there is a large difference between the controlled and uncontrolled gender pay gaps in these sectors. Among other things, this is indicative of women and men not having the same job levels or job titles. In addition, women make up only 29 percent of the tech industry and 39 percent of engineering & science workers.

Gender pay gap by industry

Top 20 jobs with the widest gender pay gaps

To illustrate the impact of the gender pay gap in concrete terms, PayScale looked at the top 20 specific jobs with the largest gender pay gaps. The following list shows the gender pay gap when all compensable factors are controlled, meaning that women in these positions have the same qualifications as men in the same positions. All of these jobs show a wage gap wider than the $0.98 for the controlled group overall. Some of the positions with the highest gender pay gaps fall into occupations that are traditionally dominated by men or are subject to strong gender norms. However, there are also job titles here that do not clearly align to skills and responsibilities perceived culturally as more masculine or more feminine.

Lost earnings over a 40 year career

When looking at the gender pay gap statistics as fractions of a dollar, it can be difficult to understand the impact on earnings over a lifetime. This is difficult in part because compensation over time for an individual is not static. Annual pay for individuals tends to increase over time. However, a rough calculation can be revelatory.

For example, let’s assume the average woman starts working at age 22 and retires at age 62, a career of 40 years. Let’s also look at the median pay earned by women in 2021 for the uncontrolled group ($50,700) and the median pay earned by women in 2021 for the controlled group ($61,000) compared to men ($62,100). These differences in women’s earnings are based off a gap of $0.82 and $0.98 on the dollar respectively. In 2021, the average difference in compensation for women in the uncontrolled group compared to men is $11,400. For the controlled group, the average lost compensation in a year compared to men is $1,100.

So how much do women lose over a 40-year career? Let’s assume that over this 40-year span, the gender pay gap does not change and that employers offer an average 3 percent base pay increase to their employees each year (as past research from our Compensation Best Practices Report has shown to be the trend). If we apply this 3 percent annual base pay increase to women’s uncontrolled median pay across 40 years, a woman’s lifetime earnings add up to $3,830,000. For the controlled group, when women’s job characteristics are similar to men’s, lifetime earnings increase to $4,600,000. Using this same calculation, we find that the lifetime earnings for all men is $4,680,000.

We see that the average amount of money earned by women throughout their career is $850,000 less than that of men. When we control for women’s pay, it is $80,000 less. In other words, women with the same job title and qualifications as a man, making a median annual salary of $61,000 in 2021, would need to work more than a year longer to earn the same as a man.

The $850,000 gap in lifetime earnings is also just a rough calculation based on current trends. It leaves out the compound interest that might be earned if women were to invest these lost wages, which is even more substantial. In addition, women who face a deeper gender wage gap for their occupation, industry or location relative to the median will face deeper losses. This includes women of color, who are more susceptible to greater losses in lifetime earnings. American Indian and Alaska Native women have the most extreme lifetime wage gap relative to white men, with lifetime earnings for these women accruing to $3,920,000 in the uncontrolled group. That is $1,740,000 less than the lifetime earnings for white men ($5,660,000). Even when we use the controlled median pay for this group, the difference comes out to $140,000.

Evaluating lifetime earnings in this way offers us a bigger picture of gender and racial economic disparity in the United States. Even a matter of being pennies short of a dollar can amount to tens or hundreds of thousands of dollars over the course of a 40-year career. For women in some racial ethnic groups, catching up to men’s earnings would mean working an additional two years or more. 

Download our special DEI report

Methodology

Download our special report:

How organizations are approaching pay equity & DEI

Pay equity means different things to different organizations, and although a majority agree that pay equity is important, approaches differ. In PayScale’s 2021 Compensation Best Practices Survey, we asked thousands of organizations how they define pay equity, whether they think they have a gender or racial pay gap, whether they plan to conduct a pay equity analysis in 2021 (and what kind), and what they are doing to foster greater diversity, equity and inclusion (DEI) across their organization.

The result of these survey questions are separate from our 2021 Compensation Best Practices Report and are available now in a special report.