The gender pay gap is real, and here’s who is hit hardest

The gender pay gap is one of those issues that sparks debate, not the least of which is whether it even exists.

To those deniers, economists have an answer: The data clearly show that women are paid less than men for doing the same work, even after controlling for issues such as education and experience. One of the reasons why some may debate its existence is that the gap can be measured in different ways, although the results consistently show depressed earnings for women, according to a new study from the Economic Policy Institute, a left-leaning think tank.

The gender pay gap hits women differently, depending on everything from age to education, EPI economist Elise Gould and co-authors Jessica Schieder and Kathleen Geier found in the report. Those who feel the worst economic pain from discriminatory pay policies aren’t the women working in low-paying jobs. Instead, the biggest earnings gap is experienced by women who work in highly paid fields, as well as those with children and older women and women of color.

“Women’s education attainment has increased disproportionately [to men’s], so now that women have comparable if not higher levels of education than men, what’s left -- why is there still a gender wage gap?” Gould said. “At the top end, you can think of the hours that women have to work, which can be harder on them because of the hours they have to put in at home.”

Women at the top of the wage-distribution spectrum earn just 74 cents for every $1 earned by men, the study found. By comparison, the median of women’s hourly wages overall are about 83 cents on the dollar. Given that highly paid women are more likely to have college or graduate degrees, as well as experience, why are they dinged more than their lower-paid counterparts?

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It could be what’s called “temporal inflexibility,” or the inflexibility of hours that some workplaces enforce, such as law firms that demand their associates work up to 80 hours a week or investment banks that call for long work nights into the wee hours.

At the same time, employers might be making assumptions about women, regardless of their educational attainment or aspirations. In other ways, social issues are still at play, given that women generally remain burdened with the “second shift” at home. Even when women are the breadwinners in their house, they end up doing more at home. 

Then there’s the motherhood penalty, with EPI noting that women’s pay lags behind that of men with similar education and experience after they have children. Fathers, meanwhile, see no corresponding fatherhood penalty. Interestingly, in one study from the Federal Reserve of St. Louis, women with children were found to be more productive than women without kids.  

“Outside the labor market, mothers are also charged a time penalty,” the EPI report stated. “For example, among married full-time working parents of children under the age of 18, women still spend 50 percent more time than men engaging in care activities within the home.”

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For women in high-wage jobs, it noted, the burden of extra home-care activities “is also a disadvantage.”

The pay gap doesn’t remain static as a woman ages, the report found. While the difference between men and women’s earnings is small when they are in their early 20s, it grows as women enter later decades of life. Women’s wage growth stops at around age 40, and then drops off faster than men’s. Women between 55 to 64 earn about 23 percent less than men in their age group, compared with a difference of just 2 percent for women and men between 16 to 24.

Over time, those pay differences snowball into a startlingly large amount of lost earnings: the average woman worker loses out on more than $530,000 from being paid less than her male counterparts. College-educated women lose even more, at $800,000 in lost wages.

As a result, women enter retirement with smaller nest eggs, leaving elderly women more likely to live in poverty than men. Women are also more likely to take career breaks to care for family members, which can hurt their earnings and ability to save for retirement. 

While the gender wage gap has been narrowing, it’s not because women have been making recent strides to catch up. Instead, men have been falling behind while women are treading water, the EPI noted. The discussion shouldn’t just be about closing the gender pay gap, but about how the economy could help both men and women reverse recent wage trends, Gould said.

“Living standards haven’t increases very much for people in this country,” she said. “We have to think about the broader context of growing inequality. It’s not just an issue of women versus men.”

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