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Key Takeaways
ARTICLE | The Employers’ Guide To The Gender Pay Gap
From our research, the pay gap is smaller than it has ever been before, with women’s pay relative to men’s pay climbing from about 83% in 2022 to about 83.6% as of 2023.
Despite the somewhat smaller pay gap, however, women who worked full-time at either a wage or salaried job in 2023 earned about $1,005 per week, while similarly situated men earned about $1,202 per week.
Although the pay gap has been closing fairly consistently over the last 40 plus years with only a few relatively minor setbacks along the way, the rate at which the gap is closing has been much slower over the most recent 20 years than it was in the 1980s and 1990s.
While the pay gap has been shrinking at a somewhat quicker pace in recent years than it had throughout most of the millennium to date, there is still more work to be done, with more than a 16% difference remaining.
While this difference in pay still exists, it is also worth noting that the gap can narrow or can expand considerably based on a number of other variables, including age, ethnicity, education, and location.
There are some interesting comparisons that can be made between how age impacts men’s and women’s pay rates differently.
Both men and women experience their highest earning years between the ages of 35 and 64 broadly, but women tend to hit their peak earning years earlier than men do.
The data indicates that women tend to earn the most in their careers between the ages of 35 and 44 with a slight drop off from 45 to 54, while men tend to see their earnings peak between the ages of 45 to 54 with a slight drop off from 55 to 64.
Interestingly, the size of the pay gap is smallest between men and women when they are starting their careers, and it grows consistently through retirement age.
For example, there is only a 6.2% difference between women’s and men’s pay rate in the 16 to 24 age group before it grows to an 11.2% difference in the 25 to 34 age group. The pay gap jumps again to 16.8% in the 35 to 44 age group, then climbs to 20.2% for men and women between the ages of 45 and 54, before peaking at 22.8% at for people 55 to 64, and finally receding a bit to 17.3% in the 65 and up age group.
The most inter-demographic growth in the pay gap occurred between the 25 and 34 age group and the 35 and 44 age group, which saw a 5.7% increase in the pay gap, followed by the increase between the 16 and 24 age group and the 25 to 34 age group, which was a 4.9% bump. The smallest occurred between the 45 and 54 age group and the 55 to 64 age group, which only recorded 2.6% pay gap growth.
While it may be tempting to interpret these data patterns with a smaller pay gap in the younger demographics as reflective of some kind of generational change, that is unlikely to be the case given that these data patterns are in line with historical expectations.
While women as a whole are paid a little under 84% of what men as a whole are paid, there is a fair amount of variation in the size of that pay gap between different races and ethnicities.
Black women and men have the smallest pay gap, at about 92%, with median weekly earnings for black women at $889 compared to $970 for black men.
The pay gap between Latina women and Latino men is about 87% and exceeds the national median, with Latina women earning a median weekly wage of $800, and Latino men earning about $915 per week.
The pay gap between white women and men, on the other hand, is about 83% - just under the national median - with white women earning a median $1,021 per week compared to the $1,225 white men earn per week.
According to the data, the largest pay gap exists between Asian women and men, with Asian women earning about $1,299 per week, which is about 79% as much as the median $1,635 Asian men earn.
Interestingly, the races/ethnicities with higher median weekly pay had larger gender pay gaps than those with lower median weekly pay, which aligns with the smaller pay gaps recorded in early career stages compared to later career stages when earnings typically peak.
Also, while the gender pay gap remains substantial in each of these examples, it is also narrowing in each case, with black women recording a 2.2% inflation-adjusted increase last year, and Asian women seeing an increase of about 1.1% to their median pay. White and Latina women each saw their inflation-adjusted pay rise by less than 1%.
While women have narrowed the pay gap more than 20 percentage points between 1979 and 2023, the vast majority of those gains have gone to women with college degrees.
Women who did not graduate from college saw their inflation-adjusted earnings grow by only 4% between 1979 and 2023. Women who graduated high school but did not attend college only did marginally better with a 6% inflation-adjusted pay increase over that time. Women who attended some college or earned an associate’s degree didn’t do much better at 8%.
Women who earned a bachelor’s degree or higher, however, saw their median weekly pay increase by 38% between 1979 and 2023, which stands in stark contrast to the pay scale increases earned by less-educated women over the last near half century.
For context and comparison, men with bachelor’s degrees or higher saw their weekly median pay rise by 20% over the same time span, while male groups with associates degrees, some college, high school degrees, and no high school degrees actually saw their median pay fall between 10% and 23% during those years, depending on their level of education.
The following figures represent the median pay of women relative to the median pay of men in each state as of 2023.
The range runs from Louisiana (where women earn a median 74% of what men earn) to California (where women’s median pay is 90% of men’s pay).
The first comparable earnings data comparing pay by gender was collected in 1979 and indicated that women earned about 62% as much as men did at the time.
While the progress has been pretty consistent in terms of narrowing the pay gap over the last 45 years, the rate of improvement itself has been less consistent, with a few short periods of rapid advancement interspersed with periods of slower change and in some cases even minor regression.
Between 1979 and 2023 as women’s pay rates relative to men’s pay rates climbed from 62% to 84%, the total percentage change over that 44-year window amounts to only a 22% narrowing of the pay gap, which equals 2% per year on average.
That said, the vast majority (~70%) of that pay-gap-narrowing occurred between 1980 and 2003 when women’s pay relative to men’s rose from 64% to 79%. In the last 20 years of data collection, however, the pay gap has only decreased by an additional 5%, with women’s earnings relative to men’s increasing from 79% to 84%.
It’s also worth pointing out that there have been several occasions over the years when the data has indicated that the pay gap may be moving in the wrong direction. For example, from 1993 to 1997, women’s pay relative to men’s fell almost 3 points from 77.1% to 77.4%, which was the longest stretch of backslide in terms of closing the pay gap since this data began being collected.
A much smaller widening of the pay gap occurred between 2005 and 2008, as well, when women’s pay relative to men’s pay fell from about 81% to about 79.9%, and there have been a few other steps in the wrong direction of about a point or less that were recorded in 2001, 2012, 2015, and 2018.
Despite those outlier regression years, while it is clear that women’s pay relative to men’s pay has been trending upward for the most part, it is equally clear that the rate of improvement has stalled significantly over the last 20 years.
Notably, however, the most recent 5 years of data pulled from 2019 through 2023 do show the pay gap narrowing at a somewhat faster pace than it had for much of the current millennium, with the most recent 5 years accounting for almost 66% of the narrowing of the pay gap that has occurred over the last 20 years.
Still, the average percentage by which the pay gap has narrowed each of the last 5 years is only 0.42%, which is less than a quarter of the 2% average annual pay gap narrowing that has been recorded since data collection began.
In sum, not only is there still more than a 16% pay gap between women and men, but even though the pace at which the gap has been closing over the last 5 years has been picking up, the rate of change is still considerably slower than it has been on average over the past half century.
Beyond the demographic factors affecting the gender wage gap addressed in this piece (i.e. age, race/ethnicity, education, and state) there are of course some structural factors that can influence the size of the gender pay gap, both in general and for a given subset of women workers.
One prime example is how different industries and jobs often compensate workers differently and in some cases have significantly different participation levels by gender, as well. Primary school teaching jobs are disproportionately held by women and pay relatively less, while the energy and construction industries pay relatively more and are disproportionately male, which can exacerbate the pay gap.
These kinds of structural disparities will make it difficult to entirely close out what remains of the gender pay gap without a major shift in both how women and men distribute themselves among the workforce, and how the value of some types of work is perceived and compensated.
Still, the progress that has been made over the last 50 years is very real and should be celebrated, but not without keeping an eye on what may be the most consistent trend evident throughout this data - the more money involved, the greater the pay gap. Accordingly, while it is certainly important to minimize the pay gap at the point of entry level jobs for those interested in increasing gender pay equity, continuing progress will require greater emphasis on eliminating the gender pay gap at top-salaried positions.
For the time being, however, it seems employers that can competently address the gender pay gap within their own organizations and can confidently share those results with talent will continue to maintain a distinct advantage in the labor market among a population of historically underpaid workers.
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