Sorry, you need to enable JavaScript to visit this website.
Skip to main content

Wednesday, March 29, 2023

Here’s why Equal Pay Day matters

Equal Pay Day: What it is & why it matters

Equal Pay Day

By
The Currency

03.03.2023

March 14, 2023 marks Equal Pay Day, a day that’s often used to raise awareness for the gender wage gap that still exists in the workforce.

Women make up nearly half of the workforce in the United States, and they make up more than half1 of the college-educated workforce. Despite that, they still get paid just 82% of their male counterparts2 — that translates to 82 cents for each dollar a male makes.

And while we typically use this mid-March date to signify Equal Pay Day, there’s far more to the story. Equal Pay Day for some women falls much later in the year. Additionally, the wage gap doesn’t necessarily show some of the other ways women have been negatively impacted in the workforce.

What is Equal Pay Day?

Equal Pay Day — which is recognized by everyone from activists to the U.S. Department of Labor — represents the date until which women must work to get paid what their average male counterpart was paid the previous year.

In 2023, Equal Pay Day falls on March 14. That means that to get paid as much as a male made from January 1 through December 31, 2022, a woman must work an additional two and a half months.

Unfortunately, this wage gap hasn’t changed much over the past several decades.2 In 1979, the first year this data was tracked, the average woman made roughly 62% of what the average male was paid.

The most progress in closing the wage gap happened in the 1980s (when women’s pay rose to roughly 70% of men’s) and the 1990s (when women’s pay rose to roughly 77% of men’s).

Unfortunately, the wage gap has remained relatively stagnant since then. Since 2004, women’s pay has fallen between 80% and 83% of men’s (yes, the wage gap has actually gotten worse, with women’s pay falling from 83% to 82% of men’s).

Equal Pay Day isn’t the same for all women

Unfortunately, the wage gap we recognize in mid-March only tells a part of the story. After all, there are pay disparities even among women.

Asian women fare the best when it comes to the wage gap between women and white men. And while white women’s earnings fall slightly lower than the overall average female average, the women that fare the worst are Black women, Native Hawaiian or Pacific Islander women, American Native American women, and Hispanic women.

The table below shows women’s wages as a percentage of white males’ as of 2020.3

 

Income as a percentage of white males

Asian women

87%

White women

79%

Black women

63%

Native Hawaiian or Pacific Islander women

63%

Native American women

60%

Hispanic women

55%

As you can see, different women actually experience their “equal pay day” at vastly different parts of the year. While it falls in March for women overall, some women won’t have their Equal Pay Day until much later.4 For example, Equal Pay Day falls on September 21 for Black women, November 30 for Native American women, and December 8 for Hispanic women.

The gender pay gap also varies depending on the state and the occupation. The states with the largest income disparities5 are Wyoming, Utah, and Louisiana. Meanwhile, Vermont, Maryland, and California have the smallest wage gap.

Women also earn less than men across just about every occupation. Some of the occupations with the largest wage gaps include6:

  • Financial managers
  • Accountants
  • Truck drivers
  • Chief executives
  • Retail supervisors
  • Sales representatives
  • Production workers
  • Janitors
  • Managers across all occupations

Note: It’s widely known that women-dominated occupations tend to pay less. However, women's choice of work can’t be blamed for a significant portion of the wage gap. Even in those occupations that have a primarily female workforce, men still tend to get paid higher wages.

What the wage gap doesn’t show

The wage gap is already a disheartening representation of women in the workforce. And unfortunately, it doesn’t show everything.

Another important data point to pay attention to is labor participation. After all, people who aren’t in the workforce — regardless of whether it’s by choice — aren’t included in the wage gap.

As of January 2023, roughly 62.4% of people7 ages 16 and older participate in the workforce. When you break it down by gender, it’s about 67.9% of men and 62.4% of women. And while some women choose not to work, it’s not a choice for everyone.

It’s clear the pandemic had a significant impact on the workforce, increasing the unemployment rate to 13%.8 But far more women lost their jobs than men. Part of this reality is due to the industries that were most impacted by the pandemic. However, many women were also pushed out of the workforce to care for children who were home from school.

According to the U.S. Department of Labor, the pandemic pushed women’s labor force participation back to its 1987 level. It has also pushed back the date when we’re likely to reach wage parity. Women aren’t expected to achieve pay equality until 21113 — that’s 88 years from now.

What the wage gap means for women

The data around the pay gap also doesn’t accurately portray the true impact of that gap. We recognize Equal Pay Day around the same time each year. But for us to most accurately depict the wage gap, we would have to push that date further and further back each year.

After all, if women have to work until March 14, 2023 to earn what a male did in 2022, then they don’t start earning for 2023 until March 15. As a result, the 2024 pay gap would be two and a half months later (and would get later each year). The true impact of the wage gap is years of lost wages, not just 18 cents per year.

In the long run, the income disparity between men and women adds up to far greater disparities.3 Here are a few examples:

  • Women have roughly 32% of the wealth that men have
  • Women have 70% of the retirement income that men have
  • Women hold roughly two-thirds of student loan debt. Their lower wages make it more difficult to pay off that debt, meaning interest has more time to compound, and the debt becomes more expensive.
  • Women’s lower wages while in the workforce also translate to lower Social Security earnings. Women collect roughly 80% of the Social Security benefits that men do.

Efforts to end the wage gap

Efforts have been made at the state, federal, and even international levels to reduce — and eventually, eliminate — the gender wage gap. Here are some of the initiatives that have been passed at the state level9:

  • Some states have passed laws that prohibit employers from preventing their employees from discussing their salaries. When employees aren’t allowed to discuss their pay, women may not realize that they’re being paid less — and how much less they’re being paid — than their male colleagues.
  • A handful of states and cities have banned employers from asking interviewees about their current and past salaries. Women are already paid less, and when employers base new-hire salaries on those peoples’ current salaries, the pay gap is more likely to persist.
  • A few states have passed laws that require employers to report gender wage gaps within their companies. Not only can this practice bring awareness to wage gaps, but it can also encourage companies to close their wage gaps for fear of bad publicity.
  • Some states have passed laws requiring that companies disclose salary information for job openings. In some states, companies must share the salary information in the job posting. In other cases, they must provide it if an interviewee asks for it.
  • Many states10 increased their minimum wages in late 2022 and early 2023. Women make up the majority of low-wage workers,11 meaning increasing the minimum wage could benefit them the most.

However, many of the policies that could help move the needle on wage parity have nothing to do with addressing salaries specifically. Instead, we need solutions focused on supporting women in the workforce. For example, policies to make childcare more affordable could make it easier for women to enter the workforce at a higher level, allowing them to increase their wages.

Finally, much of the work to be done must happen at the micro-level. Companies must take action to eliminate discrimination in the workforce. Not only does that mean paying women as much as men, but also ensuring they have access to the same advancement opportunities and aren’t assigned a disproportionate share of non-promotable work.12

How to increase your salary (and help others do the same)

A lot of the work that needs to be done to reduce the gender wage gap must happen within governments and companies. However, there are some steps you can take to potentially increase your salary and help the women in your life do the same.

1. Share your salary

Talking about your salary with others in your company and industry can go a long way in helping women to increase their wages. The more transparent we are about our salaries, the more people will find out if they’re being paid too little.

It’s especially important that you share your salary if you’re a male worker. Chances are that many women in your company and industry may be getting paid less than you and may not realize it. Sharing your salary gives women more information, which they can use to advocate for themselves.

2. Negotiate

If you’ve been offered a new job or feel you’re being underpaid in yours, negotiate your salary. Data shows that women negotiate 30% less than men,13 which could account for some of the wage gap.

3. Change your company from within

If you’re in a position of power within your company, you have the ability to change it from within. First, you can work to change your company culture to be more inclusive and less discriminatory. You can also work to ensure the women in your company (or at least in your department) are being paid equally to the men.

Another change you can make as a leader in your company is to hire more women in leadership roles. The more women we have leading companies, the more they’ll be able to achieve pay equity.

4. Pursue higher-paying jobs

One of the best ways to increase your income is to pursue higher-paying jobs. Unfortunately, women often doubt their ability to qualify for these jobs. An often-cited statistic shows that women tend to only apply for jobs when they meet 100% of the requirements.14 Men, on the other hand, will often apply when they meet only 60% or more of the requirements.

Closing the gap for the rate at which we apply for high-paying jobs could also help to reduce the wage gap.

5. Contact your representatives

The steps listed above are a great start to help you and the women in your life increase your salaries. However, those steps still aren’t enough. For example, studies have shown that when women negotiate, they’re less likely to get the higher salary.15 Not only that, but they’re also more likely to face negative backlash, including having job offers rescinded.

Similarly, while women can be more proactive about applying for high-paying jobs, recruiters report being 13% less likely14 to click on a woman’s LinkedIn profile when she applies for a job, and are 3% less likely to send her a message after viewing her profile.

Women alone can’t change the gender wage gap without the support of policymakers and employers. You can advocate for larger-scale change by contacting your representatives at the state and local levels. Consider encouraging them to support policies like equal pay laws, anti-discrimination laws, and pay transparency laws.

1 Pew Research Center, “Women now outnumber men in the U.S. college-educated labor force,” September 2022.

2 U.S. Bureau of Labor Statistics, “Highlights of women's earnings in 2020,” September 2021.

3 AAUW, “The Gender Pay Gap.”

4 Iowa State University, “Equal Pay Day.”

5 U.S. Census Bureau, “What Is the Gender Wage Gap in Your State?”, March 2022.

6 Institute for Women's Policy Research, “The Gender Wage Gap by Occupation, Race, and Ethnicity 2020,” March 2021.

7 U.S. Department of Labor, “Labor Force Status of Women & Men,” January 2023.

8 U.S. Bureau of Labor Statistics, “U.S. labor market shows improvement in 2021, but the COVID-19 pandemic continues to weigh on the economy,” June 2022.

9 Institute for Research on Labor and Employment, “State Policy Strategies for Narrowing the Gender Wage Gap,” April 2018.

10 KCCI, “New Year's pay boost: These states are raising their minimum wage,” December 2022.

11 Assistant Secretary for Planning and Evaluation, “Who are Low-Wage Workers?”

12 Gender Action Portal, “Gender Differences in Accepting and Receiving Requests for Tasks with Low Promotability.”

13 Advance U.C. Davis, “Women Don’t Ask: Negotiation and the Gender Divide.”

14 LinkedIn, “Gender Insights Report.”

15 CBS News, “A catch-22 for women: Negotiating for higher pay can backfire, study finds,” April 2021.

 

RO2751420-0223

Empower flag logo

The Currency

Editors

The Currency is a personal finance publication powered by Empower and run by a team of writers and editors. We deliver the financial news and views you need to know for life, work and play.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements. Advisory services are provided for a fee by either Personal Capital Advisors Corporation ("PCAC") or Empower Advisory Group, LLC (“EAG”) depending on your specific investment advisory services agreement. Both PCAC and EAG are registered investment advisers with the Securities and Exchange Commission (“SEC”) and subsidiaries of Empower Annuity Insurance Company of America. Registration does not imply a certain level of skill or training.

“EMPOWER” and all associated logos, and product names are trademarks of Empower Annuity Insurance Company of America. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice. ©2023 Empower Annuity Insurance Company of America. All rights reserved.