Just ahead of Equal Pay Day (coming up on April 12) Carolyn B. Maloney (D-N.Y.), ranking member of the U.S. Congress Joint Economic Committee (JEC) released a new report that takes another hard look at the gender pay gap and its long-term effects on women, their families, and the economy.
Although the study found that the wage gap between men’s and women’s median earnings has closed substantially since the 1960s when women were just starting to enter the workforce in large numbers, the report indicates that at the current rate of change, the gender pay gap will not close until 2059. Until it does, a woman working full time, year-round, earns $10,800 less per year than a man, based on median annual earnings. This adds up to nearly a half million dollars over a career.
The report found that on average, the gap hovers around 79%. But that’s the broadest estimate. We’ve reported on the complexity of the gender wage gap. It’s different based on industry (especially in tech) and location. For women of color, the inequity is most stark at less than half what their white, male counterparts are paid. That’s one of the reasons why this 57-page deep dive goes into the latest income data by gender as well as age, race, state, and congressional district.
And forget about playing the trump card of higher education. Despite the fact that more women are earning college degrees, women’s median earnings are lower at every level of education. “In fact, women are often out-earned by men with less education: The typical woman with a graduate degree earns $5,000 less than the typical man with a bachelor’s degree,” the report’s authors write.
One of the less well-known issues in the wage gap is its effect on women at different stages of their careers. Millennials stepping on to the career ladder for the first time may not even feel the gap in their salaries. More than 10,000 millennial women surveyed by Levo didn’t believe there was a gender wage gap at all. The report found that there was a disparity among those aged 18-24 (women earned 88% of what their male counterparts earn).
The gap gets wider as women continue on through their careers, affecting older workers most dramatically. Women between 45 to 54 years of age typically earn only 70% of what their male counterparts earn. “Lower pay throughout their working lives also means that women contribute less to retirement plans, receive lower pensions, and lower Social Security benefits,” Maloney said in a statement. “The result is that women have substantially less income than men in retirement and are much more likely to live in poverty as they grow older.”
Earning lower wages throughout their lives causes women to have less money in retirement. That’s because without working, or working part-time, there is less money to put toward Social Security, pensions, or personal savings.
Sallie Krawcheck, cofounder and CEO of Ellevest, reported on the so-called “retirement savings crisis” and its disproportionate impact on women. This study backs up her concern for the economy by illuminating the fact that retirement income for women ages 65 and older is 56% less than the median income for men in the same age group. The grand total income for women of retirement age in 2014 was $17,400.
Women 75 years and older are almost twice as likely to live in poverty as men. And they will live longer in that position, too. According to data compiled by the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can tack on a couple more years to 86.6.
Krawcheck notes that currently the only conventional solutions to this issue are raising taxes and cutting entitlements.
Attacking the gender pay gap at the start changes this dynamic. “The disparity between men’s and women’s earnings is not inevitable,” said Maloney. “In many ways, the pay gap is due to obsolete social norms and inequitable workplace policies that make women pay a steep price for becoming mothers and caring for their children.”
Yet the report points out the fact that even when this and other known reasons for differences in pay are taken into account, there’s still a gap of 40%, which may point to lingering discrimination.
As U.S. Treasurer Rosie Rios pointed out, gender parity is an economic issue. In a typical household, the mother working outside the home contributes nearly 40% of their family’s total earnings.
The Council of Economic Advisers found that the U.S. economy is $2 trillion bigger now than it would have been if women hadn’t increased their participation and hours since 1970. The latest report from the McKinsey Global Institute suggests that the U.S. GDP could add yet another $2.1 trillion by increasing women’s workforce participation and achieving parity.