March is Women’s History Month, which means it’s time for the annual readings on the differential between genders when it comes to pay and wealth.
The U.S. Census Bureau reports that when comparing the median wages of women who worked full-time, year-round to the wages of men who worked the same (based on 2020, the latest year with available data), women were paid 83 cents to every dollar paid to men.
The numbers are worse for women of color. Black women made 64 cents on the dollar compared to white men while Latina and Native American women made just 57 cents. The gap translates into $10,435 less per year in median earnings for all women, $24,420 for Black women and $28,911 for Latinas.
Before trying to understand the causes of the gap, the Department of Labor notes “the data shows that the majority of the gap between men and women’s wages cannot be explained through measurable differences between workers, such as age, education, industry or work hours. It is highly likely that at least some of this unmeasured portion is the result of discrimination.”
That said, there are factors that contribute to the differential. For example, some of the more women-dominated fields, like childcare or home health aides, tend to pay lower wages overall than jobs that men often occupy.
But even within those fields where women are more dominant, they “are paid less on average than men in the same job. When comparing more than 300 detailed occupations, there are none where women have an earnings advantage over men.”
Adding to the pay gap is the fact that women disproportionately bear the responsibility of care for children and aging adults. During the pandemic, this was amplified, as women left the workforce in droves.
The women who step out of the labor force may have less access to employment benefits, including retirement savings accounts, as well as tax preferred health benefits. Depending on how long they are sidelined, the time off from work could also reduce future Social Security retirement benefits.
A pre-pandemic study by Goldman Sachs found that the penalties of taking time out of the labor force are high for women. The analysis compared women who worked for 15 continuous years with those who took time off.
When women took off just one year, their earnings were 39% lower than women who worked through all 15 years. “In a conservative scenario, we find that a woman who takes just five years out of the workforce can forgo one-fifth of her potential lifetime income, even though she is only away from work for one-eighth of her career…While men are also penalized for time out of the workforce, women’s earnings losses for time out are almost always greater than men’s.”
Earning lower wages means women have less money to save and invest, which leads to a long-term wealth gap. According to National Women’s Law Center, U.S. women lose, on average, $417,400 over a 40-year career compared to white men – and those losses are worse when comparing across racial and ethnic groups.
This might explain why a McKinsey study found that U.S. women own $0.32 in financial assets for every $1.00 in assets that men own. For women of color, that number is only $.02 to every $1.00.
Finally, the wealth gap may prevent investment in educational opportunities for the woman herself or for future generations and could rob them of the ability to create a safety net that would help protect against unforeseen emergencies and hardship. We should seek to close the wealth gap because it is a matter of fairness, equity, and the improvement of quality of life.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.
