What is the gender pay gap?

Have you ever wondered why Equal Pay Day exists? Equal Pay Day symbolizes just how far into the year women have to work to earn what men earned in the previous year. In 2022, women working full-time, year-round earned 84 cents for every dollar a man made. For women of color, the gap is even greater.

“Across every industry, every education level, every city, and every job, women are paid less than men,” says Mica Whitfield, co-president and CEO of 9to5, the National Association of Working Women. The main culprit? Inequality. “Wage disparities don’t happen in a vacuum; they result from systematic racism, classism, and sexism.”

At Oxfam, we’ve been fighting for women's rights for years, working with organizations like 9to5 to advocate for policies that support and protect working women. In this explainer, we take a look at why the gender pay gap exists and what you can help do about it.

WHAT ARE REASONS FOR THE GENDER PAY GAP?

The gender pay gap is the difference in earnings between women and men. Women are paid less than men for many reasons—including gender discrimination in hiring and workplace policies, lost earnings potential when leaving the job market to take care of children, and insufficient worker protection laws.

“Discrimination against pregnant and lactating workers, a lack of paid family and medical leave, and a lack of the right to paid sick time—all of these drag down wages for women, particularly women of color,” says Elizabeth Gedmark, vice president of A Better Balance, a nonprofit dedicated to work-family justice legal advocacy.

This is intentional: The U.S. has a history of underpaying and undervaluing the work that women do. When the Fair Labor Standards Act was signed into law in 1938, it purposefully excluded sectors in which Black workers were concentrated. The history of Black women’s labor in America is rooted in race and gender discrimination. “The fact that white men earn more than Black men and the fact that Black women earn less stems directly from practices and policies that are based on the value placed on Black women during institutionalized slavery,” Cassandra Welchlin, executive director of Mississippi Black Women’s Roundtable, an organization dedicated to advancing women’s economic security, told Oxfam.

“The pay gap isn’t just about money,” adds Natalie A. Collier, president and founder of the Lighthouse | Black Girl Projects, an organization that uplifts Black girls and women. “It's about a value system.”

DO WOMEN GET PAID LESS FOR THE SAME JOB?

Women’s labor is undervalued in the United States. Even when a woman is as qualified as a man for the same role, she is likely to be underpaid.

• When you look at all wage earners, the average woman is paid 78 cents per $1 paid to the average man.
• There is a significant gender wage gap at every level of education. Overall, women must complete one additional degree in order to be paid the same wages as a man with less education.
• In 2021, women were more likely than men to be among the working poor (4.5 percent versus 3.7 percent).

Workplace discrimination may not always be obvious. Women tend to start their careers paid less than men and Welchlin says that due to a lack of workplace protections and supportive policies, women remain behind the power curve, unaware of the extent of the gaps in pay.

WHAT DOES THE GENDER PAY GAP HAVE TO DO WITH THE RACIAL PAY GAP?

The racial pay gap is intrinsically connected to the gender pay gap. One of the main drivers of these gaps is occupational segregation, which means that people of different races and genders are unevenly represented in particular jobs, which have very different wages, benefits, and working conditions. Oxfam research shows that women of color are disproportionately represented in low-wage jobs.

Women's work is undervalued in all sectors, and women of color continue to face additional discrimination, including pay inequities within virtually all occupations. Despite working critical jobs, women of color are paid significantly less than white men:

• Black women earn 66 cents on the dollar compared to white, non-Hispanic men at every education level.
• Women of color are over-represented in low-wage jobs without essential workplace protections. They may be segregated in lower-income neighborhoods and regions, without good transportation options to better jobs.
• While 25 percent of men earn less than $15 an hour, half of all working women of color earn less than $15.

Wage gaps can compound to hundreds of thousands of dollars lost through the course of their careers, says Whitfield.  Full-time, year-round working women lose up to $400k over the course of their careers.

HOW DOES UNEQUAL PAY AFFECT WOMEN AND FAMILIES?

The gender pay gap affects not just women. Society at large is worse off when women have less money to support and care for their families, less money to invest in their communities, and less money for the future.

• Women's earnings plateau midcareer, while men's continue to climb, which is one reason why widowed, divorced, and single women experience higher rates of poverty in old age, compared to men.
• Women are 5 to 8 times more likely than men to have their employment affected by caregiving responsibilities.
• The pay gap contributes to wealth gaps. Overall, the average American woman has a net worth of $5,541, less than half of the $12,188 average net worth of a man.

WHAT ARE SOLUTIONS TO THE GENDER WAGE GAP?

To close the wage gap in the United States, we must compensate equal work for equal pay regardless of an employee's race, gender, ethnicity, age, religion or other non-job-related factors.

“Raising wages alone will not address problematic workplace policies and societal power structures that create and perpetuate the inequalities many working women face,” says Whitfield. “Paid leave, anti-harassment policies, and affordable child care also are essential to support working women and families.”

In order to achieve this pay equity, we must:

• Enhance equal pay protections, including passing the Paycheck Fairness Act and requiring salary transparency.
• Raise the wage for all workers by passing the Raise the Wage Act and eliminate subminimum wages that disproportionately trap women in poverty.
• Disrupt occupational segregation by supporting women entering male-dominated professions and raising wages and protections across all sectors.
• Enact policies that support caregivers in the workplace so that women don’t have to choose between caring for their loved ones and their careers, including paid leave policies in the FAMILY Act and the Healthy Families Act.
• Expand and protect the rights to organize and collectively bargain by passing the Protecting the Right to Organize Act. The gender wage gap is significantly smaller among union members, and unions help to reduce the wage gap for all workers.

CONCLUSION

The gender pay gap affects everyone’s life in some way, but it’s not something we have to live with. Closing the gender wage gap is within our power.

Oxfam believes in a more equal world that recognizes all workers for their contributions, where people are paid equitably, regardless of gender, race, or other factors. We advocate for equal pay for equal work to close the gender wage gap.