Equal pay for women? Not in this lifetime.
According to a new report from the American Association of University Women (AAUW), the pay gap may have narrowed considerably in the past 100 years, but it will still take another 136 to do away with it entirely.
In 2015, women working full-time in the U.S. were typically paid just 80% of what men were, creating a sizable 20% wage gap on average, AAUW said. Since 1960, that gap has narrowed thanks to women’s progress in education and their growing participation in the workforce. But in recent years, women’s progress has stalled, and if things continue to progress at this slower rate, “women will not reach pay equity with men until 2152,” AAUW warned. Here’s what that could mean for your money.
The Financial Effects of the Pay Gap
As the AAUW pointed out, an average 20% pay gap affects women’s finances in myriad ways. For starters, it contributes directly to their poverty, which could be seen as recently as 2015, when 14% of women between the ages of 14 and 64 were living below the federal poverty level, compared with 11% of men, AAUW said. For those ages 65 and older, 10% of women were living in poverty, compared to 7% of men.
The damage persists well after a woman has left the workforce, AAUW said. When women retire, “they receive less income from Social Security, pensions and other sources than do retired men,” and other benefits such as disability and life insurance are smaller, since they’re typically based on earnings.
Broken down by demographic, the pay gap disproportionately affects women of color more than non-Hispanic white women and women of Asian heritage, AAUW said. And though the earnings and pay gap do vary according to a woman’s unique situation, they “persist across educational levels and [are] worse for African American and Hispanic women, even among college graduates,” AAUW said. The implication for student loan debt is concerning, since women working full-time in 2012 had a tougher time paying off their loans, on average, than men who were working full-time.
A Matter of Choice
Personal choice also plays a key role in the pay gap. “In 2015,” AAUW said, “the U.S. civilian workforce included nearly 149 million full- and part-time employed workers; 53% were men, and 47% were women … But women and men tend to work in different jobs.” There are more women in education, office, health care and administrative support roles, AAUW said, while men are “disproportionally represented” in production, transportation, maintenance and repair roles. This means segregation is a factor, especially since the jobs associated with men tend to pay more than those occupied by women, despite requiring similar levels of skill.
While gender segregation has decreased in the past 40 years, AAUW said, women in male-dominated jobs still face other obstacles like being paid higher salaries and breaking into a historically male field in the first place. There is also the issue of parenting, which can require taking time off work or cutting back hours, which puts women with children in a tough spot. The so-called “motherhood penalty,” which goes beyond actual time taken out of the workforce, can hinder a woman’s chances of landing full-time employment.
Beyond these factors, some employers are just plain biased, and a woman’s choice of college major, occupation, work hours and time out of the workforce may have nothing to do with her odds of securing fair pay, the report said. Women are less likely to land leadership roles, AAUW said, and, of course, “gender bias also factors into how our society values some jobs over others.”
So What Can You Do?
With all these factors in mind, how can modern-day women protect their finances? The odds certainly seem stacked against it, given the factors above. But there are ways to counter the problem. A budget can help you stay on top of your day-to-day finances without going into debt, while putting aside whatever you can afford can beef up your savings for the long term. It also helps to know where your credit stands, as this can give you a glimpse into the health of your finances. (You can view two of your free credit scores, updated every 14 days, as part of your credit snapshot on Credit.com.)