APU Business Original

Equal Pay Day: Raising Awareness of US Pay Disparity Issues

By Cynthia Gentile, J.D.
Faculty Member, Dr. Wallace E. Boston School of Business

March 24 is Equal Pay Day in the United States. This event recognizes that the average woman has to work almost three months longer to earn what men commonly earn in a year.

Start a management degree at American Public University.

However, the date of Equal Pay Day changes each year, due to an annual calculation that reflects improvements to the median earnings of full-time, year-round workers with data provided by the U.S. Census Bureau. March 24 is the earliest date since groups began to track women’s pay data. While the overall situation with fair pay for women is gradually improving, it will take until approximately 2059 for women to achieve equal pay in the United States at the current rate.

Pay Equity Varies by Ethnicity

Pay equity calculations vary greatly by ethnicity as well. Women in the Asian American Pacific Islander (AAPI) community earn, on average, 85 cents for every dollar earned by a white man. But these numbers vary widely by country of origin, with some AAPI women earning as little as 52 cents for every dollar earned by their male counterparts.

Similarly, Black women earn just 63 cents for every dollar earned by a male and don’t reach their Equal Pay Day until August 3, 2021. Native American women fare even worse, earning 60 cents on the dollar. Latina women suffer from the most disparate income, earning just 55 cents on the dollar. The average Latina worker won’t hit pay parity until October 21, 2021!

Surprisingly, More Education Widens the Wage Gap between Genders

Another surprising reality is that more education actually widens the wage gap between women and men. Women earn undergraduate or graduate degrees much more frequently than the average U.S. male.  

Although earning an undergraduate or graduate degree equates to higher lifetime earnings in general, women across the board still earn less than their male counterparts. The calculations of pay disparity are complex, but women who hold a bachelor’s degree earn approximately 75% of what a man holding that same degree earns.

Why Does the Pay Disparity Still Exist?

Many people point to the Equal Pay Act of 1963 and ask why this pay disparity between men and women still remains embedded in our economy. The goals of the Equal Pay Act were straightforward — “equal pay for equal work” — but in reality, this assessment is complicated.

Federal law requires that women and men doing substantially the same job be paid the same salary. The determination is based on job description, not job title.

Although almost 60 years have passed, an average U.S. woman still only earns 82 cents for every dollar earned by a U.S. man. This equates to a loss of over $10,000 in median annual earnings.

Over her lifetime, the average U.S. woman will earn almost a half-million dollars less that her male counterpart. This calculation is reflective of women workers overall and is even more stark when the pay data is broken down by state. While a woman in Vermont can close her lifetime earning gap to just under $184,000, a woman in Wyoming may suffer a lifetime earning gap of over $800,000!

Solutions for the Pay Disparity Problem

Economists are advancing many strategies to close this gap. The prospects are exciting, but the policy challenge looms large. Some of the key approaches to resolving pay disparity include:

1. Increasing the federal minimum wage

The so-called “Fight for $15” has gained traction in the last few years, culminating with this change to the federal minimum wage almost being included in the American Rescue Plan Act. Ultimately, this provision was not added to the bill, but Congressional efforts continue.

According to the Economic Policy Institute, the majority of minimum-wage earners are women. Increasing the federal minimum wage would serve to increase the salary of these women workers and close the pay gap.

There are also current conversations around raising and ultimately eliminating the subminimum wage – commonly referred to as the tipped minimum wage – which sits at just $2.13 an hour. At the median, women tipped workers make $10.07 per hour, while men make $10.63. Since 59% of tipped workers are women, this difference is a significant component of the overall pay gap.

2. Passing the Equal Rights Amendment to become the 28th Amendment to the U.S. Constitution

Adding the ERA to the U.S. Constitution would bolster legal efforts to end sex-based discrimination in hiring, compensation and promotion. It would bring clarity to the laws already in place and speed the passage of other laws necessary to close the pay gap.

3. Mandating paid family and sick leave and provide low or no cost high-quality childcare

The Family and Medical Leave Act hasn’t been significantly changed or expanded since its passage in 1993. The COVID-19 pandemic exposed a well-known reality — women leave the workforce to care for children and medically fragile adults in greater numbers than men. This departure from the workplace is due in no small part to existing pay inequities.

Supporting all employees with better paid leave policies will help to close the pay gap. Further, childcare costs often nearly exceed the salary earned by women. Women who leave the workforce to care of a child lose both immediate earnings and the lifetime earnings attributable to career growth and promotion.

The research around pay inequality is happening in nearly all sectors of our society. The data is complex, the assessments are inconsistent, and the results are often frustrating and confusing, but research clearly demonstrates the need for concerted efforts to close the pay gap for all women. On Equal Pay Day in 2021, it is crucial to consider what steps we can each take to make pay more equitable for all employees.

About the Author

Cynthia Gentile is an associate professor of management at American Public University. She holds a Juris Doctor from Rutgers University School of Law and is licensed to practice law in Pennsylvania and New Jersey. She teaches courses in human resources, management ethics, and employment law for American Public University and West Chester University of Pennsylvania. When she is not teaching, Professor Gentile is a dedicated advocate for equality, and sits on the board of the Alice Paul Institute’s Equal Rights Amendment Advocacy Committee. She is also a host on the Leading Forward podcast channel, with a dual focus on women business leaders and legal rights and responsibilities related to diversity, equality, and inclusion in the workplace.

Comments are closed.