The Negative Consequences of Unfair Gender Pay Gaps

A lot of information exists online to help companies and employees alike navigate the reality of the gender pay gap, which measures the difference between what the average man and average woman in America is paid. Right now, women make 80 cents for every dollar earned by men, making the pay gap 80%.

There are some industries where men and women experience pay equity, but the reality is that in industries dominated by men, men are paid more. And in industries dominated by women, men are still paid more. When comparing men against women with similar educational background and experience levels, the pay gap shrinks quite a bit in many industries, but that still leaves some important questions.

For example, why do many women “choose” industries that pay less, such as teaching instead of financial advising? Have men been able to advance in high-paying industries more freely than women? How has the history of employment discrimination against pregnant women led to the pay gap being what it is?

The pay gap is even more significant when you break it down by race. As of 2017, Latin American women earn only 53% of what men earn, and African American women 61% of men’s wages. Asian American women have the smallest pay gap, and yet they still only get paid 85% of men’s pay.

Understanding the gender pay gap and how it affects communities, workplaces, individuals, and our economy can help you motivate your coworkers and other decision makers to create strong policies that eliminate the pay gap in your workplace.

Economic Consequences

The Institute for Women’s Policy Research explains that if we corrected the pay gap overnight, we would see significant improvements to the economy. 60% of workers would, essentially, receive an immediate pay raise. This benefits the individual worker, sure, but the economic benefits would be substantial.

The gender pay gap represents an annual total of $512.6 billion. That’s 2.8% of our 2016 GDP. Imagine $512.6 billion suddenly injected into the economy to be used for purchases, houses, travel, debt payoffs, and much more.

The burden on employers that would be caused by the increased wages would, according to many economists, be quickly corrected by the fact that there would be more money available for consumers who want to purchase their products or services.

Consequences for Women

Natelegé Whaley, in her 2018 article about the long-term effects that the pay gap has on women, argues that there are three key things to be aware of.

1. Poverty rates: If the pay gap didn’t exist, women’s poverty rates would drop form 8% to 3.4%. For single mothers, the poverty rate would drop from 28.9% to 14.5%!

2. Student loans: Without the pay gap, women would be able to repay their student loans at a much faster rate, and with a lower percentage of non-payment.

3. Retirement: Higher rates of pay for women mean that women and men are more equitably prepared for retirement. The pay gap means that over the course of their careers, they are paid less and able to save less for their retirements.

Workplace Consequences

Workplaces are also affected by the pay gap.

If you do an internal review, you may find that the women in your workplace earn less than the men because the men are in higher earning positions. In other words, if most of your upper level managers are men, and most of your administrative workers are women, you’re probably going to see a big percentage gap between their pay.

But you should ask yourself: Why do we have so few women in these high-power positions within the company? Why have we hired so many women for the lower-wage jobs? Is it really something you can explain away by saying you didn’t get good women candidates for those upper-level jobs?

Research has shown that workplaces with a higher percentage of women experience higher profits, sales results, and productivity. Allowing a pay gap to exist within your company may be one of the major factors preventing you from hiring the best women candidates available.

Do you want to recruit the best candidates for your workplace?

Without a doubt, recruiting the best candidates for your company means appealing to candidates who are women. Actively pursuing pay equity within your company will make you stand out among your competitors and make you more likely to recruit the very top tier talent in your industry.

Check out our free Employer’s Guide to Pay Gaps and Gender Equity, and give us a call when you’re ready to learn how you can recruit the best possible candidates by promoting gender equity within your company!