Demystifying the Wage Gap
You’ve heard it before: “Know your worth.”
Maybe it was your friend, helping you gain perspective after a bad breakup. But most likely you’ve heard it in relation to pay. And while it’s about how much you earn at your job, it’s more than that too. It’s about how much your time and energy are valued, and it’s about what you’re going to build for the next generation.
How much you make. It can be a taboo conversation. Possibly considered impolite or nosy, people often feel uncomfortable discussing their salary. But the fact that this conversation is never on the table means it’s hard to assess how much you should be earning based on experience, education, and overall badassery. It also keeps women down and impacts both lifetime and generational wealth.
If you’re a get-stuff-done kind of woman, this don’t-talk-about-money rule shouldn’t work for you. It’s precisely this lack of conversation that keeps transparent salary information (i.e. power) out of the hands of women, and it contributes to maintain that concept we hear debated on every policy stage: the wage gap.
In this article, we’ll explore what the wage gap really is, what causes it, its impact, and what you can do in your own life and job to know your worth and shrink the gap.
What is the wage gap?
Isn’t it illegal to pay women less than men for the same job? Well, yes. Technically, under the Equal Pay Act of 1963, an employer cannot pay women lower wages than men for equal work on jobs that require the same skill.
A year later, Congress passed the Civil Rights Act, which made it illegal to offer different wages for the same work for any protected class, such as age, race, and gender. Since then, there have been various court cases and federal and state laws that have held up this on-paper equality. And yet, there are still wage disparities between men and women across race. What gives?
The “wage gap” typically refers to the difference that men and women make over their professional careers. If you were to do a quick Google search about it, you’d discover that on average in 2020, women earn $0.82 for every dollar that a man makes. Essentially, women are earning 18% less than men for the same job. But there’s more to it than that.
According to the Center for American Progress, in 2018, in comparison to white men’s earnings of $1.00, white women earned $0.79, Black women earned $0.62, Hispanic or Latina women earned $0.54, Asian women earned $0.90, and American Indian and Alaska Native women earned $0.57. If that doesn’t get your blood boiling…
There are lots of reasons the wage gap exists, which means women need to be savvy about what they earn and how they build their wealth. The cards are stacked against us but understanding why the wage gap exists will help us overcome come it.
What causes the wage gap?
If it’s illegal to pay employees less for the same job based on gender and race, why is there a wage gap? There are so many factors that make up this gap, including the types of industries women typically work in, years of experience, hours worked, and straight up discrimination.
Industries and type of work
The stereotypes of “men’s work” – like construction and plumbing – and “women’s work” – like childcare, home health aides, and housekeepers – funnels men and women into different earning corners. What’s considered men’s work often (intentionally) pays more and offers more benefits than what’s considered women’s work. This is true at every level of employment, including in professional fields and managerial roles.
Caregiving
While women are graduating from college at higher rates than men, women usually experience some gap in their professional careers, which essentially freezes or slows their pay increases. For example, women are more likely to stay home from work than their male partners after the birth or a child. Sometimes, it’s cheaper – or at least more worthwhile – to just stay home and cut one salary than to pay for expensive childcare and miss out on being a parent. Considering a woman might be absent from the workforce until her child enters schools, that’s five or six years of earning potential that she might miss.
The same is true for women who take time away from work to care for an aging relative, like a parent. Without access to long-term paid family leave, it’s women who are forced to make the tough decision of leaving the workforce. By the time she enters it again, her job might not be waiting for her, and other rising talents may have taken her place. And suddenly all her peers are six years ahead on the pay scale.
Discrimination and bias
And then there’s just straight up discrimination. This can be especially prevalent in professional environments where pay negotiation is the norm and employees are encouraged not to talk about what they earn. People don’t want to be the troublemaker stirring up “taboo” topics in the office, so they can’t learn what’s fair pay. This means that women are often left trusting the employer to determine their worth based on experience and education, which can have subjective consequences. The fact that resumes with white-sounding names are up to 15% likelier to receive a call back than resumes of Black applicants who more clearly indicate their race...
Yeah, that’s not an employer you should trust to tell you your worth.
How does the wage gap affect wealth over time?
When there’s a gender wage gap, there’s a gender wealth gap. This means there are significant discrepancies in women’s net worth compared to men. In 2013, single women had a median net worth of $3,210, whereas single men had a median net worth of $10,150. Basically, women had $0.32 in assets compared to men’s $1.00 in assets.
Women of color experience this wealth gap greater than white women, with Black women’s net worth median at $200 and Hispanic women’s net worth median at $100, compared to white women’s median net worth at $15,640. And this is not just a single-person issue. It affects women’s security and what they’re able to contribute to their families, children, and dreams. The consequences of this wealth gap accumulate into massive wealth gaps across race. For instance, in 2016, the net worth of a typical white family ($171,000) was almost ten times greater than the typical net worth of a Black family ($17,150).
Our wealth is not just about how we’re able to spend and when we’re able to retire. It’s about what we leave to the next generation. Wealth grows when it’s passed down. Whether it’s gifting money, debt-free education, real estate, or even financial knowledge, when the next generation inherits financial security or assets, they have increased opportunities to continue growing their wealth and follow their dreams.
What can you do about the wage gap?
Remember: growing your wealth is both about security and following your purpose in life. It’s about opening doors and uplifting yourself and the next generation.
The wage gap is not destiny, but it’s certainly an obstacle to overcome. For this reason, we’ve created a list of 10 concrete actions you can take to ensure you earn the right pay and grow your wealth.
1. Know your worth
Find out how much you should be earning. One way to do this is by conducting an online search. Robert Half and Glassdoor both have salary research tools based on level of experience and location. Before walking into an interview or pay negotiation, make sure you’re aware of what people with similar backgrounds are earning.
2. Talk to friends about pay
If your friends are in the same field as you, it is especially important that you discuss pay. You might be assessing your own salary, you might be thinking about moving to your friend’s company, or you might just need to vent about/celebrate your financial situation. Either way, understand what your peers are making. The more often you discuss it, the less taboo it will be.
What’s more: it’s another opportunity for someone who loves you to remind you of your worth. You can do the same for them.
3. Pay negotiation
When you’re offered a new job or position, always be prepared to negotiate. Remember that the number your employer or future employer offers you is the number that they have chosen, that they have assessed based on your perceived value, and a number that they feel totally comfortable offering.
Employers are prepared to negotiate, so asking for more isn’t going to offend or even surprise them. You want to be happy with the number, so go in ready to respectfully discuss the value you bring to the company, what you plan to do for them, and how much you think that’s worth.
A back and forth is healthy. Feel free to practice with a friend who thinks you’re awesome.
4. Paid time off negotiation
While salary is the number-one negotiation topic, there are other areas to ensure your work-life balance is healthy and that you feel valued. If your employer can’t budge to your ideal salary, negotiate increased PTO. A few extra days a year can go a long way in the mental health department.
5. Part-time/remote work negotiation
Many women leave the workplace to care for a new child or sick relative. If you believe these life events might occur while you’re at your next job, negotiate for a more flexible work schedule. Can you work from home some days of the week? Are there any part-time employees at the company? Does everyone work traditional hours?
If you’re out on paid parental leave following the birth of your child, instead of making the decision to go back or not go back to work, can you work part-time? Can you work from home, so you can cut the commute and continue to earn and advance your career? The same goes for when you’re taking care of a sick or aging relative.
Work doesn’t need to be an all-or-nothing decision. Think about ways that you can avoid freezing your earning potential. Get creative.
6. Retirement contribution
Maybe they can’t pay you more now, but can they increase their contribution to your 401(k)? If your employer can contribute a greater number to this account, you can either save that amount each month or actively work on securing an even healthier retirement.
7. Track quantitative performance
While you’re busy being awesome at your job, make sure you track those quantitative data points. Of course, you’ll want to be strategic about sharing this kind of information when the time comes. But in the meantime, keep tabs on how much you’re earning your company. When the time comes to prove your value, you’ll have the evidence.
8. Set a date to renegotiate
If you can’t get your employer to budge, but you really want the job, set a date to revisit the conversation. A year from now, you’ll be ready with concrete performance evidence, and your employer will likely want to make you happy in order to keep you.
Unless your job has regular review periods, make sure you get this conversation on the calendar. These things have a way of getting pushed… But you’re not the kind that gets pushed around.
9. Change your mindset
The most important thing to remember when negotiating a salary is that the worst outcome is “No.” Your employer or potential employer isn’t going to rescind an offer because you advocated for yourself. If they do, that reveals them to be a shady business, and you don’t want to work for them anyway. In fact, employers expect to negotiate, so counter-offering and entering into a salary conversation is par for the course.
Just like the saying, “You’ll never know the answer if you don’t ask the question,” you’ll never get the salary you deserve unless you ask for it. Your male coworkers are asking for more. You should ask for it too!
10. Shrink the pay gap for the next generation
There is a whole history of policy (or lack thereof), bias, discrimination, and stereotypes that contribute to the wage gap, and you personally cannot change it alone. But you can approach every opportunity you earn with a clear perspective of your worth and vision. Understand the value you bring to any team and set yourself up to earn what you deserve, so you can build your wealth not just for you, but for generations to come.
Embrace Purpose. Build Wealth. Impact Generations.
At Black Girl Fly, we help ambitious women escape the rat race and build a legacy that will last for generations to come. To learn about strategies for growing your wealth, subscribe to our podcast. And for more guided learning and development, download the free Legacy Builder Audit to assess what you personally need to do to strengthen your wealth mindset and financial health.