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The difference between the American people is the biggest in income. This difference is due to the top 1% and even top .01% of America tend to make over 2 times the bottom 90%. They have only seen a greater increase of this income due to after-tax income. People who work at minimum wage have not seen much growth either, with the same annual wages since 2007 staying within $1,000 of each other.

“Income Inequality.” Inequality.org,
[ https://www.inequality.org/facts/income-inequality/ ]

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Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Income inequality refers to the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years.

Household Income

Income disparities have become so pronounced that America's top 10 percent now average more than nine times as much income as the bottom 90 percent. Americans in the top 1 percent tower stunningly higher. They average over 40 times more income than the bottom 90 percent. But that gap pales in comparison to the divide between the nation's top 0.1 percent and everyone else. Americans at this lofty level are taking in over 198 times the income of the bottom 90 percent.

The top 1 percent of America's income earners have more than doubled their share of the nation's income since the middle of the 20th century. American top 1 percent incomes peaked in the late 1920s, right before the onset of the Great Depression.

Inequality in America is growing, even at the top. The nation's highest 0.1 percent of income-earners have, over recent decades, seen their incomes rise much faster than the rest of the top 1 percent. Incomes in this top 0.1 percent increased 7.5 times between 1973 and 2007, from 0.8 percent to an all-time high of 6 percent. The Great Recession in 2008 did dampen this top 0.1 percent share, but only momentarily. The upward surge of the top 0.1 percent has resumed.

The 1990s saw the annual incomes of the ultra rich explode in size. Between 1992 and 2002, the 400 highest incomes reported to the Internal Revenue Service more than doubled, even after the collapse of the dot.com bubble in 2000. In the early 21st century, the economic boom driven by the real estate bubble would more than triple top 400 average incomes before the 2008 economic collapse.

The Congressional Budget Office defines before-tax income as "market income plus government transfers," or, quite simply, how much income a person makes counting government social assistance. Analysts have a number of ways to define income. But they all tell the same story: The top 1 percent of U.S. earners take home a disproportionate amount of income compared to even the nation's highest fifth of earners.

Since 1979, the before-tax incomes of the top 1 percent of America's households have increased more than four times faster than bottom 20 percent incomes.

The Congressional Budget Office defines after-tax income as "before-tax income minus federal taxes." After taxes, top 1 percent incomes are increasing even faster than before taxes. Before-tax income growth for the top 1 percent has averaged 186.8 percent since 1979. The after-tax increase: 192.2 percent. A progressive tax system should function to narrow income gaps between the affluent and everyone else. Over recent decades, America's tax system has done no narrowing.

CEO Pay and Benefits

In the United States today, unions have a much smaller economic presence than they did decades ago. With unions playing a smaller economic role, the gap between worker and CEO pay was eight times larger in 2016 than in 1980.

The CEO-worker retirement benefit gap is even larger than the wage gap. As of the end of 2015, just 100 CEOs had company retirement funds worth $4.7 billion - a sum equal to the entire retirement savings of the 41 percent of U.S. families with the smallest nest eggs. Workers lucky enough to have a 401(k) plan through their employer had a median balance of just $18,433.

Wages

Wages in the United States, after taking inflation into account, have been stagnating for more than three decades. Typical American workers and the nation's lowest-wage workers have seen little or no growth in their real weekly wages.

Between 1979 and 2007, paycheck income of the top 1 percent of U.S. earners exploded by over 256 percent. Meanwhile, the bottom 90 percent of earners have seen little change in their average income, with just a 21 percent increase from 1979 to 2015.

Productivity has increased at a relatively consistent rate since 1948. But the wages of American workers have not, since the 1970s, kept up with this rising productivity. Worker hourly compensation has flat-lined since the mid-1970s, increasing just 19.1 percent from 1979 to 2013, while worker productivity has increased 132.9 percent over the same time period.

One factor in the widening income divide is the decline of U.S. labor unions. As the share of the workforce represented by a union has declined to just 11 percent since their peak in the 1940s and 1950s, those at the top of the income scale have increased their power to rig economic rules in their favor, further increasing income inequality.

American women are now almost as likely to work outside the home as men, but the glass ceiling is far from being shattered. Women still make up only 27 percent of the top 10 percent of labor income earners, and their share of higher income groups is even smaller. Among the top 1 percent, women make up slightly less than 17 percent of workers, while at the top 0.1 percent level, they make up only 11 percent.

Wall Street banks doled out $24 billion in bonuses to their 177,000 New York-based employees in 2016, which amounts to 1.6 times the combined earnings of all 1,075,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour.

The 2016 Wall Street bonus pool was large enough to have lifted all 3.2 million U.S. fast food workers, or all home care aides, or all restaurant servers and bartenders up to $15 per hour. Increasing the incomes of low-wage workers produces stronger beneficial economic ripple effects than boosting bonuses for the rich, since the poor tend to have to spend nearly every dollar they make while the wealthy can afford to squirrel away more of their earnings.

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Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Income inequality refers to the extent to which income is distributed in an uneven manner among a population.

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One-fourth of Americans make below $10 an hour, throwing them below the poverty line that is defined federally. Incomes rose after the crisis in 2008 and the top 1% took home almost 20% of the total income due to the recovery plan. Despite productivity increasing by 15%, wages continued to remain the same. The cause of these growing wage gaps between the top 1% and the rest of America is the cheap labor in China, high and unjust exchange rates, and jobs being outsourced from the U.S.

Amadeo, Kimberly. “The True Cause of Income Inequality in America.” The Balance Small Business, The Balance, 7 Nov. 2018,
[ www.thebalance.com/income-inequality-in-america-3306190 ]

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Income inequality is a wide gap between the money earned by the richest people in an economy when compared to the poorest. Income includes wages, investment earnings, rent, and sales of real estate.

Income Inequality Definition

In economics terms, income inequality is thelarge disparity in how income is distributed between individuals, groups, populations, social classes, or countries. It is a major part of how we understand socioeconomic statuses, being how we identify the upper class, middle class, and working class. It's impacted by many other forms of inequality, including wealth, political power, and social status. Income is a major factor in managing quality of life, as it serves as a means to access healthcare, education, housing, and so on. Income inequality varies by social factors such as sexual identity, gender identity, age, and race or ethnicity, leading to a wider gap between the upper and working class.

How It's Measured

The U.S. Census Bureau measures income inequality using household income.﻿﻿﻿﻿ It compares it by quintile, which is the population divided into fifths.

Another commonly-used measurement is the Gini index. It summarizes the distribution of income into a single number. It ranges from zero, which is a perfectly equal distribution, to one, where only one person has all the money.﻿﻿﻿﻿

Income Gap: Current Statistics

In 2019, the top 20% of the population earned 51.9% of all U.S. income.﻿﻿﻿ Their average household income was $254,449. The richest of the rich, the top 5%, earned 23% of all income. Their average household income was $451,122.

The bottom 20% only earned 3.1% of the nation's income. The lower earner's average household income was $15,286.﻿﻿﻿ Most low-wage workers receive no health insurance, sick days, or pension plans from their employers. They can't get ill and have no hope of retiring. That creates health care inequality, which increases the cost of medical care for everyone. Also, people who can't afford preventive care will wind up in the hospital emergency room. In 2014, 15.4% of uninsured patients who visited the ER said they went because they had no other place to go.﻿﻿﻿ They use the emergency room as their primary care physician. The hospitals passed this cost along to Medicaid.

The U.S. Gini index-which measures distribution and is often used to measure income differences-was 0.484 in 2019. That's slightly better than in 2018 when it was 0.486, but it's much worse than in 1968 when it was just 0.386.﻿﻿﻿

Income Inequality Has Worsened

The rich got richer through the recovery from the 2008 financial crisis. Between 1993 and 2015, the average family income grew by 25.7%. The top 1% of the population received 52% of that growth.﻿﻿﻿ The chart below tracks the average income growths and losses during the 22-years. It then calculates how much of that total growth was accrued by the top 1% of the population.

This worsening of income inequality had been ongoing even before the 2008 recession. Between 1979 and 2007, household income increased 275% for the wealthiest 1% of households. It rose 65% for the top fifth. The bottom fifth only increased by 18%.﻿﻿﻿ That's true even after "wealth redistribution," which entails subtracting all taxes and adding all income from Social Security, welfare, and other payments.

Since the rich got richer faster, their piece of the pie grew larger. The wealthiest 1% of people increased their share of total income by 10%. Everyone else saw their piece of the pie shrink by 1%-2%. Even though the income going to the poor improved, they fell further behind when compared to the richest. As a result, economic mobility decreased.

During this same period, average wages remained flat. That's despite an increase in worker productivity of 15% and a boost in corporate profits of 13% per year. ﻿﻿﻿

Income inequality is blamed on cheap labor in China, unfair exchange rates, and job outsourcing. Corporations are often blamed for putting profits ahead of workers. But they must remain competitive. U.S. companies must compete with lower-priced Chinese and Indian companies who pay their workers much less. As a result, many companies have outsourced their high-tech and manufacturing jobs overseas. The United States has lost 36% of its factory jobs from 1980 to 2020. These were traditionally higher-paying union jobs. Service jobs have increased, but these are much lower paid.﻿﻿﻿﻿﻿﻿﻿﻿

Education is also a powerful factor in improving economic mobility. Education increases the income that generates greater economic growth. Over a lifetime, Americans with college degrees earn 84% more than those with only high school degrees.﻿﻿﻿ A McKinsey study found that this achievement gap cost the U.S. economy more than all recessions from the 1970s through 2008.﻿﻿﻿

Deregulation means less stringent investigations into labor disputes. That also benefits businesses more than wage earners. Technology, not globalization, feeds income inequality. It has also replaced many workers at factory jobs. Those who have training in technology can get higher paid jobs.﻿﻿During the 1990s, companies went public to gain more funds to invest in growth.﻿﻿﻿ Managers must now produce ever-larger profits to please stockholders. For most companies, payroll is the largest budget line item. Reengineering has led to doing more with fewer full-time employees. It also means hiring more contract and temporary employees. Immigrants, many in the country illegally, fill more low-paid service positions. They have less bargaining power to demand higher wages.﻿﻿﻿

Many argue that President Trump's tax plan has helped businesses and investors more than wage earners. This favoritism creates structural inequality.

Walmart is the nation's largest employer at 1.5 million.﻿﻿﻿ Unfortunately, it has set new standards for reducing employee pay and benefits. Its competitors must follow suit to provide the same "Low Prices."﻿﻿﻿

In recent years, the Federal Reserve deserves some of the blame. Record-low interest rates were supposed to spur the housing market, making homes more affordable.﻿﻿﻿﻿﻿﻿ While that is the case, housing prices have leveled off in recent years.﻿﻿﻿ The average American still doesn't have enough income to buy a home. This lack is especially true for younger people who typically form new households. Without good jobs, they're stuck living at home or with roommates.﻿﻿﻿

By keeping Treasury rates low, the Fed created an asset bubble in stocks. This helped the top 10%, who own 84% of the wealth in stocks and bonds.﻿﻿﻿ Other investors have been buying commodities, driving food prices up 40% since 2009.﻿﻿﻿﻿﻿﻿ This increase hurts the bottom 90%, who spend a greater percentage of their income on food.

A Global Perspective

Many of the causes of U.S. income inequality can be traced to an underlying shift in the global economy. Emerging market incomes are increasing. Countries such as China, Brazil, and India are becoming more competitive in the global marketplace. Their workforces are becoming more skilled. Also, their leaders are becoming more sophisticated in managing their economies. As a result, wealth is shifting to them from the United States and other developed countries.

This shift is about lessening global income inequality.﻿﻿﻿ The richest 1% of the world's population has 44% of its wealth. While Americans hold 25% of that wealth, China has 22% of the world's population and 8.8% of its wealth. India has 15% of its population and 4% of its wealth.﻿﻿﻿

As other countries become more developed, their wealth rises. They are taking it away from the United States, the European Union, and Japan. In America, the least wealthy bear the brunt.

The United States must accept that global wealth redistribution is occurring. Those in the top fifth of the U.S. income bracket must realize that those in the bottom two-fifths cannot bear the brunt forever.

Trying to prevent U.S. companies from outsourcing will not work. It is punishing them for responding to the global redistribution of wealth. Neither will protectionist trade policies or walls to prevent immigrants from entering illegally.

The government should provide the bottom two-fifths access to education and employment training. Investing in human capital is the best way to increase individual wealth and improve the labor force. Equity in education would bring everyone up to at least a minimum standard. It would be a better solution than increasing welfare benefits or providing a universal basic income.

Congress can raise taxes on the top fifth to pay for it.﻿﻿﻿ It should make these changes now so that the transition is gradual and healthy for the economy overall.

Regulations are another part of the solution. The Dodd-Frank Wall Street Reform Act required corporations to disclose employee pay ratios.﻿﻿﻿ Its goal is to help shareholders better understand executive compensation practices compared to the average employee pay.

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The True Cause of Income Inequality in America

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Income inequality is a wide gap between the money earned by the richest people in an economy when compared to the poorest. Income includes wages, investment earnings, rent, and sales of real estate. In economics terms, income inequality is thelarge disparity in how income is distributed between individuals, groups, populations, social classes, or countries.

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The true definition of the gender pay gap when it is "unadjusted" is when the raw income of men and women are compared regardless of occupation, experience, or education. The gap considerably increases in the later years of a worker's life. However, some data suggests that some women are "overrepresented" meaning that those with lower wages, have more women than men. Land ownership and big household decisions usually fall upon the male.

Esteban Ortiz-Ospina and Max Roser (2018) - "Economic inequality by gender".
[ https://ourworldindata.org/economic-inequality-by-gender ]

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In this topic page we present data and research on economic inequalities between men and women. Whenever the data allows it, we also discuss how these inequalities have been changing over time.

As we show, although economic gender inequalities remain common and large, they are today smaller than they used to be some decades ago.
Related topics:
Women's Employment - rising female labor force participation has been one of the most remarkable economic developments of the last century. In this topic page we present the key facts and drivers behind this important change.
See all interactive charts on economic inequality by gender ↓
The 'gender pay gap' comes up often in political debates, policy reports, and everyday news. But what is it? What does it tell us? Is it different from country to country? How does it change over time?

Here we try to answer these questions, providing an empirical overview of the gender pay gap across countries and over time.

The gender pay gap measures inequality but not necessarily discrimination

The gender pay gap (or the gender wage gap) is a metric that tells us the difference in pay (or wages, or income) between women and men. It's a measure of inequality and captures a concept that is broader than the concept of equal pay for equal work.

Differences in pay between men and women capture differences along many possible dimensions, including worker education, experience and occupation. When the gender pay gap is calculated by comparing all male workers to all female workers - irrespective of differences along these additional dimensions - the result is the 'raw' or 'unadjusted' pay gap. On the contrary, when the gap is calculated after accounting for underlying differences in education, experience, etc., then the result is the 'adjusted' pay gap.

Discrimination in hiring practices can exist in the absence of pay gaps - for example, if women know they will be treated unfairly and hence choose not to participate in the labor market. Similarly, it is possible to observe large pay gaps in the absences of discrimination in hiring practices - for example, if women get fair treatment but apply for lower-paid jobs.

The implication is that observing differences in pay between men and women is neither necessary nor sufficient to prove discrimination in the workplace. Both discrimination and inequality are important. But they are not one and the same. (You can read about discrimination and 'equal pay for equal work' in our post here).

In most countries there is a substantial gender pay gap

Cross-country data on the gender pay gap is patchy, but the most complete source in terms of coverage is the United Nation's International Labour Organization (ILO). The visualization here presents this data. You can add observations by clicking on the option 'add country' at the bottom of the chart.

The estimates shown here correspond to differences between average hourly earnings of men and women (expressed as a percentage of average hourly earnings of men), and cover all workers irrespective of whether they work full time or part time.

As we can see: (i) in most countries the gap is positive - women earn less than men; and (ii) there are large differences in the size of this gap across countries.

(NB. By this measure the gender wage gap can be positive or negative. If it is negative, it means that, on an hourly basis, men earn on average less than women. This happens in some countries, such as Malaysia.)

In most countries the gender pay gap has decreased in the last couple of decades

How is the gender pay gap changing over time? To answer this question, let's consider this chart showing available estimates from the OECD. These estimates include OECD member states, as well as some other non-member countries, and they are the longest available series of cross-country data on the gender pay gap that we are aware of.

Here we see that the gap is large in most OECD countries, but it has been going down in the last couple of decades. In some cases the reduction is remarkable. In the UK, for example, the gap went down from almost 50% in 1970 to about 17% in 2016.

These estimates are not directly comparable to those from the ILO, because the pay gap is measured slightly differently here: The OECD estimates refer to percent differences in median earnings (i.e. the gap here captures differences between men and women in the middle of the earnings distribution); and they cover only full-time employees and self-employed workers (i.e. the gap here excludes disparities that arise from differences in hourly wages for part-time and full-time workers).

However, the ILO data shows similar trends for the period 2000-2015.

The conclusion is that in most countries with available data, the gender pay gap has decreased in the last couple of decades.

The gender pay gap is larger for older workers

The United States Census Bureau defines the pay gap as the ratio between median wages - that is, they measure the gap by calculating the wages of men and women at the middle of the earnings distribution, and dividing them.

By this measure, the gender wage gap is expressed as a percent (median earnings of women as share of median earnings of men) and it is always positive. Here, values below 100% mean that women earn less than men, while values above 100% mean than women earn more. Values closer to 100% reflect a lower gap.

The next chart shows available estimates of this metric for full-time workers in the US, by age group.

First, we see that the series trends upwards, meaning the gap has been shrinking in the last couple of decades. Secondly, we see that there are important differences by age.

The second point is crucial to understand the gender pay gap: the gap is a statistic that changes during the life of a worker. In most rich countries, it's small when formal education ends and employment begins, and it increases with age. As we discuss in our analysis of the determinants, the gender pay gap tends to increase when women marry and when/if they have children.

The gender pay gap is smaller in middle-income countries - which tend to be countries with low labor force participation of women

The scatter plot here shows available ILO estimates on the gender pay gap (vertical axis) vs GDP per capita (on a logarithmic scale along the horizontal axis). As we can see there is a weak positive correlation between GDP per capita and the gender pay gap. However, the chart shows that the relationship is not really linear. Actually, middle-income countries tend to have the smallest pay gap.

The fact that middle-income countries have low gender wage gaps is, to a large extent, the result of selection of women into employment. Olivetti and Petrongolo (2008) explain it as follows: "if women who are employed tend to have relatively high‐wage characteristics, low female employment rates may become consistent with low gender wage gaps simply because low‐wage women would not feature in the observed wage distribution."

Olivetti and Petrongolo (2008) show that this pattern holds in the data: unadjusted gender wage gaps across countries tend to be negatively correlated with gender employment gaps. That is, the gender pay gaps tend to be smaller where relatively fewer women participate in the labor force.

So, rather than reflect greater equality, the lower wage gaps observed in some countries could indicate that only women with certain characteristics - for instance, with no husband or children - are entering the workforce.

Women in management positions

The chart here plots the proportion of women in senior and middle management positions around the world. It shows that women all over the world are underrepresented in high-profile jobs, which tend to be better paid.

Firms with female managers

The next chart provides an alternative perspective on the same issue. Here we show the share of firms that have a woman as manager. We highlight world regions by default, but you can add specific countries by using the option 'add country'.

As we can see, all over the world firms tend to be managed by men. And, globally, only about 18% of firms have a female manager.

Firms with female managers tend to be different to firms with male managers. For example, firms with female managers tend to also be firms with more female workers.

Despite having fallen in recent decades, there remains a substantial pay gap between the average wages of men and women.

But what does gender inequality look like if we focus on the very top of the income distribution? Do we find any evidence of the so-called 'glass ceiling' preventing women from reaching the top? How did this change over time?

Answers to these questions are found in the work of Atkinson, Casarico and Voitchovsky (2018). Using tax records, they investigated the incomes of women and men separately across nine high-income countries. As such, they were restricted to those countries in which taxes are collected on individual basis, rather than as couples.

In addition to wages they also take into account income from investments and self-employment.

Whilst investment income tends to make up a larger share of the total income of rich individuals in general, the authors found this to be particularly marked in the case of women in top income groups.

The two charts present the key figures from the study.

One chart shows the proportion of women out of all individuals falling into the top 10%, 1% and 0.1% of the income distribution. The open circle represents the share of women in the top income brackets back in 2000; the closed circle shows the latest data, which is from 2013.

The other chart shows the data over time for individual countries. You can explore data for other countries using the 'Change country' button on the chart.
The two charts allow us to answer the initial questions:

Women are greatly under-represented in top income groups - they make up much less than 50% across each of the nine countries. Within the top 1% women account for around 20% and there is surprisingly little variation across countries.

The proportion of women is lower the higher you look up the income distribution. In the top 10% up to every third income-earner is a woman; in the top 0.1% only every fifth or tenth person is a woman.

The trend is the same in all countries of this study: Women are now better-represented in all top income groups than they were in 2000.

But improvements have generally been more limited at the very top. With the exception of Australia, we see a much smaller increase in the share of women amongst the top 0.1% than amongst the top 10%.

Overall, despite recent inroads, we continue to see remarkably few women making it to the top of the income distribution today.

Above we show that women all over the world are underrepresented in high-profile jobs, which tend to be better paid. As it turns out, in many countries women are at the same time overrepresented in low-paying jobs.

This is shown in the chart here, where 'low-pay' refers to workers earning less than two-thirds of the median (i.e. the middle) of the earnings distribution.

A share above 50% implies that women are 'overrepresented', in the sense that among those with low wages, there are more women than men.

The fact that women in rich countries are overrepresented in the bottom of the income distribution goes together with the fact that working women in these countries are overrepresented in low-paying occupations. The chart shows this for the US.

Women often have no control over their personal earned income

The chart plots cross-country estimates of the share of women who are not involved in decisions about their own income. The line shows national averages, while the dots show averages for rich and poor households (i.e. averages for women in households within the top and bottom quintiles of the corresponding national income distribution).

As we can see, in many countries, particularly in Sub-Saharan Africa and Asia, a large fraction of women are not involved in household decisions about spending their personal earned income. And this pattern is stronger among low-income households within low-income countries.

Percentage of women not involved in decisions about their own income - World Development Report (2012)

In many countries women have limited influence over important household decisions

Above we focus on whether women get to choose how their own personal income is spent. Now we look at women's influence over total household income.

In the next chart we plot the share of currently married women who report having a say in major household purchase decisions, against national GDP per capita.

We see that in many countries, notably in Sub-Saharan Africa and Asia, an important number of women have limited influence over major spending decisions.

The chart above shows that women's control over household spending tends to be greater in richer countries. In the chart we show that this correlation also holds within countries: Women's control is greater in wealthier households. Household's wealth is shown by the quintile in the wealth distribution on the x-axis - the poorest households are in the lowest quintiles (Q1) on the left.

There are many factors at play here, and it's important to bear in mind that this correlation partly captures the fact that richer households enjoy greater discretionary income beyond levels required to cover basic expenditure, while at the same time, in richer households women often have greater agency via access to broader networks as well as higher personal assets and incomes.

Land ownership is more often in the hands of men

Economic inequalities between men and women manifest themselves, not only in terms of wages earned, but also in terms of assets owned. For example, as the chart shows, in nearly all low and middle-income countries with data, men are more likely to own land than women.

Women's lack of control over important household assets, such as land, can be a critical problem in case of divorce or the husband's death.

Closely related to the issue of land ownership is the fact that in several countries women do not have the same rights to property as men. These countries are highlighted in the map.

( This map from the World Development Report (2012) provides a more fine-grained overview of different property regimes operating in different countries.)

Gender equal inheritance systems have been adopted in most, but not all countries

Inheritance is one of the main mechanisms for the accumulation of assets. In the map we provide an overview of the countries that do, and do not have gender-equal inheritance systems.

If you move the slider to 1920, you will see that while gender equal inheritance systems were very rare in the early 20th century, today they are much more common. And still, despite the progress achieved, in many countries, notably in North Africa and the Middle East, women and girls still have fewer inheritance rights than men and boys.

Gender differences in access to productive inputs are often large

Above we show that there are large gender gaps in land ownership across low-income countries. Here we show that there are also large gaps in terms of access to borrowed capital.

The chart shows the percentage of men and women who report borrowing any money in the past 12 months to start, operate, or expand a farm or business.

As we can see, almost everywhere, including in many rich countries, women are less likely to get borrowed capital for productive purposes.

This can have large knock-on effects: In agriculture and entrepreneurship, gender differences in access to productive inputs, including land and credit, can lead to gaps in earnings via lower productivity.

Indeed, studies have found that, when statistical gender differences in agricultural productivity exist, they often disappear when access to and use of productive inputs are taken into account.

Women's Economic Opportunity Index

The previous discussion focused on particularly aspects one by one. What is the the picture on economic inequality in the aggregate?

Tracking progress across multiple dimensions of gender inequalities can be difficult, since changes across dimensions often go in different directions and have different magnitudes. Because of this, researchers and policymakers often construct synthetic indicators that aggregate various dimensions.

The Women's Economic Opportunity Index (WEO) published by The Economist Intelligence Unit, is one such effort to aggregate various aspects of female economic empowerment into a single metric.

The WEO index defines women's economic opportunity as "a set of laws, regulations, practices, customs and attitudes that allow women to participate in the workforce under conditions roughly equal to those of men, whether as wage-earning employees or as owners of a business." It is calculated from 29 indicators drawing on data from many sources, including the UN and the OECD.

Here is a map showing scores on this index (higher scores denote more economic opportunities for women).

The Gender Inequality Index from the Human Development Report

The Human Development Report produced by the UN includes a composite index that captures gender inequalities across several dimensions, including economic status.

This index, called the Gender Inequality Index, measures inequalities in three dimensions: reproductive health (based on maternal mortality ratio and adolescent birth rates); empowerment (based on proportion of parliamentary seats occupied by females and proportion of adult females aged 25 years and older with at least some secondary education); and economic status (based on labour market participation rates of female and male populations aged 15 years and older).

The map shows scores, country by country.

Historical Gender Equality Index

The Gender Inequality Index from the Human Development Report only has data from 1995. Considering this, Sarah Carmichael, Selin Dilli and Auke Rijpma, from Utrecht University, produced a similar composite index of gender inequality, using available data for the period 1950-2000, in order to make aggregate comparisons over the long run.

This index covers four dimensions:

(i) Health, measured by sex rations in life expectancy;

(ii) Socio-economic resources, measured by sex ratios in average years of education and labour force participation;

(iii) Gender disparities in the household, captured by sex ratios in marriage ages; and

(iv) Gender disparities in politics, measured by sex rations in parliamentary seats.

The results from this study are shown in the chart.

As we can see, the second half of the 20th century saw global improvements, and the regions with the steepest increase in gender equality were Latin America and Western Europe.

Interestingly, this chart also shows that in Eastern Europe there was important progress in the period 1950-1980, but there was a reversal after the fall of the Soviet Union.

In almost all countries, if you compare the wages of men and women you find that women tend to earn less than men. These inequalities have been narrowing across the world. In particular, over the last couple of decades most high-income countries have seen sizeable reductions in the gender pay gap.

How did these reductions come about and why do substantial gaps remain?

Before we get into the details, here is a preview of the main points.

An important part of the reduction in the gender pay gap in rich countries over the last decades is due to a historical narrowing, and often even reversal of the education gap between men and women.

Today, education is relatively unimportant to explain the remaining gender pay gap in rich countries. In contrast, the characteristics of the jobs that women tend to do, remain important contributing factors.

The gender pay gap is not a direct metric of discrimination. However, evidence from different contexts suggests discrimination is indeed important to understand the gender pay gap. Similarly, social norms affecting the gender distribution of labor are important determinants of wage inequality.

On the other hand, the available evidence suggests differences in psychological attributes and non-cognitive skills are at best modest factors contributing to the gender pay gap.

Differences in human capital

The adjusted pay gap

Differences in earnings between men and women capture differences across many possible dimensions, including education, experience and occupation.

For example, if we consider that more educated people tend to have higher earnings, it is natural to expect that the narrowing of the pay gap across the world can be partly explained by the fact that women have been catching up with men in terms of educational attainment, in particular years of schooling.

Indeed, since differences in education partly contribute to explain differences in wages, it is common to distinguish between 'unadjusted' and 'adjusted' pay differences.

When the gender pay gap is calculated by comparing all male and female workers, irrespective of differences in worker characteristics, the result is the raw or unadjusted pay gap. In contrast to this, when the gap is calculated after accounting for underlying differences in education, experience, and other factors that matter for the pay gap, then the result is the adjusted pay gap.

The idea of the adjusted pay gap is to make comparisons within groups of workers with roughly similar jobs, tenure and education. This allows us to tease out the extent to which different factors contribute to observed inequalities.

The chart here, from Blau and Kahn (2017) shows the evolution of the adjusted and unadjusted gender pay gap in the US.

More precisely, the chart shows the evolution of female to male wage ratios in three different scenarios: (i) Unadjusted; (ii) Adjusted, controlling for gender differences in human capital, i.e. education and experience; and (iii) Adjusted, controlling for a full range of covariates, including education, experience, job industry and occupation, among others. The difference between 100% and the full specification (the green bars) is the "unexplained" residual.

Several points stand out here.

First, the unadjusted gender pay gap in the US shrunk over this period. This is evident from the fact that the blue bars are closer to 100% in 2010 than in 1980.

Second, if we focus on groups of workers with roughly similar jobs, tenure and education, we also see a narrowing. The adjusted gender pay gap has shrunk.

Third, we can see that education and experience used to help explain a very large part of the pay gap in 1980, but this changed substantially in the decades that followed. This third point follows from the fact that the difference between the blue and red bars was much larger in 1980 than in 2010.

And fourth, the green bars grew substantially in the 1980s, but stayed fairly constant thereafter. In other words: Most of the convergence in earnings occurred during the 1980s, a decade in which the "unexplained" gap shrunk substantially.

Education and experience have become much less important in explaining gender differences in wages in the US

The chart here shows a breakdown of the adjusted gender pay gaps in the US, factor by factor, in 1980 and 2010.

When comparing the contributing factors in 1980 and 2010, we see that education and work experience have become much less important in explaining gender differences in wages over time, while occupation and industry have become more important.

In this chart we can also see that the 'unexplained' residual has gone down. This means the observable characteristics of workers and their jobs explain wage differences better today than a couple of decades ago. At first sight, this seems like good news - it suggests that today there is less discrimination, in the sense that differences in earnings are today much more readily explained by differences in 'productivity' factors. But is this really the case?

The unexplained residual may include aspects of unmeasured productivity (i.e. unobservable worker characteristics that cannot be controlled for in a regression), while the "explained" factors may themselves be vehicles of discrimination.

For example, suppose that women are indeed discriminated against, and they find it hard to get hired for certain jobs simply because of their sex. This would mean that in the adjusted specification, we would see that occupation and industry are important contributing factors - but that is precisely because discrimination is embedded in occupational differences!

Hence, while the unexplained residual gives us a first-order approximation of what is going on, we need much more detailed data and analysis in order to say something definitive about the role of discrimination in observed pay differences.

Gender pay differences around the world are better explained by occupation than by education

The set of three maps here, taken from the World Development Report (2012), shows that today gender pay differences are much better explained by occupation than by education. This is consistent with the point already made above using data for the US: as education expanded radically over the last few decades, human capital has become much less important in explaining gender differences in wages.

This blog post from Justin Sandefur at the Center for Global Development shows that education also fails to explain wage gaps if we include workers with zero income (i.e. if we decompose the wage gap after including people who are not employed).

Looking beyond worker characteristics

Job flexibility

All over the world women tend to do more unpaid care work at home than men - and women tend to be overrepresented in low paying jobs where they have the flexibility required to attend to these additional responsibilities.

The most important evidence regarding this link between the gender pay gap and job flexibility is presented and discussed by Claudia Goldin in the article ' A Grand Gender Convergence: Its Last Chapter', where she digs deep in the data from the US. There are some key lessons that apply both to rich and non-rich countries.

Goldin shows that when one looks at the data on occupational choice in some detail, it becomes clear that women disproportionately seek jobs, including full-time jobs, that tend to be compatible with childrearing and other family responsibilities. In other words, women, more than men, are expected to have temporal flexibility in their jobs. Things like shifting hours of work and rearranging shifts to accommodate emergencies at home. And these are jobs with lower earnings per hour, even when the total number of hours worked is the same.

The importance of job flexibility in this context is very clearly illustrated by the fact that, over the last couple of decades, women in the US increased their participation and remuneration in only some fields. In a recent paper, Goldin and Katz (2016) show that pharmacy became a highly remunerated female-majority profession with a small gender earnings gap in the US, at the same time as pharmacies went through substantial technological changes that made flexible jobs in the field more productive (e.g. computer systems that increased the substitutability among pharmacists).

The chart here shows how quickly female wages increased in pharmacy, relative to other professions, over the last few decades in the US.

The motherhood penalty

Closely related to job flexibility and occupational choice, is the issue of work interruptions due to motherhood. On this front there is again a great deal of evidence in support of the so-called 'motherhood penalty'.

Lundborg, Plug and Rasmussen (2017) provide evidence from Denmark - more specifically, Danish women who sought medical help in achieving pregnancy.

By tracking women's fertility and employment status through detailed periodic surveys, these researchers were able to establish that women who had a successful in vitro fertilization treatment, ended up having lower earnings down the line than similar women who, by chance, were unsuccessfully treated.

Lundborg, Plug and Rasmussen summarise their findings as follows: "Our main finding is that women who are successfully treated by [in vitro fertilization] earn persistently less because of having children. We explain the decline in annual earnings by women working less when children are young and getting paid less when children are older. We explain the decline in hourly earnings, which is often referred to as the motherhood penalty, by women moving to lower-paid jobs that are closer to home."

The fact that the motherhood penalty is indeed about 'motherhood' and not 'parenthood', is supported by further evidence.

A recent study, also from Denmark, tracked men and women over the period 1980-2013, and found that after the first child, women's earnings sharply dropped and never fully recovered. But this was not the case for men with children, nor the case for women without children.

These patterns are shown in the chart here. The first panel shows the trend in earnings for Danish women with and without children. The second panel shows the same comparison for Danish men.

Note that these two examples are from Denmark - a country that ranks high on gender equality measures and where there are legal guarantees requiring that a woman can return to the same job after taking time to give birth.

This shows that, although family-friendly policies contribute to improve female labor force participation and reduce the gender pay gap, they are only part of the solution. Even when there is generous paid leave and subsidized childcare, as long as mothers disproportionately take additional work at home after having children, inequities in pay are likely to remain.

Ability, personality and social norms

The discussion so far has emphasised the importance of job characteristics and occupational choice in explaining the gender pay gap. This leads to obvious questions: What determines the systematic gender differences in occupational choice? What makes women seek job flexibility and take a disproportionate amount of unpaid care work?

One argument usually put forward is that, to the extent that biological differences in preferences and abilities underpin gender roles, they are the main factors explaining the gender pay gap. In their review of the evidence, Francine Blau and Lawrence Kahn (2017) show that there is limited empirical support for this argument.

To be clear, yes, there is evidence supporting the fact that men and women differ in some key attributes that may affect labor market outcomes. For example standardised tests show that there are statistical gender gaps in maths scores in some countries; and experiments show that women avoid more salary negotiations, and they often show particular predisposition to accept and receive requests for tasks with low promotion potential. However, these observed differences are far from being biologically fixed - 'gendering' begins early in life and the evidence shows that preferences and skills are highly malleable. You can influence tastes, and you can certainly teach people to tolerate risk, to do maths, or to negotiate salaries.

What's more, independently of where they come from, Blau and Kahn show that these empirically observed differences can typically only account for a modest portion of the gender pay gap.

In contrast, the evidence does suggest that social norms and culture, which in turn affect preferences, behaviour and incentives to foster specific skills, are key factors in understanding gender differences in labor force participation and wages. You can read more about this in our blog post dedicated to answer the question 'How well do innate gender differences explain the gender pay gap?'.

Discrimination and bias

Independently of the exact origin of the unequal distribution of gender roles, it is clear that our recent and even current practices show that these roles persist with the help of institutional enforcement. Goldin (1988), for instance, examines past prohibitions against the training and employment of married women in the US. She touches on some well-known restrictions, such as those against the training and employment of women as doctors and lawyers, before focusing on the lesser known but even more impactful 'marriage bars' which arose in the late 1800s and early 1900s. These work prohibitions are important because they applied to teaching and clerical jobs - occupations that would become the most commonly held among married women after 1950. Around the time the US entered World War II, it is estimated that 87% of all school boards would not hire a married woman and 70% would not retain an unmarried woman who married.

The map here highlights that to this day, explicit barriers across the world limit the extent to which women are allowed to do the same jobs as men.

However, even after explicit barriers are lifted and legal protections put in their place, discrimination and bias can persist in less overt ways. Goldin and Rouse (2000), for example, look at the adoption of "blind" auditions by orchestras, and show that by using a screen to conceal the identity of a candidate, impartial hiring practices increased the number of women in orchestras by 25% between 1970 and 1996.

Many other studies have found similar evidence of bias in different labor market contexts. Biases also operate in other spheres of life with strong knock-on effects on labor market outcomes. For example, at the end of World War II only 18% of people in the US thought that a wife should work if her husband was able to support her. This obviously circles back to our earlier point about social norms.

Strategies for reducing the gender pay gap

In many countries wage inequality between men and women can be reduced by improving the education of women. However, in many countries gender gaps in education have been closed and we still have large gender inequalities in the workforce. What else can be done?

An obvious alternative is fighting discrimination. But the evidence presented above shows that this is not enough. Public policy and management changes on the firm level matter too: Family-friendly labor-market policies may help. For example, maternity leave coverage can contribute by raising women's retention over the period of childbirth, which in turn raises women's wages through the maintenance of work experience and job tenure.

Similarly, early education and childcare can increase the labor force participation of women - and reduce gender pay gaps - by alleviating the unpaid care work undertaken by mothers.

Additionally, the experience of women's historical advance in specific professions (e.g. pharmacists in the US), suggests that the gender pay gap could also be considerably reduced if firms did not have the incentive to disproportionately reward workers who work long hours, and fixed, non-flexible schedules.

Changing these incentives is of course difficult because it requires reorganizing the workplace. But it is likely to have a large impact on gender inequality, particularly in countries where other measures are already in place.

Implementing these strategies can have a positive self-reinforcing effect. For example, family-friendly labor-market policies that lead to higher labor-force attachment and salaries for women, will raise the returns to women's investment in education - so women in future generations will be more likely to invest in education, which will also help narrow gender gaps in labor market outcomes down the line.

Nevertheless, powerful as these strategies may be, they are only part of the solution. Social norms and culture remain at the heart of family choices and the gender distribution of labor. Achieving equality in opportunities requires ensuring that we change the norms and stereotypes that limit the set of choices available both to men and women. It is difficult, but the evidence shows that social norms, too, can be changed.

Gender pay gap

The gender pay gap (or the gender wage gap) is a metric that tells us the difference in pay (or wages, or income) between women and men. It's a measure of inequality and captures a concept that is broader than the concept of equal pay for equal work.

Differences in pay between men and women capture differences along many possible dimensions, including worker education, experience and occupation. When the gender pay gap is calculated by comparing all male workers to all female workers - irrespective of differences along these additional dimensions - the result is the 'raw' or unadjusted pay gap. On the contrary, when the gap is calculated after accounting for underlying differences in education, experience, etc., then the result is the adjusted pay gap.

Discrimination in hiring practices can exist in the absence of pay gaps - for example, if women know they will be treated unfairly and hence choose not to participate in the labor market. Similarly, it is possible to observe large pay gaps in the absences of discrimination in hiring practices - for example, if women get fair treatment but apply for lower-paid jobs.

The implication is that observing differences in pay between men and women is neither necessary nor sufficient to prove discrimination in the workplace. Both discrimination and inequality are important. But they are not one and the same.

How is the unadjusted gender pay gap measured?

Percent differences in average or median earnings

The gender wage gap is often measured as the difference between average earnings of men and average earnings of women expressed as a percentage of average earnings of men. By this measure the gender wage gap can be negative. This is the definition used by the ILO. (We explore the ILO data above.)

Comparisons of averages can often be misleading because averages are very sensitive to extreme data points. Hence, it is also common to measure gender gaps by comparing earnings for the individuals at the median - or middle - of the earnings distribution. This is the definition used by the OECD. (We explore the OECD data above.)

Ratios of average or median earnings

In addition to percent differences, it is also common to express the gender pay gap as a simple ratio between wages. This is the measure adopted by the United States Census Bureau.

By this measure, the gender wage gap is expressed as a percent (median earnings of women as share of median earnings of men) and it is always positive. Here, values below 100% mean that women earn less than men, while values above 100% mean than women earn more. Values closer to 100% reflect a lower gap.

Data hubs dedicated to gender statistics

World Bank - Gender Statistics

United Nations - Gender Statistics

OECD - Development Centre's Social Institutions and Gender Index (SIGI)

OECD - Gender data portal

Data Source: Multiple sources

Description of available measures: The OECD Gender Data Portal includes selected indicators shedding light on gender inequalities in education, employment, entrepreneurship, health and development, showing how far we are from achieving gender equality and where actions is most needed. The data cover OECD member countries, as well as partner economies including Brazil, China, India, Indonesia, and South Africa.

Link: http://www.oecd.org/gender/data/

Wikigender statistics

World Economic Forum - Global Gender Gap Report

Other sources referenced in this article

International Labor Organization (ILO)

Data Source: ILO

Description of available measures: Unadjusted gender gap in average hourly wages, Female share of low pay earners

Time span: 1990-2016

Geographical coverage: Global by country

Link: http://www.ilo.org/ilostat/

World Bank - World Development Indicators

UN Human Development Report

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What is determining the inequality in incomes, jobs, and wealth between men and women?

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The global trend of stronger economic standings brings more political and economic power to the overwhelmingly male top percent. A study of the top eight countries for high income showed that only 14% to 22% were in the top 1%. On average, the biggest gap between male and female is seen with Asian and White ethnicity groups. Studies also show that women tend to spend more time doing unpaid domestic work while men only share around 16% of these domestic chores.

“Gender Inequality.” Inequality.org,
[ inequality.org/gender-inequality/ ]

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The global trend towards extreme wealth and income concentration has dramatically strengthened the economic and political power of those individuals - overwhelmingly male - at the top. In the United States and around the world, women continue to be underrepresented in high-level, highly paid positions and overrepresented in low-paying jobs. Women of color and transgender individuals experience particularly high levels of poverty, unemployment, and other economic hardships. Gender discrimination and sexual harassment in the workplace contribute significantly to these persistent economic divides.

Inequality Across Gender Diversity and Covid-19

The Covid-19 pandemic has exacerbated long-standing gender inequalities. Women are more likely than men to work in service occupations, including domestic work, restaurant service, retail, tourism, and hospitality, that require face-to-face interactions and have been hard-hit by layoffs. Because of the nature of these jobs, teleworking is not an option for many women.

Frontline jobs, which are the ones most often deemed "essential" and require people to work in-person, are also heavily staffed by women. The health care, social work, and government and community-based services sectors are overwhelmingly made up of female employees, according to research from the Economic Policy Institute. Women make up 73 percent of government and community-based services workers, 76 percent of health care workers, and 78 percent of social workers.

The official U.S. unemployment rate does not include people who have not looked for work in the past four weeks. Because women tend to bear more responsibility for family caregiving, women with children were more likely than men to drop out of the labor force when schools and care centers closed due to Covid. Rand Corporation research reveals that the steepest decline in labor force participation in the first phase of the pandemic was among women with two children, at 3.82 points, compared to a 1.39 point drop for men with two children. More recently, the shortage of affordable childcare services has emerged as a barrier for women in returning to jobs in restaurants and other low-wage sectors, contributing to staffing challenges.

Among U.S. women who've stopped looking for work during the pandemic, the steepest drops have been among women of color. Between February 2020 and November 2021, Black women had a 3.5 percentage point drop in labor force participation and Latinx women had a 2.8 point drop, compared to 1.7 for white women. Several factors may have contributed to women of color becoming discouraged from seeking work. On top of gender inequities, women of color face racial discrimination in hiring and layoffs and they are disproportionately concentrated in service and care sector jobs with high risks of Covid exposure.

Transgender people are always in a precarious position, but the Covid-19 pandemic has made them particularly vulnerable. According to research from the Williams Institute at UCLA, transgender Americans are at a higher risk for Covid-19 for several reasons. They are more likely to be low-income, with 47.7 percent of transgender people living below 200 percent of the official U.S. poverty line, compared to 28.9 percent of the general U.S. population. They are also significantly more likely to suffer from asthma and HIV, conditions that put people at higher risk of mortality if they contract Covid-19. And they experience high barriers to receiving health care.

The pandemic has also hit transgender Americans especially hard economically. A poll from the Human Rights Campaign and PSB Research shows that as of June 2020, 54 percent of transgender people had experienced reduced work hours - more than double the 23 percent of the total U.S. workforce that faced a similar reduction. Twenty-seven percent of transgender people had experienced pay cuts, compared to just 7 percent of the U.S. workforce. And 19 percent had become unemployed due to the pandemic, a significantly larger share than the general population.

Gender Income Gaps

Female-dominated occupations - such as childcare and restaurant service - continue to occupy the lower rungs of the U.S. wage ladder. Women make up 67 percent of workers earning the federal minimum wage according to the Bureau of Labor Statistics, a wage rate stuck at $7.25 since 2009. By contrast, women represent only 8 percent of CEOs at Fortune 500 firms. CEOs took home $15.5 million on average in 2020.

White males particularly dominate highly lucrative financial industry jobs. At the top five U.S. investment banks (JPMorgan Chase, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, and Citigroup), males make up from 64 to 82 percent executives and top managers. The share who are white ranges from 70 to 81 percent. More than two-thirds of all New York City securities industry employees were male in 2020, and nearly three-fifths were white.

Men make up an overwhelming majority of top earners across the U.S. economy, even though women now represent almost half of the country's workforce. Women comprise just 27 percent of the top 10 percent, and their share of higher income groups runs even smaller. Among the top 1 percent, women make up slightly less than 17 percent of workers, while at the top 0.1 percent level, they make up only 11 percent.

Other major economies show similar trend lines. A study of eight high-income countries from the London School of Economics found that women made up just 14 percent to 22 percent of the top 1 percent of earners. These surveys were conducted during the 2010-2014 period. The U.S. figure for 2012 is from the National Bureau of Economic Research.

Throughout the U.S. workforce, women remain vastly underpaid. Among full-time workers, women earned less than 81 cents for every dollar a man earned in 2016. If part-time workers were included, the gap would be even wider, since women are more likely to work reduced schedules, often in order to manage childrearing and other caregiving work.

Within racial groups, Bureau of Labor Statistics data shows the largest pay gaps between men and women appear among Whites and Asians - not because Latinas and Black women have made faster progress towards equity but because average pay for men in these groups falls far below the compensation of White and Asian men.

American women earn less than men, on average, in all industries. The largest pay gaps are in management positions, where men made $88,000 on average in 2016, compared to just $55,000 for women. The smallest gap appears in the construction sector, but women make up only 9 percent of workers in this industry.

The U.S. gender pay gap, while unacceptably large, is not the world's widest. But accurately measuring these gaps across countries can be difficult. Within the OECD group of higher-income nations, South Korea holds the widest gap, with men earning 37 percent more than women, on average. The country with the narrowest gap: Luxembourg, where men make just 3.4 percent more than women. Gaps have been smallest in OECD countries where the share of workers covered by collective bargaining agreements hits at least 80 percent and widest in countries with weak collective bargaining and no or very low minimum wages.

The International Labor Organization concedes that more work needs to be done to develop more accurate global gender gap analyses. One factor skewing the numbers: Women do considerably more unpaid work, from housekeeping to caring for children and the elderly. Among the 21 countries reporting data for at least one year during the 2013-2015 period, the West Bank and Gaza had the greatest imbalance, with men devoting just 16 percent as much time to unpaid domestic and caregiving work as women. Belgium, where men spend 63 percent as much time on these activities as women, ranked at the top.

In the UK, a new regulation requires corporations to disclose the pay gaps between their male and female employees. Financial firms have among the largest divides because of the scarcity of women in top positions. In 2018, HSBC reported the biggest gap, with the bank's female employees averaging just 41 percent as much as UK male employees. For all 10,000 firms in the survey, the median-paid male employee received 9.7 percent more in pay than the median female.

Gender Wealth Gaps

Most inequality analysis focuses on income (the wages earned from a job or from capital gains) rather than wealth (the sum of one's assets minus debts). Income inequality, while stark, pales in comparison to wealth inequality. The divides become even more dramatic when viewed through a gender lens.

At the top end, we have no more striking sign of increasing global wealth concentration than the rise of the billionaire class. The number of individuals with fortunes worth at least $1 billion more than doubled between 2010 and 2018, while remaining overwhelmingly male. In 2018, only 256 women ranked among the world's 2,208 billionaires. Seventy-seven hail from the United States, more than double the number in any other country.

One important component of wealth, retirement savings, shows an even wider gap between men and women. According to the Transamerica Center for Retirement Studies, American women in 2017 held $42,000 in median retirement savings, compared to $123,000 for men. Some 21 percent of women and 12 percent of men have less than $10,000 in retirement accounts. Both pension plan and Social Security payouts reflect in part past earnings. The gender pay gap means women end up with fewer post-retirement resources. In 2017, the $15,000 average annual Social Security benefit for women lagged the benefit for men by $4,000. The smaller retirement nest eggs of women also have to stretch further than male retirement savings, simply because women have longer life expectancies.

Debt also significantly impacts wealth. Crushing student loan burdens drag many young Americans far into the negative side of the wealth line, with the heaviest for female students. Women comprise 56 percent of college students, but hold nearly two-thirds of outstanding student loan debt.

According to the American Association of University Women, black women graduate with the most debt - $30,400, on average - compared to $22,000 for white women and $19,500 for white men.

Gender Poverty Gaps

The gender poverty gap widened over the past 50 years. In 1968, 10.8 percent of women aged 18-64 (6.1 million women) and 7.2 percent of men (3.7 million) in this age group lived below the poverty line. In 2016, 13.4 percent of women in this age group (13.4 million women) were living in poverty, compared to 9.7 percent of adult men (9.4 million men). The poverty threshold for a single person in 2016: $11,880 in annual income. Households led by single women with children had a poverty rate of 35.6 percent, more than twice the 17.3 percent rate for households led by single men with children, according to the National Women's Law Center.

Poverty is a particularly acute problem for women of color, affecting 21.4 percent of Black women, 18.7 percent of Latinas, and 22.8 percent of Native American women, compared to the national poverty rate for white men of 7.0 percent.

Transgender Economic Gaps

Transgender Americans experience poverty at double the rate of the general population, and transgender people of color experience even higher rates. The National Center for Transgender Equality has found that 43 percent of Latino, 41 percent of Native American, 40 percent of multiracial, and 38 percent of Black transgender respondents lived in poverty in 2015.

In 2015, the overall unemployment rate for transgender Americans stood at 15 percent, compared to 5 percent for the general population. The unemployment rate ran even higher for American Indian, Black, Latino, Middle Eastern, and multi-racial transgender Americans.

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Gender Economic Inequality - Inequality.org

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The global trend towards extreme wealth and income concentration has dramatically strengthened the economic and political power of those individuals - overwhelmingly male - at the top. In the United States and around the world, women continue to be underrepresented in high-level, highly paid positions and overrepresented in low-paying jobs.

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Persistent occupational segregation is a primary contributor to the lack of progress to closing the gender gap. Jobs that are already women dominant get paid less than jobs that are previously male dominated. Equal pay would cut poverty in half among women and their families.

“Pay Equity & Discrimination.” Institute for Women's Policy Research,
[ iwpr.org/issue/employment-education-economic-change/pay-equity-discrimination/ ]

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The narrowing, but persistent, gender gap in pay

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The narrowing, but persistent, gender gap in pay

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The pay gap has shrunk by 36 cents since 1980. Four in ten women have experienced gender discrimination compared to two in ten men. Mothers are twice as likely to take off compared to fathers for non-job things.

Graf, Nikki. “Gender Pay Gap Has Narrowed, but Changed Little in Past Decade.” Pew Research Center, Pew Research Center, 9 Apr. 2018,
[ www.pewresearch.org/fact-tank/2018/04/09/gender-pay-gap-facts/ ]

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The gender gap in pay has narrowed since 1980, but it has remained relatively stable over the past 15 years or so. In 2017, women earned 82% of what men earned, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time workers in the United States. Based on this estimate, it would take an extra 47 days of work for women to earn what men did in 2017.

By comparison, the Census Bureau found that full-time, year-round working women earned 80% of what their male counterparts earned in 2016.

Our analysis finds that the 2017 wage gap was smaller for adults ages 25 to 34 than for all workers ages 16 and older. Women in this age group earned 89 cents for every dollar a man in the same age group earned.
(For more on the gender pay gap, see our 2014 explainer, "There's more to the story of the shrinking pay gap." To understand how we calculate the gender pay gap, see our 2013 post, "How Pew Research Center measured the gender pay gap.")
The estimated 18-cent gender pay gap among all workers in 2017 has narrowed from 36 cents in 1980. For young women, the gap has narrowed even more over time. In 1980, women ages 25 to 34 earned 33 cents less than their male counterparts, compared with 11 cents in 2017.

Why does a gender pay gap still persist?

Much of the gap has been explained by measurable factors such as educational attainment, occupational segregation and work experience. The narrowing of the gap is attributable in large part to gains women have made in each of these dimensions.

But other factors that are difficult to measure, including gender discrimination, may contribute to the ongoing wage discrepancy. In a 2017 Pew Research Center survey, about four-in-ten working women (42%) said they have experienced gender discrimination at work, compared with about two-in-ten men (22%) who said the same. One of the most commonly reported forms of discrimination focused on earnings inequality. One-in-four employed women said they have earned less than a man who was doing the same job; just 5% of men said they have earned less than a woman doing the same job.

Both men and women see inequalities in the workplace: In a 2014 Pew Research Center survey, 77% of women and 63% of men said this country needs to continue making changes to give men and women equality in the workplace.

Family caregiving responsibilities, particularly motherhood, can lead to interruptions in career paths for women and can have an impact on long-term earnings. In a 2013 survey, women were more likely than men to say they had taken breaks from their careers to care for their family. Roughly four-in-ten mothers said that at some point in their work life they had taken a significant amount of time off (39%) or reduced their work hours (42%) to care for a child or other family member. Roughly a quarter (27%) said they had quit work altogether to take care of these familial responsibilities. Fewer men said the same. For example, just 24% of fathers said they had taken a significant amount of time off to care for a child or other family member.

Our 2016 survey of workers who have taken parental, family or medical leave in the past two years found that mothers typically take more time off than fathers after birth or adoption. The median length of leave among mothers after the birth or adoption of their child was 11 weeks, compared with one week for fathers. About half (47%) of mothers who took time off from work in the past two years after birth or adoption took off 12 weeks or more.

Mothers were also nearly twice as likely as fathers to say taking time off had a negative impact on their job or career. Among those who took leave from work in the past two years following the birth or adoption of their child, 25% of women said this had a negative impact at work, compared with 13% of men.

Even though women have increased their presence in higher-paying jobs traditionally dominated by men, such as professional and managerial positions, women as a whole continue to be overrepresented in lower-paying occupations. This may also contribute to gender differences in pay.

Note: This is an update of a post originally published April 8, 2014.

Topics: Gender, Income Inequality, Work and Employment, Income

1. Nikki Graf is a research associate focusing on social and demographic trends at Pew Research Center.

2. Anna Brown is a research analyst focusing on social and demographic trends at Pew Research Center.

3. Eileen Patten is a former research analyst focusing on Hispanic, social and demographic trends at Pew Research Center.

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Gender pay gap has narrowed, but changed little in past decade

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The gender gap in pay has narrowed since 1980, but it has remained relatively stable over the past 15 years or so. In 2017, women earned 82% of what men earned, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time workers in the United States.

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You’ve heard that women make 80 cents to men’s dollar. A new report says it’s much worse than that.

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You’ve heard that women make 80 cents to men’s dollar. A new report says it’s much worse than that.

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Black women make 63 cents on the dollar compared to men, while Hispanic women make even less at 54 cents. The gap only increases due to incorrect tradition measurement of the gender pay gap. 27% of mothers said that they would drop out of work for family compared to 10% of fathers. This family orientation is considered the "Care Chasm".

North, Anna. “You've Heard That Women Make 80 Cents to Men's Dollar. A New Report Says It's Much Worse than That.” Vox.com, Vox Media, 28 Nov. 2018,
[ www.vox.com/policy-and-politics/2018/11/28/18116388/gender-pay-gap-real-equal ]

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Every year on Equal Pay Day, we hear that women in America make about 80 cents for every dollar men earn. For many women of color, the number is lower - black women make about 63 cents on the dollar compared with men, while Latina women make 54 cents.

But matters are actually worse than any of these numbers would suggest, according to a report published Wednesday by the Institute for Women's Policy Research (IWPR), a think tank that looks at public policy through the lens of gender. Measures of the pay gap typically compare the wages of men and women working full time in a given year, as Emily Peck notes at HuffPost. But women are more likely to drop out of full-time work to take care of children or other family members.

To account for this, the report's authors looked at women's earnings across a 15-year period, and compared those with men's. What they found was a pay gap nearly twice as big as what's traditionally reported: averaged out over 15 years, women made just 49 cents for every dollar men made.

Men lost income when they dropped out of the labor force too, of course. But women were far more likely to drop out, and when they did, the wage penalty was more severe. Those inequalities, the report argues, are key to understanding the wage gap - and, ultimately, closing it.

Traditional measures of the pay gap miss the big picture

"The commonly used figure to describe the gender wage ratio-that a woman earns 80 cents for every dollar earned by a man-understates the pay inequality problem by leaving many women workers out of the picture," authors Stephen J. Rose, a labor economist and fellow at the Urban Institute, and Heidi I. Hartmann, the founder of IWPR and an economist in residence at American University, argue in their report, titled "Still a Man's Labor Market." Specifically, it leaves out women who have dropped out of the labor force temporarily, often to care for family.

To include those women, Rose and Hartmann tracked the earnings of individual women and men over three 15-year periods: 1968 to 1982, 1983 to 1997, and 2001 to 2015. They used data from the Panel Study on Income Dynamics, which tracks a nationally representative sample of Americans over many years. For their analysis, Rose and Hartmann included everyone who earned money in at least one of the three time periods.

The gaps they found were stark: Between 1968 and 1982, women's earnings were 19 percent of men's. Between 1983 and 1997, they rose to 38 percent. Between 2001 and 2015, they rose again, but not by as much: Over that 15-year period, women made 49 percent of what men made.

The gaps are so big in large part because women were much more likely to take time off work. Between 2001 and 2015, 43 percent of women had a year with no earnings, while only 23 percent of men did.

Women also tended to suffer a greater wage penalty for taking time out of the labor force. The effect didn't start right away: Women and men who took a year off work both made about 39 percent less in the years they did work than their counterparts who never took time out. But women who took four or more years off work made 65 percent less than women who never took time out; men who took the same amount of time, meanwhile, made 57 percent less than men who worked straight through.

The pay gap is also a "care chasm"

One big reason women drop out of the labor force at higher rates than men is that they're far more likely to be the primary caregivers for children or sick relatives. In a 2013 Pew survey, 27 percent of mothers said they'd quit their job at some point to care for a family member; only 10 percent of fathers said the same.

In a 2016 Pew survey, meanwhile, women and men were about equally likely to say they'd recently taken time off to care for a sick family member, but women had taken slightly more time off than men. And women who did take leave were much more likely than men to say they were the primary caregiver for their sick relative.

Another way to look at these gender differences is to compare men and women who leave the labor force. In a 2004 study, just 2.4 percent of men between 20 and 64 who weren't working cited care for family members as the reason, compared with almost 39 percent of non-working women, Nicholas Eberstadt, an economist at the American Enterprise Institute, wrote earlier this year - and the numbers have changed only slightly since then. Eberstadt calls this gap the "care chasm."

Rose and Hartmann's work drives home the fact that, as Vox's Sarah Kliff has written, the gender wage gap is really a child care penalty - or, perhaps, just a care penalty, with women more likely to shoulder primary care responsibility for all family members, not just children.

Some women, just like some men, choose to take time off work to care for children or other relatives, and some find this care deeply rewarding. But whether they want to or not, women are more likely than men to face the expectation that they'll step up to provide necessary care for a new baby or an ailing parent - in the 2016 Pew survey, 59 percent of women said family caregiving responsibilities fell mainly on women. (Interestingly, only 29 percent of men agreed.)

Meanwhile, paid family leave for many American workers is infinitesimal or nonexistent, meaning that for those who do need to take care of a family member, there's often no choice but to quit work. And the fact that women face a steeper penalty than men for taking significant time off suggests that there's more at work in the 15-year earnings gap than just women's choices.

As Rose and Hartmann note, paid family leave, available and used by both men and women, would likely help close the gap. So would subsidies for child care and elder care. As Peck points out at HuffPost, there are also less intuitive solutions, like raising wages to give people more incentive to work.

Whatever the solutions are, though, Rose and Hartmann's report is a reminder that when we think about policies to close the pay gap, we can't just look at what working men and women are making in a given year. We have to look at the men and women who aren't working, why they're not working, and how that affects their careers over the long term.

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You've heard that women make 80 cents to men's dollar. A new report says it's much worse than that.

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Every year on Equal Pay Day, we hear that women in America make about 80 cents for every dollar men earn. For many women of color, the number is lower - black women make about 63 cents on the dollar compared with men, while Latina women make 54 cents.

# data[].attributes.body
Harvard economists observed that men bus drivers were more likely to accept an overtime shift on shorter notice and worked 83% more overtime compared to their female counterparts. Two policy changes unintentionally lowered the gap with these bus drivers, but women also began to take unexcused time off, which put them at risk of getting terminated. Best accommodation of the gender pay gap is through the marketplace rather than that of the government's laws.

Board, The Editorial. “Opinion | Parsing the Gender Pay Gap.” The Wall Street Journal, Dow Jones & Company, 22 Nov. 2018,
[ www.wsj.com/articles/parsing-the-gender-pay-gap-1542917969 ]

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A new study suggests choices, not sexism, explain wage disparities.

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Gender pay gap at universities could get even worse – here’s why 

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Gender pay gap at universities could get even worse – here’s why 

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Women in UK universities are earning about 31% less than men due to lack of digital knowledge. Men tend to be more technologically savvy while women are underrepresented in the technology sector. Universities need to add more technology classes for women to further develop these skills for better chance at a stronger career.

Ameen, Nisreen. “Gender Pay Gap at Universities Could Get Even Worse – Here's Why.” The Conversation, The Conversation, 6 Dec. 2018,
[ theconversation.com/gender-pay-gap-at-universities-could-get-even-worse-heres-why-107456 ]

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For every £1 men earn per hour, women earn 81.6p. shutterstock

Britain has one of the largest gender pay gaps in the European Union, with women earning roughly 21% less than men. This means that women in UK universities today are still earning less than their male colleagues. So although laws on equal pay have been in place for more than 40 years, there is still a large gender pay gap in UK universities.

The difference in hourly pay between men and women is 15% in top UK universities and 37% in other universities. What's more, men have most of the top jobs in UK universities, while women have more of the lower-paid jobs.

And this "gender pay gap" may keep getting wider if women aren't supported to develop their digital skills. This is because women tend to have less advanced digital skills than men - skills that are increasingly in demand for university lecturer roles. And as universities around rely more extensively on digital technology, they need employees who have creative digital skills - which means women are more likely to miss out on jobs, promotions and pay increases.

Wanted: technical talent

The use of technology is now just part of the day job for anyone involved in teaching and learning in universities. Universities use technology to teach and communicate with students online - which can help to improve a student's learning experience. Staff are also expected to use online learning and mobile learning platforms to teach, assess and talk to students in a virtual environment.

Shutterstock

Universities also plan to use more advanced technology. Gamification is on the rise in universities. This is where universities personalise a student's learning, using game design thinking in non-game applications. Wearable devices, such as an Apple Watch or Google Glass, can also encourage learners to get more involved in the subject. This type of technology will most likely be used more in universities over the coming years.

And as women in higher education are generally less likely to be skilled in using these technologies, they may well be left behind - widening the gender pay gap in higher education - while also making it harder for women to progress in their careers.

Digital skills divide

Our research which looks at the gender gap in smartphone adoption and use in Arab countries shows there is a wide gap in the way men and women use technology in some parts of the world. And we found similar patterns in the UK. Men have more advanced digital skills than women, and women are underrepresented in the technology sector, specifically in the digital sector in education.

This "digital divide" begins at a very early age in school. It continues into higher education - in the UK there is one of the highest gender gaps in technology-related courses among all university courses in the world.

Technology is advancing quickly, so academics and others working in higher education constantly have to update their skills. Without these skills, women in the sector are at a disadvantage when it comes to promotion and pay rises. So it's more important than ever for universities to provide training and other programmes that help women develop their digital skills.

Closing the gender gap in digital skills would remove one factor contributing to the gender pay gap in UK universities. It would increase the chances of women being employed in the sector and make it easier for them to develop their careers. Tapping into female talent in technology would bring huge benefits to universities. And above all, it would help to close the digital skills gap - while helping to build a more equal and fairer society.

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Gender pay gap at universities could get even worse - here's why

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Britain has one of the largest gender pay gaps in the European Union, with women earning roughly 21% less than men. This means that women in UK universities today are still earning less than their male colleagues. So although laws on equal pay have been in place for more than 40 years, there is still a large gender pay gap in UK universities.

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Can pay reporting help reduce the gender pay gap?

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Can pay reporting help reduce the gender pay gap?

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New policies are being made to help wage gap reporting. Over 250 private companies must now report hourly wages and differences on genders. Data reporting can help show structural inequalities such as lack to access to same opportunities.

“Can Pay Reporting Help Reduce the Gender Pay Gap?” Yahoo! Finance, Yahoo!, 3 Dec. 2018,
[ finance.yahoo.com/news/pay-reporting-help-reduce-gender-144924671.html ]

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Since the first week of November, women in the United States, Ireland, UK, and around the world have effectively been working for free as the gender gap in average pay earnings accounts for remaining two months' salary of the year.

The gender pay gap has remained remarkably constant over time and is linked to a wide range of factors. Yet now there is a new policy approach being promoted in the form of pay gap reporting. To what extent can these policies break down the persistent gaps between women and men's wages?

Pay reporting legislation on the rise

With the gender pay gaps widening for the first time since 2006, governments have been forced to broaden their existing legislation to encourage organizations to address the issue. Gender pay gap reporting has appeared as one of the preferred measures, with a recent regulatory uptake across the EU.

For example, a law in Iceland requires companies to prove they are paying male and female employees equally. In the UK, all private and public companies with more than 250 employees must now report gender differences in both hourly wages and bonuses. Other EU and non-EU countries either already have or are planning to introduce legislation concerning employers' duty to report on pay differences, including France, Denmark, Belgium, Germany, Italy, The Netherlands, Ireland and outside the EU Switzerland, Australia, and Canada.

"Naming and shaming" vs "secrecy" of pay gap data

An important factor determining the impact of reporting measures is whether it allows for identification of specific "bad performers." Companies are aware of the reputational consequences of paying men more than women, which may prompt them into action. Indeed the "naming and shaming" mechanism is already being used in the UK, where gender pay gap data is publicly available and has affected employers such as the BBC. By contrast, in Austria and Belgium confidentiality of the pay reports limits both reputational costs (and benefits) for employers, as well as the ability of employees to act upon the findings. Similarly, reporting requirements in Australia do not allow for direct pay comparisons and thus hinder action. Confidentiality and aggregated data also limit the impact of pay reporting since these can become a formality with no incentive or obligation to discuss the data or potential solutions.

Britain provides an interesting example of a policy that has evolved after being introduced on a voluntary basis and then subsequently legally reinforced after an initial low take up. The figures for the gender pay gaps show that voluntary equality initiatives have not significantly changed the situation for women, especially in top jobs. Voluntary measures place emphasis on the willingness of employers to identify with the issue and act while legislation leaves them with little choice.

Pressures and enforcement

Gender pay gap reporting regulations vary, even within the more harmonized regulatory space of the European Union. UK legislation does not include penalties against companies with large gender pay gaps, relying instead on the reputational stakes of sector-specific league tables. In Sweden, employers are required by law to undertake actions when unjustified pay gaps are identified. Elsewhere legislation has included various degrees of constraint, e.g., in Iceland companies should obtain a certification of compliance with equal pay regulations for all jobs and hierarchical levels, and in Ontario, Canada compliance audits may be conducted and financial penalties issued.

The impact of gender pay reporting measures also depends on the type of companies required to comply. In the EU alone there is a wide variety of company size thresholds -smaller companies are often excluded from the measures, thus excluding many women who work in smaller firms.

Shedding light on specific gender pay data

Gender pay gap reporting can also prove to be important in identifying specific inequalities. For example, where there is a pattern of structural inequality of opportunity and unequal distribution of women not getting the best-paying jobs. The data can also reveal persistent differences in access to bonuses and rewards based on salary levels that help widen the gender pay gap. A pilot program in Iceland has revealed that salaries were lower when women were employed as a large group. Findings could thus force or encourage employers to identify internal barriers for women's progression and seek remedies. Similarly results could also trigger an external push for more equality from stakeholders such as clients and employee groups.

Depending on the specific requirements-scope, detail and enforcement-gender pay gap reporting may also produce some unintended consequences. For example, it might encourage outsourcing of lower-paid jobs occupied by women or avoiding recruitment of women to atypical occupations-for example, technical apprentices-to prevent their inclusion in the report. It could also cause resentment toward women and discourage them from seeking work with certain employers. Furthermore, there might even be salary cuts for men instead of raising pay for women, as happened at the BBC and EasyJet.

The way forward?

The eventual impact of gender pay reporting measures depends not only on the requirements on companies to publish but also on the sanctions and the required follow-up actions. While it is not easy to assess impact of the relatively new measures, it is clear that new legal obligations have boosted participation. To have a larger impact, pay reporting measures need to be accompanied by a requirement to act.

The evidence from Sweden, where legislation has a longer history, indicates that employers are in fact positive about the changes that they have been required to implement. Likewise the case of Iceland suggests that a bold legislative push accompanied with relevant support structures for employers might be the way forward. In any case, given the complexity of the causes of the gender pay gap, it is clear that a combination of legislative and non-legislative measures is required to produce tangible effects on pay inequalities.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Can pay reporting help reduce the gender pay gap?

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Since the first week of November, women in the United States, Ireland, UK, and around the world have effectively been working for free as the gender gap in average pay earnings accounts for remaining two months' salary of the year.