A Brief History of Equal Pay in the U.S. and What to Do About It
by Erin Papworth
Remember how much drama erupted after the news broke that Claire Foy, the leading lady of The Crown (playing the Queen of England), earned less than her male co-star, Matt Smith? Feels like ages ago now.
You already know this issue isn’t exclusive to the entertainment industry. Unequal pay is happening to women across the country (and world), every day. Let’s be real, you’ve likely experienced unequal pay yourself.
To kick inequality to the curb, we first need to understand how we got here and the components of pay discrepancy.
Because it’s not just one person’s fault or even the (current) white man’s fault. It’s a system that has morphed and altered and edited itself over 100s of years that needs continual upkeep and change. Once we understand how the system functions, then, we can advocate for the best ways to change and protect ourselves in the now.
This is extremely true in light of what COVID-19 has done to our economy and women particularly in labor markets. We had made so many gains to have over 50% representation. (Though this was still not at the upper echelons of leadership and high paying industries.) We were, and continue to be, wage earners and important contributors. Unfortunately, COVID-19, with its disproportionate effects on service industries and in-person schools, has dramatically reduced women’s participation in paying jobs and services.
So let’s talk numbers:
Though the specific number fluctuates depending on race, class, education, and a host of other factors, generally women are paid 22 percent less than their male counterparts in the U.S. This is of course the median.
38% for Black women
46% for Hispanic or Latino women and
43% for American Indian and Alaskan Native women.
Asian American women is 10%. (However, this number underestimates the wage gap for many Asian American women such as Filipino (17%), Tongan (25%) and Nepali women (50%). )
Experts cite these statistics for the ‘Gender Wage Gap’. They note our realities are affected by differences in industries or jobs worked, differences in years of experience (hi, babies), differences in hours worked (cough, babies) and just plain discrimination. I would argue our historic barriers to salary negotiation was also a factor for the difference between earned wage for the same job.
If changes to the gender pay gap continue at the pace of the last 40 years, White women won’t see equal pay until 2059, Black women until 2124, and 2233 for Hispanic women.
Obviously, it’s a topic we have to keep talking about and pushing to fix.
How in the world does pay inequality surive?
Back in 1963, the Equal Pay Act made it illegal for an employer to pay different salaries for the same job to two equally qualified people of different genders. Why, then, are we having this conversation 50+ years later?
Blame it on a technicality.
That 1963 law said that women were only allowed to bring a claim against an employer 180 days after the first unequal pay check. I don’t know about you, but I don’t typically know about the pay discrepancies of a company I just started working at. Nor would I have enough evidence to prove something shady is going down within the first six months.
Oh, and did I mention the law didn’t require employer earnings data to be made available? So it was (and still is) on women to do the research. Then, women have to demand their right to be paid equal wage plus pay for a lawyer to help with the case.
Progress = Another Technicality
During the Obama administration, the Lilly Ledbetter Fair Pay Act was passed. It still didn’t mandate a change to fix wage disparity for the same job. It merely eliminated the 180 days statutory charge filing period (i.e. the time you could bring the lawsuit). In this way, it opened the door for more people to bring wage discrimination suits to court. The problem is it still requires the evidence to be provided by the complainant and for them to bear the expense.
So the system still has kinks in it. It’s mostly incumbent upon individual companies to choose how they structure their compensation packages.
Here are some other reasons why the Wage Gap thrives and how to navigate it.
Reason 1: Our economy is based on profit.
From A Business Perspective
Whether you’re the corner coffee shop or Starbucks, you need profit to stay in business. Making more profit often means cutting costs.
Since the biggest cost to a company is employee wages, salaries have ranges and flexibility. That includes the benefits added on top of a salary.
Some companies argued that it’s the employee’s responsibility to negotiate their wages. If they accept a lower salary, that decision is on the employee. (There has been a shift social that asks, can’t we be better than that? Yes, yes I believe we can.)
If you’re job hunting, look out for companies that have publicly stated they want to close the wage gap. Since the Me too movement, more and more companies have tried to fix this problem within their internal structures.
From a Personal Perspective
We can learn to advocate for ourselves. Be aware and be decisive when faced with blatant discriminations. There are also companies and moments where we just need to speak up for ourselves. When it comes to annual review and salary discussions, be prepared with the list of accomplishments you’ve achieved over the year. It’s an excellent way to show your value and set the tone for asking for a salary review. Advocating for ourselves is a key step in navigating both the workplace and inequality.
It’s true, we don’t all have the luxury of finding companies that promote equal pay. But, we can pay attention to which companies are making strides in these areas. It also helps us know where we can spend our money and who we should support.
Reason 2: Financial literacy among American women (and men!) is abysmal.
In a recent assessment, only 22 percent of women answered basic financial questions correctly (yikes!). This has far reaching ramifications that are not only implicated in the Gender Wage Gap but also in the Gender Wealth Gap. This includes a major gap in retirement savings.
That means it’s time to get educated.
Confidence in our money management generates confidence in our ability to navigate workplace negotiations and understand our value.
While Wall Street whizzes may talk about inflation, diversification, and compound interest in their sleep, there’s no reason you can’t get the gist of it. The number one way to make more money is to earn it. Passive income is great, but you need active income for a while to make passive investments. So salary matters.
Glassdoor is a great place to look at reviews of former and current employees. Look up your industry and “market worth” with tools like PayScale, and research the latest news about companies to see if they’re on the right side of history.
Digging the gig you have but unsure of your employer’s gender equality policies? There are ways to ask and make suggestions tactfully. Chief Diversity and Inclusion Officers are being hired more and more. Plus, your managers and HR have an obligation to respond to your requests for information.
Reason 3: Women are less likely to negotiate for themselves than they are for others, like their employees
Real talk, ladies: If we don’t understand our income potential, we will continue to fail at negotiation. Consider this staggering statistic: Over the course of a woman’s lifetime, she could lose out on $500,000 to $1 million (some even say more) in earnings because she didn’t negotiate.
That’s the difference between retiring when you want to, owning a house (or two!), and building a wealth base that allows you the freedom to do things like travel the world or hop industries mid-career.
A trick of the trade going into anxiety-provoking negotiations is to pretend you’re negotiating for a friend. We are much more likely to go to bat for someone else than ourselves.
(Hint: You can learn the 101 of confident money moves and negotiations right here with Nav.it.)
This continues to be a hot topic in our generation and we’re excited to navigate this together. You’ve got this, we’ve got you.