What the Gender Pay Gap Really Means.
As we embark on a journey to connect with our femininity and embrace the challenges and triumphs that define us as women (in whatever way you relate to the meaning of ‘woman’), one crucial issue beckons our attention: the gender pay gap. It's a term we've all heard, but what does it truly signify? Why does it persist, and how does it impact us as individuals navigating the modern world? In the spirit of self-care, let's delve into the heart of this matter and gain a deeper understanding of the gender pay gap.
What Is the Gender Pay Gap?
The gender pay gap is essentially a measure of the difference between the average hourly earnings of men and women. It's typically represented as the percentage by which men earn more than women. Influences such as the pandemic can impact our most recent data examples, however the simple fact is clear: women are not paid fairly, at all.
According to the Office for National Statistics (ONS), as of April 2022, the median hourly pay for full-time female employees was 8.3% less than that of their male counterparts. For part-time employees, the story is different, with women earning 2.8% more than men. This distinction arises because part-time workers often earn less per hour. The median, which indicates the midpoint where half of employees earn more and half earn less, is considered a better measure of typical employee pay compared to a simple average.
Understanding Discrepancies
The gender pay gap takes on different shades when we consider elements such as full-time and part-time employment. More women are, statistically speaking, engaged in part-time work, a sector where hourly wages tend to be lower. This dynamic significantly widens the overall gender pay gap. In April 2022, the pay gap for all employees stood at a staggering 14.9%, signifying that, on average, women earned 14.9% less than men.
Interestingly, the full-time pay gap has been on a decreasing trend since 1997, and the overall pay gap has also seen a reduction over time. In contrast, the part-time pay gap remains consistently small and negative, with women generally earning more than men in part-time roles. Therefore, with more women in part-time roles, the impact of the gender pay gap still remains significant.
Interpreting the Data
The existence of multiple ways to measure the gender pay gap sometimes leads to misconceptions about data reliability. However, one fact remains crystal clear: irrespective of how you measure it, the gender pay gap undeniably exists. These varying measurements answer different questions. By exploring these data and the reasoning behind seemingly conflicting measures of the wage gap, we aim to enhance our understanding of this complex issue.
A common analytical misstep in gender pay gap discussions is the assumption that measuring it "correctly" will precisely quantify the impact of gender-based discrimination on women's earnings. Some argue that the commonly cited unadjusted gender pay gap figures fail to account for other influential factors like education levels, labor market experience, and occupation. Consequently, they suggest that gender discrimination might be a less significant issue than perceived, as "adjusted" gender pay gaps (which control for demographic characteristics) are often smaller.
However, the adjusted gender pay gap only narrows the analysis to one dimension: differential pay for equivalent work. This adjustment overlooks disparities in opportunities for men and women that affect their choices before wage negotiations even occur. While regression with multiple factors can distinguish the role of discrimination in a narrow sense, it cannot capture how discrimination influences differences in opportunities.
Roots of the Gender Pay Gap
Despite substantial progress in gender equality, including increased access to education and higher female workforce participation rates, the gender pay gap endures due to deep-seated societal and economic inequalities. Women have made strides in education, often surpassing men in qualifications, extended working years, and entry into stereotypical male-dominated fields such as medicine and law. Yet, the pay gap persists, and at the current pace, it's estimated to take 257 years to close it worldwide.
The gender pay gap is not a one-size-fits-all problem; it magnifies for women facing additional layers of discrimination, including those related to religion, race, caste, geographical location, age, sexual orientation, and ableism. In the United States, the overall gender pay gap shows that women earn $0.82 for every $1.00 earned by men. However, when we consider race, this gap deepens: Black women earn $0.62, Native American women $0.57, and Latina women just $0.54. Ethnic disparities the United Kingdom mirrors this context. Women from almost every minority ethnic group face a pay gap when compared to White British men. For instance, Black African women earn, on average, 19.6% less than their White British male counterparts.
Several factors contribute to the persistence of the gender pay gap:
Discrimination and Bias: Conscious and unconscious biases in hiring and pay decisions.
Occupational Segregation: Women and men often work in different industries and roles, with female-dominated fields typically offering lower wages.
Lack of Workplace Flexibility: Especially in senior roles, the absence of flexible work arrangements for caring responsibilities.
Part-Time Work: High rates of part-time employment among women.
Career Breaks: Women's greater time out of the workforce for things such as pregnancy impacting career progression.
Unpaid Care Work: The unequal distribution of unpaid caregiving and domestic work.
The Gender Savings Gap
A billion-pound problem the gender pay gap's impact extends beyond earnings. It leads to disparities in savings, pensions, and investment accounts. In the UK, the gender savings gap looms as a substantial £1.65 trillion issue.
So, why does this gap persist? Women are just as likely as men to have savings accounts, with both genders at 65%. However, the divergence occurs when it comes to investing. Women are notably less likely to have investment accounts or save money in their pensions.
On average, women save less than half of what men save. Women put away £180 per month, while men save a significantly higher £306 per month. This disparity compounds over time. Over a decade, with even a modest 1% interest rate, this can result in nearly £16,000 more in a man's account. Over two decades, it could mean more than £33,000 extra. Something that is so often labelled a ‘man’s world’ is leaving women with the potential of a difficult financial situation for their later life.
Understanding the Disparities the gender pay gap in the UK varies between 5% and 9%, allowing for significant discrepancies and misreporting. When women earn less, it naturally follows that they save less due to having fewer financial resources. Moreover, "pink taxes" impose an extra burden on women, as personal care products and other necessities are often priced higher for them. All of this makes it even more crucial for women to connect with the numerous female financial experts out there who are pushing for all of women’s ‘money problems’ to be a crass idea of the past. Empowering yourself through your finances is one of the strongest forms of self-care, you’re actively investing in your financial future by yourself, for yourself.
