Data Shows Gender Pay Gap Widened at Level Not Seen in 20 Years

The pay gap between American men and women widened in a “statistically significant” way for the first time in two decades, according to a report released Sept. 10 by the U.S. Census Bureau, but experts urge against viewing that finding in a vacuum.

Census Bureau data — which compared income from 2022 and 2023 for full-time, year-round U.S. workers — showed real median earnings increased by 3% to $66,790 for men and 1.5% to $55,240 for women. That dropped the women-to-men earnings ratio from 84% in 2022 to 82.7% in 2023. The last time the gap increased to that degree was 2003.

In addition, the data showed:

The pay ratio widened further for many women of color. Black women working full-time in 2023 earned 66 cents to the dollar compared to men, down from 69 cents in 2022. Asian women’s comparative earnings dropped to 94 cents from 98.6 cents. The greatest gap, for Latina women, remained the same at 58 cents. By comparison, white women’s relative earnings remained at 80 cents both years.
The percentage of women in the workforce continued to increase (now generally mirroring the percentage of women in the population), but there is not a comparable proportion of women in high-paying jobs.

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Factors and Trend Lines

One contributor to the 2023 change, according to Axios, may be that a significant number of Hispanic women, younger women and women new to the workforce recently entered the labor market; all of those populations tend to earn lower salaries.

The COVID-19 pandemic likely also played a recent role. Industries more likely to employ women, such as hospitality and dining, were hard-hit during the pandemic, and women were more likely to step back from work to care for their children when schools and daycare facilities closed, said Consuela Pinto, a partner at the PintoBrown law firm whose focus areas include pay equity as well as diversity, equity and inclusion (DEI).

However, the bigger issue, according to total rewards professionals, is not the one-year shift but the fact that the gap has barely narrowed in the past two decades. The pay gap between men and women has only closed by 2% between 2002 and 2022, according to a Pew Research Center analysis that accounted for both full-time and part-time work. (When comparing the gap for full-time workers only, the U.S. Department of Labor’s Bureau of Labor Statistics recorded a 76% earnings ratio for women in 2000, compared to an 82.7% ratio in 2023.)

“We could perseverate on the percentage [in 2023], or we could look at how much hasn’t changed,” said Nancy Romanyshyn, the senior director of total rewards strategy and solutions at HR technology company Syndio. “I think the trend is the fact that the needle is not moving. It’s clear that as much as we are aware that these issues exist, we haven’t effectively addressed them.”

Understanding the Pay Gap

A major contributor to the pay gap is the fact that men tend to fill higher-paying jobs, which are often less flexible roles requiring more hours. These are roles labor economist Claudia Goldin has termed “greedy work.”

Meanwhile, women, who disproportionately take on caregiving duties, often work in part-time or flexible, lower-paying roles, or spend a significant amount of time outside of the workforce if they have children, which diminishes their earning power far into the future once they return to work.

“Further progress will require a focus on access to senior, high-paying jobs [for women],” said Brian Levine, a partner and pay equity leader at Merit Analytics Group, an HR services firm.

Even in somewhat similar jobs, though, measurable gaps can be observed. For instance, Axios pointed out that housekeepers or maids, roles traditionally held by women, make less money than janitors, who are more often men.

Part of addressing the wage gap in the future will involve reanalyzing long-held beliefs about how jobs traditionally held by women versus those traditionally held by men are valued and compensated, Romanyshyn said.

Taking Action Is Increasingly Necessary

Closing the raw gender pay gap is a main driver for conducting internal pay equity analyses, said Sue Holloway, a compensation content director at WorldatWork. Seventy-one percent of organizations surveyed for WorldatWork’s 2022 Pay Equity Study cited that reason as a significant incentive (other motivations include closing gaps by race or ethnicity, building trust, mitigating legal risk, and aligning corporate actions with employee expectations).

Among organizations surveyed by WorldatWork, 70% are acting to address pay equity, a 10% increase since 2019, and only 2% of employers said pay equity is not on their radar. Organizations are also conducting pay equity analyses more often.

However, data from HR tech company beqom showed about one-third of employers have not instituted a pay equity strategy, even though 70% have discovered internal wage disparities after conducting a pay equity analysis.

“The answer to narrowing the gap is vigilance,” Pinto said.

Pay transparency and equity laws and policies are continually being enacted, and while they have made an impact in some areas, Romanyshyn emphasized that these rules are still relatively new — and she believes they will have a measurable impact on the wage gap in the years to come.

Taking action to find and address pay gaps should be a top priority for businesses, Romanyshyn said: “Scaled, fair and consistent compensation decision-making is the most important thing total rewards teams can be working on.”

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