Acknowledging the Effects of Systemic, Gender, and Racial Wage Gap
The Wage Gap is a universally recognized term referring to the difference in pay between two groups of people. The most recognizable wage disparities are observed globally through gender and race pay discrimination. With a specific focus on pay inequality in the United States, centuries of systemic racism and gender biases have prevented people of color and women not only of fair pay, but of securing necessities such as healthcare, quality education, housing, and safety as a result.
Even with numerous equality and anti-discrimination laws in place, centuries of exploitation and segregation have forced people of color to navigate a prejudiced system while countless women are funneled into low-paying careers and punished financially for becoming mothers.
To understand the different facets of the Wage Gap, Intelligent Partnerships, Inc. put together three highly researched eBooks on the Wage Gap and its effect on the American people and the economy. Each eBook is available for free download by clicking the links below.
The Racial Wage Gap: How Historical and Current Events Have Shaped the Racial Wage Gap and How to Address It
What Causes the Wage Gap?
A single entity did not create the Wage Gap. Pay discrimination in America is woven into its foundational history. Since the formation of the early colonies, racial discrimination perpetrated forced labor that led to a deeply rooted racial bias affecting African Americans, Hispanic Americans, and Native Americans well into modern society. Furthermore, women of all backgrounds have fought an uphill battle for pay equality and are still approximately 135 years away from closing the gender wage gap.
A major cause for continued pay inequality is seen through the effects of role-to-role wage gap and group-to-group wage gap. Role-to-role wage gap refers to the difference in earnings between workers performing the same tasks and have similar work experience. This disparity is less common today as organizations are transitioning to a more transparent pay structure. Group-to-group wage gap refers to the difference in wages between two groups and is directly tied to history, social standing, and geographical location. Occupational segregation—including occupational crowding, devaluation of work, uneven occupational integration, and recessions—is the largest component of group-to-group wage gap and is especially prevalent among the difference of work between genders.
Equitable Growth reports that occupations with more men tend to be paid better regardless of skill or education levels. However, work predominantly completed by women are valued less in the labor market and are therefore often lower-paying even when considering education and skill.
Realistic Overview of Wage Gap in America
The Wage Gap in America is a shocking reminder that hardworking employees are paid less due to their gender, race, and/or background. Plenty of research has been done on this topic nationwide to prove that the Wage Gap is real and still persists. Below are just a few statistics regarding the current Gender and Racial Wage Gaps.
According to the National Partnership for Women and Families, the 2021 breakdown for women working full-time jobs compared to white males working full-time in the United States is as follows: White women: 79 cents, Black women: 63 cents, Native American women, 60 cents, Latinas: 55 cents, Asian American/ Pacific Islander women, 52 cents.
Black men have the largest uncontrolled pay gap—which refers to the average pay for men and women regardless of their job—relative to White men in the U.S and are paid on average $0.71 to $0.87 for every dollar paid to White men.
Black men who reach executive positions are paid $0.97 for every dollar paid to White men with the same qualifications.
Black women make up 10% of the low-wage workforce, including jobs that typically pay less than $11.00 per hour, or $22,880 annually. Black women who work full time are typically paid only $0.63 for every dollar paid to White men.
Latinas are paid $0.55 for every dollar paid to White males. Educated Hispanic women earn less than all other educated races, both male and female.
Native Americans endure some of the highest levels of financial insecurity in the country, with a combined 27% of Indigenous Americans living in poverty compared to 8% of White people.
Asian American/Pacific Islanders represent the largest intraracial wage gap of all races.
The top three most common occupations for women include elementary school and middle school teachers, registered nurses, and secretaries/administrative assistants which provide a weekly salary of $1085, $1240, and $770, respectively. For men working in these same occupations as of 2020, they earn on average $200 more per week for the same positions. However, the disparity between male and female teachers’ salaries is because men frequently undertake more extracurricular activities than women.
According to the Institute for Women’s Policy Research, women ages 15 and older spend on average 5.7 hours per day on unpaid household work and caretaking work compared to men, who spend on average 3.6 hours.
The OECD states that women take a 7 percent wage cut per child, which on average widens the gender pay gap to 22% for women with one or more children. Men do not take a pay cut.
How Companies Can Invest in Closing the Wage Gap
Identifying and closing the Wage Gap is a group effort that starts at the top. Currently, four in ten Americans believe that the Gender Wage Gap is made up to serve political agendas, while reports show that most Americans believe that the Racial Wage Gap was previously solved and is currently nonexistent. Instead of denying the existence of the Wage Gap, companies have a responsibility to acknowledge and correct pay discrepancies. Here are three ways companies can start combating the Wage Gap epidemic.
1. Conduct Frequent Pay Equity Audits
Pay equity audits help a company identify wage inconsistencies, especially among employees with similar jobs. Typically, Human Resource departments conduct pay audits. However, for larger companies (50+ employees), Harvard Business Review recommends hiring a consulting firm specializing in pay and rewards.
A 2019 study done by Korn Ferry found that “while a slight majority of organizations are addressing pay equity in their workplaces, one third are still only considering doing the necessary work, and seven percent say pay equity is not on their company’s radar.” Additionally, after receiving results of pay equity shortcomings, a combined 51% of the companies audited in the survey have failed to initiate remediation strategies or identify root causes for pay equity. Even more concerning is that only approximately 31% openly shared the results of their pay audit with the entire company. Most of the companies shared their finding only with senior leaders or managers while keeping quiet with the workforce.
Solving the Wage Gap is only possible if there is transparency regarding compensation topics. When companies provide full disclosure with their employees, they work towards building a workforce committed to the company and are therefore motivated by trust in their leadership.
2. Invest in Registered Apprenticeship Programs
Apprenticeship programs are an earn-while-you-learn model that pays employees a progressive wage starting day one on the job. According to Apprenticeship.gov, apprenticeship is an “industry-driven, high-quality career pathway where employers can develop and prepare their future workforce, and individuals can obtain paid work experience, classroom instruction, and a nationally-recognized, portable credential.” Companies in industries such as IT, healthcare, hospitality, energy, manufacturing, engineering, construction, and more can benefit immensely from starting a Registered Apprenticeship Program (RAP) and fostering highly trained employees of all genders and backgrounds.
American Progress reports that investing in apprenticeship programs are a necessary pathway to bridge the racial and gender wage gap plaguing families across the nation. RAPs also provide a way to enter and maintain middle-class living standards comfortably, thus providing opportunities for many who would otherwise reside below the poverty line.
Individuals who complete a RAP earn nationally recognized industry credentials to help them go straight from apprenticeship to the workforce with an average annual salary of $70,000. RAPs also provide a realistic hands-on solution for companies to close the wage gap. When the future workforce is paid fairly, we all benefit.
For more information on apprenticeship, check out our article What is Apprenticeship and How Can it Help Your Business?
3. Stop Penalizing Women for Having Children
One of the largest pay gaps results from motherhood. Known as the Motherhood Penalty, sociologists discovered that women in the workforce who do not have children earn 96 cents on the dollar, while women with children face biased disadvantages in pay, raises, and promotions due to a motherly status.
When a woman in the workforce becomes a mother, her earnings drop to approximately 70 cents on the dollar. AAUW reports that managers are less likely to hire mothers, and their salary is lower when they do.
However, mothers are a vital entity in the workforce, with 71% working with children at home and 41% bearing the responsibility of sole breadwinner. Countries like Iceland and Sweden have successfully addressed the Motherhood Penalty by reassessing parental leave to include more paid time off for fathers. This small change made a large impact on the wage gap as Iceland’s current gender wage gap is at 90 cents for every dollar earned by a man, and Sweden is close behind at 86 cents. Currently, the overall gender wage gap for the United States is 84 cents on the dollar.
To adopt Iceland and Sweden’s proven parental leave method would require the United States to implement significant change, as currently, only 14% of U.S. civilians have access to paid family leave, and only four states—New York, California, Rhode Island, and Washington state--and Washington D.C. require paid parental leave.
Learn More About the Wage Gap
Our team at Intelligent Partnerships, Inc. put together three highly researched eBooks on the Wage Gap and its effect on the American people and the economy. Each eBook is available for free download by clicking the links below.
The Wage Gap is a persistent issue that affects the nation at a foundation level. This eBook addresses the role-to-tole wage gap, occupational segregation, the effects of the pay gap, and more. Click below to download the free eBook.
When women are paid unfair wages, it hurts families and hurts the local, state, and national economies. Although previously legal to discriminate against women based on gender, pay discrepancies have affected women decades after pay discrimination became illegal. This eBook addresses the timeline of women’s pay in the nation while also explaining factors such as occupational earning, motherhood, “women’s work,” and how COVID-19 fueled the Wage Gap. Click below to download the free eBook.
The Racial Wage Gap: How Historical and Current Events Have Shaped the Racial Wage Gap and How to Address It
Wage discrimination significantly affects multiple races—including African Americans, Hispanics, Native Americans, and Asian Americans/Pacific Islanders—and has contributed to the foundational wage discrimination against non-Whites nationwide. This unfair difference in pay, systemic racism, and biased notions are traced back to the brutal foundational roots of the United States. Although much improvement has been made over the past fifty years, people of color, especially women of color, still face wage discrimination in the modern workforce. This eBook addresses a detailed breakdown of how the Racial Wage Gap affects African Americans, Hispanics, Native Americans, and Asian Americans/Pacific Islanders. Click below to download the free eBook.
Key Takeaways Regarding the Wage Gap
The Wage Gap is a real problem that can only be fixed when companies commit to fair pay practices. When employees—regardless of race, gender, or background—are paid a progressive living wage, families thrive, the economy grows, and businesses succeed.
For more information on this topic, check out What is Pay Equity and How it can Help Close the Wage Gap