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For women in the workforce, less money means more problems

For women in the workforce, less money means more problems
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When the average woman has to work an extra 99 days to earn the same amount earned by a man in 2017, it’s undeniable that far too many women lack the opportunity to earn a good life.

Why does Equal Pay Day fall on April 10th? The median annual earnings for people working 35 hours or more per week is $51,640 for men and $41,554 for women. The gap between the two — 20 cents on the dollar — can only be made up if the typical working woman puts in 99 extra days.

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The gap is even wider for women of color. At 31 cents and 40 cents on the dollar respectively, a truly equal pay day is an even longer way off for black women and Latinas.

These and other workplace inequities are at the core of an agonizing question held by millions of Americans: Will my children and I be able to earn a good life? Solving some of the more intractable causes of the gender pay gap must be part of a new social contract for our modern economy. Third Way recently released a set of future-oriented ideas to do just that: expand the opportunity to earn a good life to everyone, everywhere.

So as we honor the struggle for parity on Equal Pay Day, let’s consider four critical factors driving the wage gap: parental penalties, cultural expectations, occupational sorting, and workplace bias.  

First, too many workplaces in America hinder equal opportunity for working women, particularly those with children.  American employers regularly penalize working parents, with women disproportionately bearing those penalties. It’s one of the reasons our new social contract redesigns the pay and benefits of work to fit a changed economy.

My organization, Third Way, has proposed a Paid Parental Flex Plan to remove these outdated penalties. Families with new children should receive federal parental leave insurance for six weeks after a birth or adoption. Employers should offer more temporary, part-time work arrangements. And to give more parents the opportunity to return to work, the child tax credit should be expanded to ease the burden of childcare costs.

While all parents would benefit, this would specifically boost earnings for many women by ensuring they don’t face a slower career trajectory if they have children and work simultaneously.

Cultural expectations are also a major culprit.

Traditional beliefs on caregiving roles discourage women from spending time away from home, resulting in more men working 40-hour weeks or putting in overtime. In 2013, 51 percent of Americans still believed children are better off with a stay-at-home mother, as opposed to 34 percent who said children are just as well off with working moms. Only 8 percent thought children are better off with stay-at-home dads.

These beliefs come at a steep price for women. Women who return to work incur a wage penalty of 4 percent each time they have a child. Men, by contrast, are rewarded with a bonus of 6 percent in additional wages for becoming a father.

These cultural norms also play into another cause of the pay gap: occupational crowding. The fact remains that men monopolize most of the highest-earning jobs.

Of the top 20 highest-paying occupations, 16 were male-dominated in 2017. Two of these highest-earning professions have become significantly more populated by men over the past three years. By contrast, women comprise the majority of the workforce for 14 of the 20 lowest-paying occupations.

To close the pay gap, women need more opportunities to earn at the highest wage levels. That means women must have equal access to the education and training pathways leading to these occupations, as well as career ladders within them.

A fourth factor is the most frustrating: workplace bias. Even within occupations, men take home larger paychecks than women. Men out-earn women in 96 percent of 120 occupations. Observable differences between men and women, such as number of hours worked, fail to explain this gap. That means bias and discrimination must be at work.

Applicants with male-sounding names are more likely to be offered jobs than women. Women who negotiate for higher salaries are often perceived as more demanding and difficult to work with than male counterparts, resulting in fewer women asking for raises. Even female executives are rewarded less for firm success and penalized more for poor firm performance.

The evidence is clear: Women still do not have equal opportunity to earn. As our economy evolves into the modern era, it’s time for all women to earn what they’re worth.

Rachel Minogue is the economic fellow at Third Way, a centrist Democratic think tank. She earned a Master's degree at the Johns Hopkins School of Advanced International Studies (SAIS) and worked as a Government Relations Associate at Urban Swirski & Associates, a DC-based consulting firm, where she led projects related to trade, taxation, financial services, and retirement security.