What the Pay Disparity Means for America
What the Pay Disparity Means for America
Women remain behind the curve compared to men when it comes to equal pay. With the surge of unemployment caused by the pandemic, this situation appears to have worsened. More women than men have lost their jobs in recent months. The unemployment rate for black women is higher than that of white women, black men and white men. Unfortunately, the longer the pandemic continues, the greater the damage will be to women’s careers. Moms are often responsible for childcare and home-schooling duties when classrooms shut down.1
Women currently earn an estimated 82 cents for every $1 earned by men.2 Compare the average earnings of men and women by specific age groups:3
- 25 to 34 years: Men, $50,076 vs. women $45,084
- 35 to 44 years: Men, $64,428 vs. women, $52,572
- 45 to 54 years: Men, $66,092 vs. women, $52,260
- 55 to 64 years: Men, $63,440 vs. women, $50,544
The average income for women starts to decrease after age 45, and after age 55 for men.
A two-income couple has become the norm. Many younger couples have relied on this income model to establish their housing budget, education aspirations for their children and their overall lifestyle. Having to curb that budget now, even in the short-term, may cause financial hardship. It can also be tough for middle-aged households who are actively planning for retirement. If you’re concerned about the pandemic’s possible impact on your future retirement income, we may be able to help. Feel free to contact us to discuss creating retirement strategies through the use of insurance products that can help you work toward your long-term retirement income goals.
The economic and pay disparity for women extends into retirement. According to the National Institute on Retirement Security, the median retirement income for women aged 65 and up is $47,244, whereas it is $57,144 for men — nearly a $10,000 difference annually.4 Women tend to outlive their husbands, so it’s important to consider the possibility of living alone for a number of years. If a wife outlives her husband for 30 years, her retirement income would be $300,000 less than if her husband outlived her for the same timeframe.
As evidenced by the disparity in retirement income, it’s clear gender pay disparity goes far beyond not earning the same amount of money as a male colleague. The largest percentage of a worker’s salary tends to go necessary household expenses, such as food, housing, utilities and transportation. Therefore, the less a person makes, the less he or she has left to save for retirement. Thus, while women may make 82 cents of every $1 earned by men, they actually own only 32 cents on the dollar. The situation is far more dire for women of color, as they own mere pennies on the dollar in terms of asset wealth relative to both white women and men.5
As much as the pandemic has suppressed women’s opportunities in the job market, the nation’s economic recovery will largely depend on women getting back into the workforce and improving their financial footing. According to the Institute for Women’s Policy Research, closing the gender pay gap could add $512.6 billion to America’s economy moving forward.6
Improving financial prospects for people of color could add even more to that economic growth. Following on the heels of recent protests calling for systemic reform of racial disparities in the U.S., one banker suggests that increasing mortgages and small-business loans to people of color would help them build equity, start new businesses and contribute to the growth of capital markets.7
Content prepared by Kara Stefan Communications.
1 Julia Boorstin and Harriet Taylor. CNBC. July 15, 2020. “How coronavirus could do real, long-term damage to women’s careers.” https://www.cnbc.com/2020/07/14/how-coronavirus-could-do-long-term-damage-to-womens-careers.html. Accessed July 20, 2020.
2 Robin Bleiweis. Center For American Progress. March 24, 2020. “Quick Facts About the Gender Wage Gap.” https://www.americanprogress.org/issues/women/reports/2020/03/24/482141/quick-facts-gender-wage-gap/. Accessed July 20, 2020.
3 Kathleen Elkins. CNBC. July 18, 2020. “Here’s how much men and women earn at every age.” https://www.cnbc.com/2020/07/18/heres-how-much-men-and-women-earn-at-every-age.html. Accessed July 20, 2020.
4 Tyler Bond, Joelle Saad-Lessler and Christian E. Weller. National Institute on Retirement Security. May 2020. “Still Shortchanged.” https://www.nirsonline.org/wp-content/uploads/2020/04/Still-Shortchanged-Final.pdf. Accessed July 20, 2020.
5 Jessica Stender. Ms Magazine. July 19, 2020. “How Salary History Bans Help Combat the Race and Gender Pay Gap.” https://msmagazine.com/2020/07/19/salary-history-bans-help-combat-the-race-and-gender-pay-gap/. Accessed July 20, 2020.
6 Elizabeth Schulze. CNBC. March 8, 2018. “Closing the gender pay gap could have big economic benefits.” https://www.cnbc.com/2018/03/08/closing-the-gender-pay-gap-could-have-big-economic-benefits.html. Accessed July 20, 2020.
7 Allissa Kline. American Banker. July 12, 2020. “How banks aim to close racial wealth gap: More minorities in leadership.” https://www.americanbanker.com/news/how-banks-aim-to-close-racial-wealth-gap-more-minorities-in-leadership. Accessed July 20, 2020.
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